SuperStream represents the centrepiece of technological change for the superannuation industry but it will require many businesses to embrace technological change far more quickly. Graham Sammells explains why.
The SuperStream package of reforms will potentially be the largest Information Technology (IT) change that Australian business has experienced since the introduction of the Goods and Services Tax in 2000.
With IT leading the charge to improve the superannuation industry’s efficiencies, new electronic data and payment standards for superannuation contributions will start being implemented from July 2014.
In its research into the ‘Business Use of Technology 2011 – 2012’, the Australian Bureau of Statistics (ABS) found a significant percentage of businesses are still in the practice of writing cheques and submitting paper forms – while 10 per cent have no internet connection at all.
This latest issue of the research, ‘Characteristics of IT and Internet in Australian Business’ (22 August, 2013), confirmed there are 777,000 businesses in Australia, the good news being that nine out of 10 businesses reported having internet access as at 30 June 2012. But, that means roughly 70,000 businesses have no internet access at all.
In order to comply with the new superannuation data and payment standards, these businesses will have to either ‘get online’, or work with a service provider to comply on their behalf.
It is encouraging to note that more than 80 per cent of all businesses currently use the internet to make payments of some sort.
However, less than 30 per cent of businesses use the internet for information sharing or data exchange with other organisations.
This is a concern, as the SuperStream requirements call for employers to send all superannuation information via the internet to the superannuation funds.
The study outlined approximately 65 per cent of businesses use IT systems for HR/payroll processing to some extent. The flip side is that 35 per cent (270,000 businesses) must either outsource the payroll function, or else do not use any particular system.
The majority of this 35 per cent are small businesses with less than 20 staff. In order to meet the SuperStream requirements, they will have to either outsource the process for a service provider to submit contributions in the new standards, or else ‘get online’ to meet their obligations.
Looking at electronic lodgements with government organisations, only 63 per cent of businesses currently lodge payments to the Government electronically.
Therefore, about 40 per cent of medium/large businesses do not use an accountant or tax agent, do not use the government online forms, but rather still use paper forms.
About the same number must also still use cheques for payments to Government. I would suggest many of these businesses currently use paper and cheques for their superannuation contributions too.
These businesses will have to either outsource the superannuation process for a service provider to submit contributions in the new standard, or else ‘get online’ to meet their obligations.
This ‘get online’ theme keeps cropping up and it will become harder and harder to avoid as the Government and regulators move towards a 100 per cent electronic communications interface with business.
There may be many reasons why businesses do not embrace all that the internet has to offer. Possibly some may “prefer to maintain the current business model” – where costs and processes are understood. Many businesses just don’t like change.
Furthermore in the latest Sensis eBusiness Report (September 2013) regarding the percentage of SMEs with computers but no internet connection, a large proportion (16 per cent) stated they had no need for the internet.
Other reasons SMEs gave for not connecting to the internet despite owning a computer included concerns over safety and hackers (13 per cent), not trusting their staff with it (10 per cent), views that their business was not big enough or that they were concerned over viruses.
There is obviously some way to go with the SME sector and other businesses, as this resistance to change remains one of the biggest challenges for all employers, super funds and service providers to deal with over the next few years as they all grapple with the new SuperStream requirements.
With the recent change of Government, if we take a look at the Coalition’s policy for e-Government and the digital economy, we can highlight two major themes.
There is a concerted effort to engage with business online and provide greater transparency and access to public data. With these statistics from the ABS and some of the reasons for not connecting to the internet outlined above, we can see what this challenge truly looks like.
The second theme is enabling infrastructure including online identities, digital mail and payment systems. The concept is sound, we just need to ensure that we don’t stop at the digital mailbox initiative and instead we see efficient business-to-government processes.
This would include electronic Tax File Number (TFN) declaration for new staff, employer TFN validation services, superannuation-choice forms as well as the existing requirements for tax that currently are delivered through the ATO business portal. SR
Graham Sammells is CEO of The IQ Group (IQ), a specialist consulting firm with expertise in operations, risk and technology. He is also the chair of ASFA’s Electronic-Commerce Policy Sub-Committee and is a member of the SuperStream Advisory Council.
