Australian workers are missing out on $5.6 billion in superannuation payments, according to research by Industry Super Australia (ISA). The Australian Taxation Office, which regulates the area, claims the figure is exaggerated but can’t tell us what it should be.

But a Senate committee, which reported on the problem on Wednesday, backed ISA’s view. It shows underpayments hit 32 per cent of workers receiving the superannuation guarantee and costs each on average $24,000 over a working life.

The committee made 32 clear recommendations on how to deal with it. These are its five most important remedies:

1. Make super cover all workers, not just those earning more than $450 a month. This would extend super to people, especially women, who currently miss out because they work multiple part-time or casual jobs. It would also make it harder for unscrupulous employers to avoid paying entitlements to those whose incomes falling just over the cutoff point.
2. Get the ATO on the case. Build its capacity to determine whether payments are being made and beef up the law so it can prosecute employers deliberately avoiding payments, the inquiry recommended.
3. Giving employee advocates more power. This would involve giving unions and super funds the ability to launch legal action against super-payment avoidance.
4. Make employers pay super entitlements monthly, or with fortnightly salary payments, instead of every three months. This would make it easy for workers to check whether their super was being paid and ensure super sums deposited in accounts begin earning interest quickly.
5. Tighten the law to ensure bosses can’t direct workers’ optional salary sacrifice payments to cover their super guarantee commitments instead. Unbelievably, employers aren’t legally obliged to honour salary sacrifice elections. They can simply use workers’ money to cover their own obligations and this is costing workers $1 billion a year.

The Senate committee has limited power because it was formed by the Labor opposition and the Greens, so the government might not feel obligated to act on it. But Financial Services Minister Kelly O’Dwyer called a separate inquiry that reported in March.

Industry Super Australia public affairs director Matt Linden said as a result the government has the knowledge to act.

“That’s given them time to include the issue in the budget process so they should be acting as soon as next week’s budget,” Mr Linden said.

A spokesperson for Senator Mathias Cormann, acting Financial Services Minister, said “the Turnbull government takes superannuation guarantee non-compliance by employers very seriously. Employers who do not pay employees their SG entitlements are breaking the law”. 

The government’s inquiry, criticised by some for its secrecy, brought together “senior representatives from the ATO, APRA, ASIC, Department of Employment and Treasury to investigate community concerns and develop practical recommendations to the Minister to deal with SG non-compliance”, the spokesperson said. 

“The government is currently considering the recommendations of this group.”

Labor failed to address the issue while in power and had used the Senate inquiry for political purposes, the spokesperson said.

“The report has gone well beyond the terms of reference and proves that Labor’s agenda is to entrench the role of unions and their cronies in the $2 trillion superannuation system.”

But ISA’s Mr Linden said the inquiry was “comprehensive and has done a very creditable job to articulate the problem and put significant onus on the ATO and others to deal with it”.