Greens slam Labor's decision to retain under 18s SG exemption under payday super

Superannuation industry groups expressed their support for the reforms during the inquiry but various super funds and associations have also called for the superannuation guarantee system to be extended to all workers, including under 18s who work less than 30 hours per week.

The regulations as registered retain an exemption that excludes workers under 18 and who work less than 30 hours per week from being entitled to superannuation guarantee. The exemption was previously contained in the Superannuation Guarantee (Administration) Act 1992.

In a submission to the inquiry, Rest Super noted that 93 per cent of workers under the age of 18 usually work less than 30 hours per week in all jobs, meaning these workers miss out on compulsory legislated super guarantee contributions.

Rest suggested that there would be significant benefits to paying superannuation to all workers under the age of 18, regardless of whether they work less than 30 hours per week.

It gave an example of a ‘typical’ 15-year-old fund member who would "benefit from an estimated $3,400 extra in super by their 18th birthday, and an estimated $18,100 in additional super by retirement, in today’s dollars".

The ACTU also raised concerns about the exclusion of under-18 workers, noting that the exclusion was "contrary to the principle of universal superannuation and directly undermines the adequacy of superannuation in retirement for these workers". 

The Senate Committee said while it supported the principle of paying superannuation on every dollar earned, including those under 18, it did not consider this to be a priority in the near-term.

"The committee also notes that, at present, the majority of employers of under 18 workers do not pay superannuation. Payday super is a significant change to the superannuation system and embedding the new system should be a priority before considering further changes," it said.

"Extending the superannuation guarantee to under 18s would require careful consultation with unions, civil society, employers and further detailed work to understand the impacts."

The committee also noted that some large national employers, such as Aldi, Bunnings and Priceline, already pay superannuation to workers under 18.

"The committee also notes that there are small businesses who support the superannuation rights of young people already paying superannuation to all their employees regardless of age, demonstrating that there is some support for this approach within the business community," it said.

The Greens Party have slammed the government's decision to include the exemption applying to under 18s in the payday super regulations, warning that it "entrenches lower lifetime savings before workers even turn 18".

In a Dissenting Report contained within the report, Senator Barbara Pocock said the Committee Chair's decision to retain the exemption denied thousands of young people fairness in their earnings, including their retirement earnings.

"This is a classic major party delay tactic: agree in principle, promise more consultation and leave vulnerable people waiting for fair treatment and long overdue reforms," said Pocock.

"Australian workers don’t need another roundtable to decide whether young workers deserve super: they have been waiting for decades."

Pocock said that evidence provided to the inquiry showed that most large employers of young Australians do not provide their under-18 workers with this workplace entitlement, despite raking in massive profits off the back of their labour.

The Greens explained that while the carveout may have been justified in the early 1990s on the basis that fees and insurance premiums would erode small balances, this was no longer the case following decades of reform.

"The Super Members Council helpfully points out that today, fee caps and protections for low-balance accounts, alongside opt-in insurance settings for young workers, means that even small super balances are preserved and grow over time," said Pocock.

"What remains is not a targeted safeguard, but a blunt discriminatory exclusion that denies young workers the same entitlement to deferred wages as every other worker."

Pocock said the rule draws an arbitrary line based on age and hours, despite the fact that under-18s perform the same work, for the same employers, as their older counterparts.

"As a result, hundreds of thousands of young people are working, earning, and contributing to the economy without receiving the superannuation they should be legally entitled to once they turn," she said.