Labor considers changes to superannuation contributions for workers on parental leave

The federal Labor Party is considering changing its policy position on superannuation contributions to allow for employees to be receive superannuation contributions while they are on paid parental leave.

However, the Council of Small Business of Australia has called on the Labor Party to ensure that any policy change does not translate to extra costs and red tape for small businesses.

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Labor Senator Katy Gallagher, who is the shadow minister for small business and financial services, told a leadership forum on Thursday the federal opposition is looking at the issue closely.

Employers are not currently required to make superannuation contributions for employees when they are on paid parental leave. However, voluntary contributions can be made.

Speaking about disparities between the retirement savings of men and women, Gallagher said in order to ensure “women can live a dignified retirement”, pay equity in the early stages of their careers needs to be addressed, along with “the periods of time when women take leave to have a child”.

“This might be looking more closely at superannuation during periods of paid parental leave,” Gallagher said.

“I do acknowledge that this is not necessarily a cheap or easy solution, although it is probably easier than cheaper, and is something that we as a party have not yet reached a final position on, but that does not mean that we are not looking at it.”

Fellow Labor Senator Jenny McAllister is an advocate for the change in policy, according to Fairfax, and the reform formed one of the recommendations from a Senate inquiry into economic security for women in retirement in 2015.

Gallagher said on Thursday she will be working with Senator McAllister and her colleagues to “progress our thinking on these issues during this term of Parliament”.

Peter Strong, chief executive of the Council of Small Business of Australia, this morning called on Gallagher to “fight long and hard” to ensure any change in policy does not adversely affect small businesses.

“We know Katy Gallagher would fight hard to make sure there is no extra cost or red tape for small business,” Strong says.

Gallagher told SmartCompany this morning that the small business community will be consulted before any policy positions are altered.

“Labor will continue to look at the best ways to address the disparity between men and women’s retirement savings and we will work in close consultation will all stakeholders, including small and medium businesses, before finalising any policy positions,” Gallagher says.

Strong says when considering the quality of life for women in retirement, it is essential to also be talking about the retirement of self-employed women, who may be the employer paying the additional super for their workers in this equation.

“What is going to happen with them? Their small business is often their income and retirement,” he says.

“You can’t punish one group to look after another group. That’s really important.”

As an alternative, Strong suggests the major political parties consider how employer superannuation contributions are collected.

“If they changed the collection process so that it is in PAYG [Pay-As-You-Go] withholding, then that gives the government the option of changing the tax system … [so] people who take time out from the workplace get some sort of tax benefit,” he says.

“They need to look at this from the point of view of business and the way things currently work to create a better system that looks after the disadvantaged.”