A powerful figure in Australia’s $4.4 trillion superannuation sector says major players in the industry are working on a reform that will see Aussies get paid super contributions for unpaid care.
Jo Kowalczyk, CEO of Women in Super, hinted at the changes in a panel discussion at a super forum in Sydney on Thursday, saying valuing unpaid care was the next major reform the industry was looking at.
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“As we all know, superannuation in this system is designed as a percentage of your income, which means your retirement outcomes are entirely linked to the paid work that you do across your life,” she said.
“So for anyone who steps back, whether that’s to parent or to look after a family member, in that process foregoes income. There’s no mechanism within our current system that’s able to recognise that contribution of that work.
“And it’s not that carers have been excluded because of some oversight; it’s actually a structural gap within the design of the system itself. And until we close that gap, no amount of tinkering around that is going to mean that women are going to retire into security and safety. So the idea of some kind of carers credit has been talked about in theory or in concept for a number of years.
“But it’s actually taken the sector the better part of three decades to actually name this as a critical issue. So no one is under any illusion that we’re going to fix it quickly. But I’m really pleased to say at Women in Super we’re not just sitting around admiring the problem; we’re doing the hard work to try and solve it.”
‘Carer credits’ being looked at
She said Women in Super, a non-profit advocacy and networking organisation that works to improve retirement outcomes for women and eliminate gender-based inequality in the super system, has been working with four of its member funds and some “very clever” academics at the University of Sydney and the University of New South Wales (UNSW) to develop a model of “carer credits”.
“And really what we’re looking at is how do we translate the economic value of unpaid care into a retirement savings contribution,” she said. “So that’s very exciting to watch this space.”
Speaking to news.com.au after the panel discussion, which the Minister for Finance Katy Gallagher took part in, she said she couldn’t go into detail about how the “carer credit” system would work as the details were still being ironed out.
However, she said the industry bodies and academics looking at the changes said there had been successful examples of similar systems working overseas.
In Germany, for example, the statutory pension scheme explicitly credits parents for child-rearing. In the UK, the government provides National Insurance credits for individuals who take time out of paid work to care for others. Sweden and France have similar systems.
However, those overseas examples function within public, state-run pension schemes funded by social security taxes.
Because Australia relies on a privatised superannuation system, Women in Super and its partner academics face the unique task of converting unpaid care into direct cash contributions or capital injections into private investment accounts without placing an unfair burden on employers or individual funds.
Ms Kowalczyk said the measure would go some way to tackling the superannuation gap between Aussie men and women.
Australian women face a substantial retirement deficit, reaching ages 60–64 with a median superannuation balance of roughly $163,000 compared to $220,000 for men — a gap of nearly $57,000 by median measures and over $80,000 on average.
This shortfall is driven by lower lifetime earnings from the gender pay gap, higher participation in part-time work, and extended career breaks taken for unpaid caregiving responsibilities.
Ms Kowalczyk said the issue of Aussies losing out on super due to unpaid care was an issue that mainly affected women but that the effect is also being felt on Australia as a whole.
She said issues around pay equity and superannuation were costing the Australian economy a staggering $1.26 billion a week through lost productivity.
“There is an importance we see in needing to reframe the way that employers look at employees’ caring responsibilities and shifting that from an inconvenience that needs to be worked around into a recognition that care is actually what makes paid economy work,” she said. “It’s that unpaid care that is the foundation that allows people to participate in the workforce. So when that shift happens and we get the policy in place around that, then we can see that really shifting the dial for the carers in this country who we know predominantly are women.”
Tax office, accountants being ‘used as a weapon’
Beyond gaps in retirement savings, the panel heard disturbing evidence on how Australia’s tax system is actively being weaponised against women.
Professor Ann Kayis-Kumar, Founding Director of the UNSW Tax and Business Advisory Clinic, said assumptions of “good faith” are being exploited by abusive partners to saddle victim-survivors with tax debts.
The clinic she set up in 2019 works to help victims, survivors of intimate partner financial abuse, and she said they had noticed a disturbing trend.
“The majority of the female clients that we help at the clinic who come to us with a tax problem are experiencing intimate partner financial abuse,” she said. “And so they’ll have, for example, $20,000 in tax debts put in their name by an abuse-informed partner because they’ve misused a family business.
“At the moment, legal systems assume that if the victim’s name is on the business or a document, then there’s good faith in assuming that she was involved.”
She said perpetrators exploit structural vulnerabilities, meaning accountants and lawyers are often unwitting “auxiliaries” in financial abuse.
“Work that my team and I have done has identified that if you have two criteria, then that means that the opportunity for perpetrators is rife,” she said. “One is the ability to have joint access to assets, and the other element is the ability to have joint creation of liabilities.”
She said that while banking reforms have progressed, led by researchers like Jan Breckenridge, the tax framework remains heavily exposed.
“When it comes to tax, what was surprising was that as long as you have a family business where there is opportunity for joint use of a liability, and in turn the creation of debts through that mechanism, then unfortunately we found that was one of the most common ways that perpetrators can create tax debts, saddle the victim-survivor with them, and then these systems that assume good faith… have the tax office chase the victim-survivor,” she said.
“So perpetrators are able to mobilise and weaponise professions and government agencies to deploy them effectively as a further tactic of their abuse.”
Training accountants and reforming the ATO
To counter this, the UNSW Clinic co-designed the ATO’s Vulnerability Framework released last October to train frontline tax officers.
“It’s terrific to see that they have already started operationalising it before our paper recommending it has been published,” Prof Kayis-Kumar said, stressing that financial abuse is widespread.
“From ABS data… 16 per cent of Australian women are experiencing intimate partner financial abuse. That is an unacceptably high number. So one in eight women who have a touchpoint with your business will be experiencing intimate partner financial abuse.”
Because accounting is one of the top three professions mobilised by perpetrators, the clinic has already trained over 7000 tax and accounting professionals to spot red flags, such as controlling access to money or a lack of transparency in joint accounts.
“Raising awareness is a really key step. Frontline support, being front and forward, is a really key step,” Prof Kayis-Kumar said.
“And these are manageable bite sizes to get us to collectively as a whole respond to this really insidious problem.”