Australian workers missed out on a record $5.2bn of superannuation that employers failed to pay last financial year, according to the Australian Taxation Office.
The ATO has released the data on the superannuation “gap” in its annual report, which also reveals that $1.4bn is likely to go unpaid because it is owed by insolvent companies.
That has renewed calls from unions, the Greens and the Super Members Council for super to be added to the unpaid wages safety net so that workers’ retirement savings do not take a hit when their employers go bust, but instead are topped up by taxpayers.
Labor committed in its 2023 national platform to include super in the fair entitlements guarantee, but is yet to say when and how it might legislate it.
The ATO annual report reveals that the net super gap – the proportion of super that went unpaid even after recovery efforts – has shrunk from 6.7% in 2022-23 to 6.3% in 2023-24.
In dollar terms, however, the net amount of unpaid super rose to $5.2bn this financial year, up from $4.8bn last financial year. The super gap has risen steadily from $3.5bn in 2016-17.
The ATO explained it had introduced a new method for calculating unpaid super, resulting in an upward revision of unpaid super in previous years and raising its confidence in the figures from low to medium.
The report showed the amount of superannuation guarantee charges had increased from $1.2bn in 2022-23 to $1.9bn in 2023-24, which the ATO attributed in part to an increase in its compliance action.
“At 30 June 2024, super guarantee debt on hand was approximately $3.7bn, of which $80m is disputed debt and $1.4bn is insolvent debt; $2.2bn of this amount is assessed as being collectable debt owed by approximately 89,300 employers,” the ATO report said.
According to a Super Members Council analysis of the new figures, the gross amount of super unpaid (excluding recoveries) over the last three years was about $18.6bn.
The super guarantee charges raised over this time – reflecting the underpayment that was identified and where liabilities were raised with employers – amounted to $4.2bn.
The SMC analysis concluded the ATO was therefore detecting only about 22.5% of the estimated underpayments.
Matthew Linden, the SMC’s executive general manager of strategy and insights, said the ATO was “now confessing the scale of the problem is more significant than previously reported” but the amount of super charges raised was “still a fair way short of their estimates around the degree of underpayment and non-compliance”.
“This is why changes to the 30-year-old system to introduce payday super are so important,” he said. “The ATO will have the tools it really needs to combat this problem properly.”
From 1 July 2026 employers will be required to pay super at the same time as employees’ pay.
Linden said that the “long lags between employees realising they are being underpaid and the ATO identifying underpayment” of super can mean that it is “too late in circumstances where businesses are not able to repay that debt”.
The exclusion of super from the unpaid wages safety net “really makes no sense, it’s the only employee entitlement not covered”, he said.
“It would improve the diligence the ATO and government are applying to underpayment, if there is a mechanism that means they have to cover the shortfall, that will ensure [the] right sort of incentives for [them] to address the problem at its source, before businesses become insolvent and employees are out of pocket.”
The Australian Council of Trade Unions assistant secretary, Joseph Mitchell, said the report “shows the shameful legacy of the Coalition governments’ inaction on stolen super”.
The ACTU credited Labor with adding super to the national employment standards, criminalising wage theft and committing to payday super.
Senator Barbara Pocock said that despite Greens amendments to count superannuation theft as wage theft, “too many employers are getting away with wage theft and a big part of that is the wilful non-payment of superannuation entitlements”.
“For workers who have lost out through insolvency and are receiving government assistance through the fair entitlements guarantee, they should be paid super on all their entitlements,” the Greens employment spokesperson said.
The Unions NSW secretary, Mark Morey, said the latest figures paint a “devastating picture of wage theft” including $1.4bn in debt “written off as ‘insolvent debt’ – that’s retirement savings that workers will never see”.
“This is exactly why Unions NSW has been calling for unpaid super to be included in the fair entitlements guarantee.
“When businesses go under, workers shouldn’t lose their retirement savings. The current system essentially rewards employers who do the wrong thing by letting them off the hook.”
A government spokesperson said it was “committed to supporting workers whose employer has entered liquidation or bankruptcy and are owed entitlements”.
“Reforms to FEG would need to be carefully considered to balance the protection of employee entitlements with other parts of corporations policy,” they said.
The spokesperson said compliance of unpaid super through the fair entitlements guarantee recover program had been strengthened from July 2024.
The government “expects to recover an additional $56.6m in [superannuation guarantee charge] debt over four years from 2024–25”, which will go to employees’ super funds.
