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25 February 2010

NSW’s largest business organisation, NSW Business Chamber, has welcomed the announcement of an inquiry into the Federal Government’s Superannuation Clearing House Bill as an opportunity to correct issues identified by the business community.

“Business is supportive of the Government’s plan to provide a clearing house facility that businesses can use to pay their superannuation obligations to their employees,” said Stephen Cartwright, CEO of NSW Business Chamber.

“Business does have some concerns about how the clearing house will operate in practice.  We want to ensure that it is a facility that will provide value to businesses and is not an additional burden.”

Mr Cartwright said the NSW Business Chamber had identified four key issues with the current bill that should be the subject of the inquiry. They include:

1)    Why has Medicare been chosen as the approved clearing house when the initial proposal for a free small business clearing house facility suggested it would be operated by the private sector?  The Government has not released an explanation for this decision.

2)    The bill provides the “approved” clearing house (Medicare) with an unfair advantage in that contributions are deemed to be made to the relevant superannuation fund on the date they are received by the clearing house regardless of when they are forwarded to the nominated fund.  Payments from existing clearing houses, which are not approved, are dated when the clearing house pays the super fund, not when the employer pays the clearing house.

3)    Under the bill, an “approved” clearing house cannot accept a payment if the employer is not a small employer (less than 20 employees).  Many employers have fluctuating workforces; if their workforce increases from 19 to 20 they are not eligible to use the “approved” clearing house.

4)    Not all superannuation contributions which employers have to make are covered by the bill.  For example, the deeming of a contribution made to a fund does not apply to contributions arising under other obligations such as agreements and/or fund trust deeds.  Many employers pay superannuation contributions monthly (not quarterly as required by the guarantee) but where monthly contributions are enforceable the deeming provisions do not apply.

“These are uncompetitive outcomes that will not encourage employers to use superannuation clearing houses.

“Businesses want to be able to use an efficient and competitive clearing house system to discharge their superannuation responsibilities.  These are the issues that need to be resolved to create a fair system that is not a burden on businesses.”