The objective of the audit was to assess the effectiveness of the implementation and administration of the Small Business Superannuation Clearing House.
1. Superannuation is a long-term vehicle for building retirement savings, and is a key element of the Government’s policies to address the financial independence of Australia’s ageing population. Under the Superannuation Guarantee (Administration) Act 1992, all workers aged between 18 and 69 (inclusive) who earn $450 or more (before tax) in a month must have a minimum of nine per cent of their ordinary time earnings contributed to superannuation by their employer.1 These contributions are in addition to salary or wages and are known as ‘Superannuation Guarantee’ (SG) contributions.2
2. On 1 July 2005, amendments to superannuation legislation, commonly known as ‘Choice of Funds’, came into effect.3 The amendments required employers to allow eligible employees to choose a superannuation fund to which their SG contributions would be credited. As a consequence, employers could face additional administrative demands when making payments into multiple superannuation funds on behalf of their employees. ‘Clearing house services’ emerged in the superannuation industry to assist employers. These services receive a single aggregated superannuation contribution amount and payment instructions from an employer, and then distribute each employee’s contribution to the superannuation fund of the employee’s choice. Offered as a stand-alone service or as part of payroll, banking or superannuation services, they are readily available to employers. Employers can be charged directly for them, or can receive them free of charge in conjunction with other services.
3. In 2007, the then Opposition made an election commitment to reduce the ‘red tape’ imposed on businesses, particularly small ones, by introducing a government-supported superannuation clearing house facility.4 The 2008–09 Federal Budget subsequently provided $16.1 million over three years for the facility.5 The Australian Taxation Office (ATO) was nominated as the agency that would administer the facility, consistent with the ATO’s responsibility for the administration and regulation of employers’ SG obligations under the Superannuation Guarantee (Administration) Act 1992. Treasury, as the policy agency for superannuation policies and legislation, was responsible for designing the program. The Budget measure provided that the ATO would use private sector providers to deliver the service, which would be offered free of charge for businesses with fewer than 20 employees and at a cost to larger employers.
4. An additional benefit of using the government-supported superannuation clearing house facility was that an employer’s SG obligation would be discharged when payments were received by the clearing house. Employers using private sector clearing houses need to allow sufficient time for their superannuation contributions to be received, processed and paid by the clearing house to the superannuation fund, before their SG obligation is discharged. At the time the measure was announced it was assumed that the facility would be taken up by 10 per cent of the eligible population in the first year of the facility’s operation, and 15 per cent in the subsequent year.6
5. Following a period of public consultation and assessment of program design options, the Government announced on 6 November 2009 that a free superannuation clearing house service—the Small Business Superannuation Clearing House (SBSCH)—would be offered to businesses with fewer than 20 employees through Medicare Australia rather than the ATO or the private sector.7 Medicare Australia was considered well placed by the Government to deliver the service as a ‘key service delivery agency with significant electronic and payment processing capacity whilst ensuring the privacy of information and the security of funds’. This delivery model also removed the prudential regulation risk of a private sector clearing house collapsing while holding SG contributions. The $16.1 million allocation identified in the 2008–09 Budget was transferred from the ATO to Medicare Australia.
6. The objectives of the program are to: provide a free service; reduce time and paperwork burdens; assist employers to make SG payments; promote standardised information sharing; and encourage take-up of e-commerce. The SBSCH is provided as an online service and uses e-commerce channels for transactions.8 Employers self-register through an online portal and enter their business and nominated employees’ details. Periodically, usually quarterly, they make superannuation payments to a special account in the Reserve Bank of Australia and send an accompanying contribution statement to the SBSCH. When the details of payments in the contribution statement are verified, the SBSCH issues a pay authority to the Reserve Bank of Australia, which then transfers funds to employees’ superannuation funds. Unverified payments are returned to employers, who are advised of the returns. Medicare Australia also runs a helpdesk call centre to assist SBSCH users.
7. The SBSCH accepted registrations from employers and Australian Prudential Regulation Authority regulated superannuation funds (which receive payments from the SBSCH) beginning on 24 May 2010, and began full operations from 1 July 2010. From its inception until the end of June 2011, the SBSCH was provided by Medicare Australia. From 1 July 2011, Medicare Australia was integrated into the Department of Human Services (DHS).9 For the purpose of this audit, reference is made to Medicare Australia, acknowledging the integration of Medicare Australia into DHS on 1 July 2011.
8. Twenty-six full time equivalent (FTE) staff were allocated to the program in 2011–12, and as at 31 May 2012, the SBSCH has:
- 24 397 employers registered, who together make payments on behalf of 159 037 employees;
- 3655 superannuation funds registered to take payments, made up of 423 Australian Prudential Regulation Authority (APRA) regulated funds and 3232 self-managed superannuation funds; and
- made 86 522 employer payments representing 561 010 payments for employees, totalling $316.5 million.10
9. In December 2010, the Government announced its ‘Stronger Super’ reforms in response to the recommendations of a review into the governance, efficiency, structure and operations of Australia's superannuation system (known as the Cooper Review).11 Following consultations with industry stakeholders, the Government announced its decisions on key design aspects of the Stronger Super reforms in September 2011.12 Its key components are the increased use of e commerce, uniform data standards, and the use of tax file numbers as a key identifier of member accounts. The introduction of data and e-commerce standards raises potential implementation issues for small employers. Treasury, on its website, affirms that ‘smaller employers will be able to utilise the free services offered by the Medicare Australia Small Business Superannuation Clearing House to streamline their processing’. This policy development points to a potential increased demand for the SBSCH.
10. The objective of the audit was to assess the effectiveness of the implementation and administration of the Small Business Superannuation Clearing House.
11. The audit examined whether the SBSCH’s:
- program design and implementation strategy was appropriate and effective;
- administrative arrangements are effective and meet regulatory requirements;
- information and communication technology (ICT) systems are effective, provide for the secure electronic transfer of funds and protect the privacy of employers’ and employees’ information; and
- governance arrangements support operations and performance reporting.
12. The audit examined the involvement of Treasury, DHS and the ATO in the program design, implementation and subsequent operation of the SBSCH.
13. Allowing employees to choose their superannuation funds for SG contributions in 2005 created a potential compliance burden on employers. Clearing house services, which receive payment instructions and SG payments from employers and distribute these payments to the superannuation funds of employees’ choice, emerged in the private sector. The market for clearing house services is well established—these services are presently offered by a variety of entities, either alone or in conjunction with superannuation, banking or payroll services. The 2008–09 Budget included $16.1 million over three years to provide a government supported superannuation clearing house facility, designed to reduce red tape and make compliance with SG obligations easier for small businesses. The measure named the ATO as the agency which would administer the facility, using private sector providers. Subsequent changes to the delivery model for the proposed facility culminated in the establishment of a clearing house facility administered by Medicare Australia. The SBSCH began taking SG contributions from employers on 1 July 2010.
14. The SBSCH has been operating for nearly two years. The program provides a free superannuation clearing house service that is well regarded by the small businesses that use it and the superannuation funds that receive SG contributions through it, and thus meets its primary objective.
15. Treasury’s approach to designing the program and service delivery model appropriately included public consultation and took into account ministerial views. Treasury undertook a preliminary impact assessment of the legislative and competition impacts on the market at an early stage. However, in later analysis and advice to government the department did not prepare formal assessments of the potential legislative and competition impacts of the program, although it noted competition impact issues in advice provided to government. Medicare Australia successfully implemented the SBSCH and the service is well administered, although the number of employers using it is substantially lower than the level assumed for costing the Budget measure.
16. While questions of policy and budget allocation are matters for government, there is at present a substantial difference between the cost of SBSCH transactions (on the basis of funding provided to Medicare Australia) and the prices of private sector clearing house services, even allowing for the comprehensive service provided by the Commonwealth. Factors such as the private sector’s ability to bundle services and to achieve economies of scale are relevant here, as well as recognising that the cost of providing a service to employers with less than 20 employees could be higher given the smaller number of transactions per employer. However, the difference relates primarily to a combination of low take-up and higher operating costs.
17. By way of background, Treasury conducted a public consultation process in November 2008 in accordance with policy co-design principles, to inform the design of the SBSCH program. The 36 submissions Treasury received confirmed that there was a mature private sector market for providing clearing house services. In April 2009, Treasury recommended to government that the service be provided by multiple private sector providers. The then Minister for Superannuation and Corporate Law did not accept this recommendation. Treasury subsequently designed a single provider program and service delivery model considering both private and public sector options. In September 2009, it recommended that Medicare Australia administer and operate the scheme.
18. In providing advice to government concerning the program design and delivery model, Treasury was expected to follow the Office of Best Practice Regulation’s policy relating to consideration of legislative and competition impacts. In summary, agencies are required to consider the need for a Regulation Impact Statement (RIS) if a proposed legislative requirement was likely to have a significant impact on business and individuals or the economy.13 In the context of responding to the election commitment, Treasury conducted a preliminary impact assessment in December 2007 and determined that a full assessment was not required. Treasury, however, formed this view before the program delivery model had been decided, and without the benefit of the public consultation process, which provided important perspectives on an existing private sector market and the potential impacts of government regulation and funding on it.
19. Treasury had two further opportunities to formally assess any legislative and competition impacts on the existing market. Firstly, when providing advice to the Government in April 2009 on the proposed multiple private sector delivery model, and secondly when providing advice in September 2009 about the public sector delivery model. Treasury did refer to competition issues in its advice but formal assessments would have provided more comprehensive briefing to government and better informed the Government decision-making process.
20. Following the decision that Medicare Australia would implement the SBSCH, the agency had eight months to develop and deliver the SBSCH program. This was a very short timeframe in which to establish business processes, management oversight and supporting information systems. Medicare Australia implemented the service on time and within budget. Development of the ICT systems for the SBSCH followed a Systems Development Life Cycle approach14 and established a strong basis for the SBSCH systems to reliably function as intended. Overall, the implementation of the SBSCH was effective, and industry stakeholder feedback to the ANAO is complimentary of the SBSCH, with it being considered a practical solution to the provision of a clearing house function. The ongoing operations of the SBSCH are well administered. The ICT systems supporting the SBSCH operate effectively and adequately protect funds transfers and the privacy of employer and employee information. Governance arrangements are appropriate to support the program and user surveys report high levels of satisfaction with the service, and reduced compliance costs.
21. Medicare Australia received $16.1 million for the SBSCH and advised that it has used most of the funding allocated to design the system and operate the program.15 This expenditure combined with the low take-up raises issues about the cost-effectiveness of the service when compared to the budgeted cost. Medicare Australia’s costing for the measure estimated that in 2011–12 there would be around 150 000 registered employers and over 2 million employee transactions, equating to a lower cost per transaction. However, the number of employers using the scheme as at 31 May 2012 was 24 397, considerably less than estimated. Employee transaction numbers are also much lower (561 010 as opposed to the 2.7 million estimated). As a consequence, and on the basis of the funding provided to Medicare Australia, the service has been considerably more expensive per transaction than expected.
22. Another point of comparison is the difference between the cost of services provided by the public sector and the fees charged by the private sector. Variations between the business models of private sector service providers and the SBSCH, and factors such as the average number of transactions per employer, mean that some caution needs to be exercised with comparisons.16 Nevertheless, the cost per employee transaction of the SBSCH (when calculated against the funding for the service), is in the order of seven times higher than similar services being provided by the private sector. This position warrants further consideration by Treasury and advice to government, given the significant differences in the estimates on which the government decision was taken and the actual transaction volumes being achieved and related costs. It is also noteworthy that the take-up rate and the cost of the service are not reflected in performance measures or targets for the program. It would be appropriate for Treasury to expand its range of key performance indicators (KPIs) to assess the program’s performance against these factors.
23. The ANAO has made two recommendations. The first is aimed at reviewing the program’s funding arrangements and its regulatory and competition impacts. The second is aimed at improving the KPIs for the SBSCH to enhance focus on cost-effectiveness and take-up.
Program Design and Delivery (Chapter 2)
24. Following the announcement of the superannuation clearing house facility in the 2008–09 Budget, Treasury consulted publicly on how the clearing house facility should be delivered, regulated and kept within budget. It released a public discussion paper on 14 November 2008, calling for submissions by 19 December 2008. The majority of the 36 submissions received supported delivery of the clearing house through multiple private sector providers and pointed to a mature private sector clearing house market. There was strong support for SG obligations to be extinguished once payment had reached the clearing house.
25. On 3 April 2009, Treasury sought the agreement of the Minister for Superannuation and Corporate Law to a program delivery model involving contractual service agreements between the ATO and multiple commercial clearing house providers. Treasury addressed the prudential regulation risk, of clearing houses collapsing while holding SG contributions, by specifying that the providers would be required to hold an Australian Financial Services Licence. Treasury was also required to make an assessment of the need for a Regulation Impact Statement (RIS) to inform the Minister’s decision. The requirements then in force required a RIS for proposals that were likely to have a significant impact on business and individuals or the economy.17
26. In responding to the election commitment for a clearing house facility, Treasury prepared a preliminary impact assessment in December 2007, and determined that the likely impacts were such that a RIS was not required. This assessment was made at an early stage when Treasury had little direct information about the private clearing house market and when the options for a delivery approach were still being considered. Subsequent public submissions showed that there was a mature private sector clearing house capability, and that a prudential supervision risk did exist. Both of these elements, along with the fact that Treasury was requesting a decision from government on the program design and delivery model, should have triggered a formal re-assessment of legislative and competition impacts in accordance with RIS policy.
27. Treasury’s proposed service delivery model was not accepted by the Minister and Treasury began considering a new approach—contracting a single provider to provide the clearing house facility. On 9 April 2009, Treasury advised the ATO that it would be required to run a tender process to select a single provider for the clearing house service. In response, the ATO reiterated concern about the prudential regulation risk of private sector provision. On 19 June 2009, the ATO provided comments on an alternative approach: that the clearing house be government owned (an ATO function) and contracted out to a single provider.
28. Treasury began to consider a public sector provision model. In July 2009, Treasury advised the Minister that possible delivery agencies were a Government Business Enterprise and Centrelink. The ATO was not further considered as there were concerns that it did not possess the necessary technical capability. Treasury cited a greater level of financial security, with a reduced need for prudential regulatory controls, as advantages of public sector provision.
29. On 29 September 2009, Treasury recommended that the service be delivered through Medicare Australia, and be restricted to employers with less than 20 employees, in part to minimise the competition impact on the existing private sector market. The idea that the service would be provided through the public sector represented a significant change in the program design, and the prospect of competition impacts merited re-assessment of legislative and competition impacts in accordance with the Office of Best Practice Regulation’s policy.
30. In November 2009, following consideration of the revised model, the then Minister for Financial Services, Superannuation and Corporate Law announced that Medicare Australia would be the provider of the SBSCH. Later that month an exposure draft of legislative amendments to support the superannuation clearing house facility was released for public comment. Ten submissions were received, raising concerns about: the impact of a free government service on competition in the private sector market; granting a government clearing house special legal status as an ‘approved clearing house’; and flagging the need for consistent electronic data standards.
31. Treasury prepared a revised preliminary compliance cost assessment prior to the introduction of the Bill into Parliament. The Bill relating to the SBSCH was introduced into Parliament on 10 February 2010. On 15 March 2010, Treasury advised the Senate Economics Legislation Committee that it was appropriate for the clearing house service to be provided within the public sector, in view of the risk that would be created by private clearing house failure.18 The Committee noted Treasury’s view and the Bill supporting creation of the SBSCH received Royal Assent on 3 June 2010.
32. The costing and the estimations which informed the Budget measure stated that it was expected to affect around 10 per cent of small business employees in 2009–10 and 15 per cent in 2010–11.19 Subsequent sensitivity analyses and estimation documents refer to the anticipated take-up by employers as 75 576 or 10 per cent of the estimated eligible population of 755 758 in the first year.20 The estimated take-up rate informed system design, budget and the staffing resources required.
Implementation of the SBSCH (Chapter 3)
33. From the time it was announced as the provider of the SBSCH, Medicare Australia had about eight months to implement the SBSCH on 1 July 2010. This involved establishing a business process for an online interface, electronic payment systems, management oversight, and stakeholder engagement. Medicare Australia adopted a project management approach to guide the implementation of the SBSCH. This approach incorporated:
- project planning documents that included a project schedule, risk management plan, budget, governance arrangements and a separate ICT implementation plan;
- project oversight provided by a steering committee;
- a risk management plan that identified key risks (in a risk register) and mitigation strategies;
- stakeholder engagement through two working groups with membership from superannuation funds, employer groups, Treasury and the ATO;
- monthly ‘traffic light’ project status reports that tracked the progress of project deliverables; and
- a project closure report that included a review of the risk register, noting that risks were either closed or transferred to an operational risk management plan.
34. ICT systems are fundamental to the effective operation of the SBSCH. ANAO analysis of Medicare Australia’s ICT governance processes concluded that the SBSCH implementation adhered to project governance structures: standard ICT project management principles were documented and followed; third party work was documented and approved; and ICT testing strategies and change management controls were applied.
35. The program was delivered on time and under budget and went live on 1 July 2010. All project deliverables were complete, and Medicare Australia’s Internal Audit conducted a post-implementation review of the project. External stakeholder feedback received by the ANAO was also complimentary of Medicare Australia’s implementation of the SBSCH, particularly given the very short timeframe; and complimentary of the SBSCH itself, as an effective system for processing payments. Participants of the working groups interviewed by the ANAO agreed that Medicare Australia’s stakeholder management during the implementation was good.
Ongoing Management of the SBSCH (Chapter 4)
36. The SBSCH is heavily reliant on ICT support to give employers online access to register for the SBSCH and to make payments, and for electronic payment distribution to superannuation funds. The ICT solution for the SBSCH utilises a web based application, two servers (one as a back-up) and a database. ANAO examination of the SBSCH ICT system showed:
- comprehensive end-to-end process mapping and systems configuration documentation;
- compliance with the Protective Security Policy Framework and applicable Information Security Manual requirements21;
- a sound security framework, information transfer security controls, and access management controls. Security logging and user access logging for the database and the SBSCH application are in place; and
- data transfer mechanisms which operate effectively.
37. Some manual processes are used by the SBSCH for activities such as returns of payments22, checking compliance with the less than 20 employee limit, and a process called Employer Spotchecks that verifies if employers have registered with the SBSCH (rather than someone else using that company’s Australian Business Number). These work effectively, although the recording of Employer Spotcheck results could be improved.
38. Internal service standards for the SBSCH have been consistently exceeded in all three areas measured: time taken to answer telephone calls; payment processing times; and customer feedback acknowledgment and resolution23. Medicare Australia conducts customer satisfaction surveys of SBSCH users. Results have been consistently positive, with 98 per cent of respondents either satisfied or extremely satisfied with the SBSCH service, and 96 per cent of respondents agreeing or strongly agreeing that the SBSCH has reduced the amount of time taken to make their SG payments. In addition, complaint numbers are low. For the period April 2010 to May 2012, the SBSCH received only 66 complaints, the majority relating to website login or password issues.
39. The level of take-up by employers is not a key performance indicator for the SBSCH, nor has a target been set. The assumption used for costing purposes was a take-up rate of employers registering in the first year of 75 576 (10 per cent of a total population of 755 758). A comparison of the actual number of employer registrations against the estimate shows that just 4 781 employers registered in 2010–11 (0.6 per cent of the population), and as of 31 May 2012 there were only 24 397 employers registered (just over 3 per cent of the population). The original costing estimated that 144 854 employers would have taken up the scheme by 31 May 2012.
40. In January 2010, the ATO’s Revenue Analysis Branch estimated the base for the take-up rate to be much lower than that used in the original costing. The ATO considered employers with less than five employees would be unlikely to take advantage of the measure—reducing the potential population to 209 000. Medicare Australia’s market research indicated that 67 per cent of respondents having between one to four employees considered themselves unlikely to use the SBSCH. This analysis suggests that the original estimates for take-up of the scheme were high, and that the current level of take-up may reflect actual levels of demand.
41. Between August and December 2011, Medicare Australia conducted a mail-out to promote take-up. The ATO held the address details for targeted employers, but due to information privacy principles could not transfer these to Medicare Australia. The ATO assisted Medicare Australia on a fee for service basis. Some 683 000 letters were sent out and the actual take up was approximately 1.9 per cent.24 Registrations increased from 5414 total registrations in the 14 months up to July 2011 to 16 952 registrations as at 31 November 2011, the final month of the four-month mail-out. On the basis of the success in increasing take-up levels, Medicare Australia and the ATO are planning another mail-out in mid-2012.
42. To establish and operate the SBSCH, Medicare Australia received $16.1 million over the three years 2009–10 to 2011–12. Medicare Australia advised that it had allocated $15.4 million (of the $16.1 million appropriation to the SBSCH) for expenditure over the three years (2009–10, 2010–11 and 2011 12), notwithstanding the lower than anticipated take-up levels by employers, and lower consequent transaction volumes.
43. As take-up has been low the full cost of providing the free service (electronic data transfers, information and assistance to customers) is relatively high when compared to fees for similar services in the private sector25. After one year of operation (as at 30 June 2011), the cost per employee transaction was $62.26 As the number of transactions processed has increased the cost per employee transaction has decreased but in May 2012 was still $20.66.27 As at 31 May 2012, on average each employer had lodged 3.5 SG contribution payments (24 397 employers made 86 522 employer lodgements) and each lodgement was on behalf of on average 6.5 employees (24 397 employers made payments on behalf of 159 037 employees).
44. Some caution needs to be exercised when making comparisons between the fees charged by the private sector and the costs of providing the full SBSCH service. However, there is a substantial difference between them. For the cost per employee transaction to reduce to levels similar to the fees charged by the private sector, take-up of the SBSCH would need to increase by around 120 000 employers. The objectives of the SBSCH are to provide a free service that supports small businesses by reducing their compliance costs. The SBSCH achieves these objectives for the employers using the service, but the cost effectiveness of the service should be monitored and optimised.
Governance Arrangements Supporting the SBSCH (Chapter 5)
45. There is a Service Arrangement between Treasury and Medicare Australia that sets out each department’s roles and responsibilities, and SBSCH reporting requirements. Treasury is responsible for all policy matters, while Medicare Australia is responsible for all service delivery matters. There is currently no formal agreement in relation to the SBSCH between Medicare Australia and the ATO, notwithstanding the ongoing engagement between the two agencies. A high-level Memorandum of Understanding is currently being negotiated and is expected to be finalised in late 2012.
46. Medicare Australia’s corporate governance, risk management processes and reporting for the SBSCH are appropriate, with oversight by the Superannuation Programs Steering Committee. The SBSCH has been closely managed since it went live, and the Superannuation Programs Steering Committee discussed in June 2010 the need to establish target numbers for registrations, but no target was set. Within Medicare Australia, the key means of monitoring and reporting performance of the SBSCH is a monthly status report, provided to the Superannuation Programs Steering Committee. The report measures: outcomes against internal operational service standards28; transactions such as numbers of registrations, enquiries and payments; and the feedback received from customer satisfaction surveys. These measures appropriately support monitoring of the program’s operational achievements.
47. The Service Arrangement between Treasury and Medicare Australia specifies that Treasury is responsible for assessing the SBSCH’s program performance. Broadly, the objectives of the SBSCH are to: provide a free service; reduce the ‘red tape’ and assist employers with meeting their Superannuation Choice obligations; and promote standardised information sharing and e-commerce. In measuring achievement against these objectives, there are no comparative assessments made between the SBSCH and private sector provision. There are no KPIs that address two key concerns of delivering a service—the cost-effectiveness and whether the service is meeting the needs of the target market (that is, the take-up rate).
48. The Service Arrangement specifies three KPIs in relation to SBSCH reporting.29 To meet the KPI on reporting, Medicare Australia provides a copy of its monthly status report to Treasury and the Minister for Financial Services and Superannuation. This data does allow the measurement of take-up and cost-effectiveness. There would be benefit in Treasury conducting a review of the program’s KPIs to include an appropriate focus on cost-effectiveness and take-up levels.
49. The agencies’ responses to each recommendation are included in the body of the report, directly following each recommendation. Agencies’ general comments on the audit report are below.
Department of the Treasury
Treasury notes the ANAO’s findings that the SBSCH provides a free superannuation clearing house service that is well administered and well regarded by the businesses that use it and the superannuation funds that receive contributions through it, meeting the primary objective of the program.
Treasury also notes that the clearing house program has been operating for less than two years and that, during that period, take up of the service has increased as a result of awareness raising initiatives undertaken by the Department of Human Services. Treasury expects that pending Government reforms in the superannuation area will have a further positive impact on take up of the program in coming years, leading to a reduction in the average cost of delivering the service.
Department of Human Services
The Department of Human Services (the department) welcomes the Australian National Audit Office findings that the design, development, and implementation of the Small Business Superannuation Clearing House (the Clearing House) was successful, that it continues to be well administered and that it consistently exceeds service standards. The audit acknowledges the excellent stakeholder relationship established with the Treasury during the implementation of the program and that the program is highly regarded by industry stakeholders and users of the system.
The department agrees that caution should be exercised when making comparisons between fees charged by the private sector and the current costs per transaction for the Clearing House. The Clearing House is currently in its first two years of operation and has experienced increased take-up by small businesses following implementation of an awareness strategy. This increase is expected to continue and will significantly reduce the cost per transaction as more small businesses use the service.
The department agrees with both recommendations and will work with Treasury to implement them.
Australian Taxation Office
The ATO welcomes this review. We note the two recommendations directed to The Treasury and the Department of Human Services.
 On 1 July 2013 this will change, as per the Superannuation Guarantee (Administration) Amendments Act 2012, which received Royal Assent on 29 March 2012. The contribution rate will increase from nine per cent to 12 per cent between 1 July 2013 and 1 July 2019. The age limit of 69 will be removed from 1 July 2013, and employers will be required to contribute for employees aged 70 and older.
 Australian Taxation Office, Guide to Superannuation for Individuals—Overview, 2011, <http://www.ato.gov.au/content/00250233.htm?headline=SuperEssentials&segment=Individuals> [Accessed 24 April 2012].
 The amendments were introduced in the Superannuation Laws Amendment (Choice of Superannuation Funds) Act 2004, with a commencement date of 1 July 2005.
 Australian Labor Party Media Statement, Real Action to Cut Red Tape, 10 May 2007, <http://pandora.nla.gov.au/pan/22093/20071005-1425/www.alp.org.au/media/0507/msloosbicsuif100f0b6.html> [Accessed 26 April 2012].
 Commonwealth of Australia, Budget Paper 2, 2008–09, p. 290.
 As the program’s implementation progressed, take-up assumptions used by Medicare Australia in its costing calculations (discussed in Chapter 2) changed to 10 per cent of eligible small business employers in each of the three years. The small business population used by Medicare Australia for its costing calculations was 755 758.
 Minister for Financial Services, Superannuation and Corporate Law, the Hon. Chris Bowen, 6 November 2009, Joint Media Release No.035, Cutting Red Tape
for Small Business — Superannuation Clearing House Service.
<http://mfsscl.treasurer.gov.au/DisplayDocs.aspx?pageID=003&doc=../content/pressreleases/2009/035.htm&min=ceba> [Accessed 19 April 2012].
 Electronic commerce, commonly known as e-commerce, is the buying and selling of products or services over electronic systems such as the Internet. E-commerce uses technologies such as electronic funds transfer and online transaction processing.
 On 1 July 2011, the Human Services Legislation Amendment Act 2011 integrated the services of Medicare Australia and Centrelink into the Department of Human Services.
 Information supplied by Medicare Australia.
 Minister for Financial Services and Superannuation, the Hon. Bill Shorten, 16 December 2010, Media Release No.024, Government Super Reforms Mean More Money in Retirement, <http://ministers.treasury.gov.au/DisplayDocs.aspx?doc=pressreleases/2010/024.htm&pageID=003&min=brs&Year=&DocType=> [Accessed 19 April 2012].
 Minister for Financial Services and Superannuation, the Hon. Bill Shorten, 21 September
2011, Media Release No.131, A Better Deal for Superfund Members, <http://ministers.treasury.gov.au/DisplayDocs.aspx?doc=pressreleases/2011/131.htm&pageID=003&min=brs&Year=&DocType=> [Accessed 19 April 2012].
 Australian Government, Department of Finance and Deregulation, Changes to the Australian Government’s Regulation Impact Statement requirements,
[Accessed 29 February 2012].
 A Systems Development Life Cycle is a model used in project management that describes the stages involved in an information system development project, from an initial feasibility study through to maintenance of the completed application.
 The 2009–10 funding of $4 million was used in designing and implementing the information and communications technology system and associated staff costs. Subsequent funding of $12.1 million for 2010–11 and 2011–12 has been used largely for operating costs and minor systems enhancements.
 Since the inception of the SBSCH up until 31 May 2012, on average employers have made 3.5 Superannuation Guarantee contribution payments on behalf of 6.5 employees per payment.
 Australian Government, Department of Finance and Deregulation, Changes to
the Australian Government’s Regulation Impact Statement requirements,
[Accessed 29 February 2012].
 Commonwealth of Australia, The Senate, Economics Legislation Committee, Tax Laws
Amendment (2010 Measures No 1) Bill 2010 [Provisions], March 2010, <http://www.aph.gov.au/Parliamentary_Business/Committees/Senate_Committees?url=economics_ctte/tlab_1_2010/report/index.htm> [Accessed 19 April 2012].
 Increasing by an additional 10 per cent of the eligible population in each of the next two years for a total take-up of 30 per cent of the eligible population after three years.
 The Australian Government’s Protective Security Policy Framework requires government agencies to implement policies and procedures for the security classification and protective control of information assets (electronic and paper-based). The underlying procedures about ICT security are provided in the Information Security Manual.
 Returns occur when contributions are paid to funds, but cannot be allocated for reasons such as member identification numbers being incorrect.
 The service standards are: 90 per cent of telephone calls answered within 30 seconds; 96 per cent of correctly made payments are processed within two working days; and 95 per cent of customer feedback is acknowledged and resolved within 10 days.
 The actual take-up cannot be calculated exactly, as registrations may have occurred from employers who were not included in the mail-out.
 Private sector costs can range from $0.40 to $3.00 per employee transaction. These costs can be in addition to registration fees, or provided for a lesser fee when combined with additional services provided by private clearing houses (such as bookkeeping services), and can also reduce with a greater number of transactions. However, employers’ SG obligations are not met when they are paid to private sector clearing houses, whereas their SG obligations are fulfilled once payments are received by the SBSCH.
 From 1 July 2010 to 30 June 2011 there were 96 600 transactions on behalf of employees, and the cost of the program had been $6 million (excluding the $4 million implementation costs in 2009–10).
 The calculation is based on the pro rata appropriation of $11.6 million for the period 1 July 2010 to 31 May 2012, divided by the 561 010 payments made for employees in the same period.
 Each of these measures has a target against which performance is compared, for example, 98 per cent of payments are processed within two working days.
 The three KPIs are: provide management information reports (including a monthly report showing the number of registrations, payments and amounts); meet reasonable customer expectations; and move employees’ money through the clearing house in a reasonable time.