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‘Running out of time’: industry sounds alarm over payday super rush

Profession
23 July 2024
running out of time industry sounds alarm over payday super rush

Accounting software developers are staring down a deadline that is becoming increasingly unachievable in the absence of government guidance.

Accounting software developers are sounding the alarm over the government’s push to implement payday super by 2026, warning they will not have systems ready to meet the deadline.

Digital Service Providers Australia New Zealand (DSPANZ), the peak body for accounting and payroll software developers and superannuation gateways, said the government had left the industry in the dark since announcing the change last year.

“The software industry needs clarity now,” DSPANZ president Matthew Prouse told Accountants Daily.

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“We don't have specifications. We have no legislation, we have no regulation. We have no idea what the specifications will need to be. We don't know which systems will need to change yet, we don't know how this is going to work as a business process.”

Payday super laws, announced in the 2023-24 federal budget, require employers to pay employees’ super at the same time as their salary and wages from 1 July 2026.

It is designed to stamp out unpaid super, which the ATO estimated totalled $3.4 billion in 2019-20.

“This simple change will strengthen Australia’s superannuation system and help deliver a more dignified retirement to more Australian workers,” Treasurer Jim Chalmers said in a statement in May 2023.

“The 1 July 2026 start date will provide employers, superannuation funds, payroll providers and other parts of the superannuation system with sufficient time to prepare for the change.”

But DSPANZ, which represents major players like Xero, MYOB and QuickBooks, said it was “unrealistic” to presume the software industry would be able to meet the start date – an issue the organisation raised in its Treasury submission in November 2023.

DSPANZ said the sector had heard nothing from the government since consultations in mid-2023 and only had “stale” press releases as guidance as it geared up to make multi-million-dollar investments to deliver payday super.

“It has been 444 days since Assistant Treasurer Stephen Jones announced payday super in the 2023-24 federal budget and 400 days since consultations began,” Prouse said. “This is not acceptable.”

Prouse compared the scale of the change to the introduction of single touch payroll (STP), which took seven years from announcement to full implementation in 2019.

“We are making every business in Australia change their processes to pay superannuation at the same time as they pay staff … there are so many changes that would need to happen to make that possible,” he said.

While the July 2026 start date was still two years away, Prouse said if time was allowed for policy and consultation processes – such as industry co-design, business cases and the passage of legislation – it left the industry only around 12 months to build the software and transition all employers and employees.

“We're running out of time. In fact, we were running out of time in November 2023,” he said, calling for the government to either push the start date back by two years to 2028 or “reduce the scope of what can be reasonably delivered”.

Matthew Addison, executive director of the Institute of Certified Bookkeepers, supported DSPANZ’s concerns.

“Payday by 2026 is just going to cause a significant problem and not fix anything,” he said.

“Technology, and everybody’s costs, throughout the system will need to change to ensure payday super can happen.”

The ICB said the current start date should instead act as “stage one” for a move towards monthly super payments, while allowing a corrections framework that would not impose over the top penalties.

It also said a date closer to July 2028 would be more realistic to achieve a total overhaul of the super payment system.

About the author

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Christine Chen is a graduate journalist at Accountants Daily and Accounting Times, the leading sources of news, insight, and educational content for professionals in the accounting sector. Previously, Christine has written for City Hub, the South Sydney Herald and Honi Soit. She has also produced online content for LegalVision and completed internships at EY and Deloitte. Christine has a commerce degree from the University of Western Australia and is studying a Juris Doctor degree at the University of Sydney.

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