Submission: Australia's Future Tax System (Retirement Income System) (2009)

Australia's Future Tax System (Retirement Income System)

Australian Human Rights Commission Submission to the Review Panel on Australia's Future Tax System

27 February 2009

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Table of Contents

• 1 Introduction
• 2 Summary
• 3 Recommendations
  • 3.1 Remove Barriers to Women’s Workforce Participation
  • 3.2 Increase life-time earnings for women by reducing the gender pay gap
  • 3.3 Extend initiatives to increase superannuation contributions for those not in paid work due to caring responsibilities and low income earners
  • 3.4 Ensure the Age Pension fulfils Australia’s international human rights obligations for women and men to equally enjoy a right to social security
  • 3.5 Regularly monitor and report on the gender impact of Federal budgets and reforms
  • 3.6 Introduce measures to achieve equality in women’s representation in superannuation fund governance positions
  • 3.7 Independent monitoring and reporting on Australia’s progress towards achieving substantive gender equality
  • 3.8 Review the superannuation exemptions in the Sex Discrimination Act 1984 (Cth)
• 4 Australia’s international human rights obligations
  • 4.1 Convention on the Elimination of all Forms of Discrimination Against Women (CEDAW)
  • 4.2 International Covenant on Economic, Social and Cultural Rights (ICESCR)
    • (a) The human right to social security
    • (b) Relationship between the right to social security and the right to an adequate standard of living
    • (c) Equal enjoyment of the right to social security for women and men
• 5 The extent of the gender gap in retirement savings and retirement income in Australia
  • 5.1 Average superannuation account balances and payouts
  • 5.2 Distribution of superannuation
  • 5.3 Income and assets during retirement
  • 5.4 The impact of divorce and separation on financial security in retirement
• 6 The implications of the gender gap in retirement savings
• 7 The reasons for the gender gap in retirement savings and retirement income
  • 7.1 Lower earnings over the lifetime
  • 7.2 Disrupted and lower rates of labour market participation
    • (a) Ongoing discrimination
    • (b) Lack of flexible work arrangements and paid parental leave
    • (c) Lack of access to quality, affordable child care and other care facilities
    • (d) Tax arrangements that provide a disincentive to women’s workforce participation
  • 7.3 Specific barriers to labour force participation for older women
    • (a) Discrimination
    • (b) Caring responsibilities
    • (c) Access to education and training
  • 7.4 The impact of women’s past exclusion from superannuation schemes
• 8 Solutions for increasing women’s financial security in retirement
  • 8.1 Removing barriers to women’s labour market participation
    • (a) Extend legal protection from discrimination on the grounds family and carer responsibilities
    • (b) Introduce a positive duty to reasonably accommodate family and carer responsibilities
    • (c) Introduce a national scheme of paid leave for parents
    • (d) Remove tax disincentives to women’s labour market participation.
  • 8.2 Increasing life-time earnings for women by reducing the gender pay gap
  • 8.3 Extending initiatives to increase superannuation contributions for those not in paid work due to caring responsibilities and low income earners
    • (a) Superannuation for those not in paid work due to caring responsibilities
    • (b) Increasing superannuation savings for low income earners
  • 8.4 Ensuring the Age Pension fulfils Australia’s international human rights obligations for women and men to equally enjoy a right to social security
    • (a) Objectives of the Age Pension
    • (b) Single rate of the Age Pension
    • (c) Monitoring and tracking of poverty
  • 8.5 Regular monitoring and reporting on the gender impact of Federal budgets and reforms
  • 8.6 Increasing the representation of women in superannuation fund governance positions
  • 8.7 Independent monitoring and reporting on Australia’s progress towards achieving substantive gender equality
  • 8.8 Reviewing the superannuation exemptions in the Sex Discrimination Act 1984 (Cth)

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1 Introduction

 

1. The Australian Human Rights Commission (‘the Commission’)^[1] makes this submission to the Review Panel on Australia’s future tax system (‘the Review’). The submission specifically addresses Australia’s retirement income system.

2. The Commission is Australia’s national human rights institution.^[2]

3. The Commission administers the Sex Discrimination Act 1984 (Cth) (‘SDA’). The SDA makes unlawful discrimination on the grounds of sex, marital status, pregnancy or potential pregnancy in many areas of public life including employment, education, and the provision of goods, services or facilities. The SDA makes unlawful discrimination on the ground of family responsibilities only in dismissal from employment.

4. The SDA also aims to promote recognition and acceptance within the community of the principle of the equality of men and women.^[3]

5. The Commission has examined inequality between women and men with respect to retirement income and labour market participation in a variety of reports and submissions. It has also undertaken community consultation regarding issues relevant to the Review, most recently to inform the Report, It’s About Time: Women, Men, Work and Family (2007) and the Listening Tour Community Report (2008). The Commission draws on its previous consultation and policy work in making this submission.

6. However, due to the timeframe of the Review, the Commission has not had the capacity to undertake detailed community consultation with respect to the Terms of Reference of this specific Review.

7. This submission will focus on the following areas:

   • Australia’s international human rights obligations as they relate to Australia’s retirement income system

   • the nature and extent of Australia’s gender gap in retirement savings and retirement income

   • the implications of Australia’s gender gap in retirement savings and retirement income

   • the reasons for the gender gap in retirement savings and retirement income

   • solutions for increasing women’s financial security in retirement.

2 Summary

8. The Commission welcomes the review of Australia’s retirement income system.

9. There has been a growing global recognition of the role of retirement income systems in maintaining national economic stability and financial security across the lifecycle.^[4] As such, Australia’s retirement income system is a vital element of the nation’s economic and social policy framework.

10. Over the last two decades, there has been a strong public policy focus on superannuation as a means to provide income during retirement and reduce reliance on the Age Pension.

11. However, the linking of the current system of compulsory savings enforced through the superannuation guarantee (‘the SG’) exclusively to engagement in paid work disadvantages women and other groups with marginal labour force attachment.

12. Women are more likely to have broken paid work patterns due to caring responsibilities and have lower life-time earnings due to pay inequity. This means that not only do women generally have lower levels of superannuation coverage over the lifetime, but when they do engage in paid work, they accumulate lower amounts of superannuation.

13. As a result, there is a significant disparity between the retirement savings and retirement income of men and women. Current figures show that women’s superannuation balances are less than half of those of men.^[5] This stark figure is a clear marker of gender inequality in Australia.

14. With women generally retiring earlier and living longer than men, there are a number of serious implications stemming from the gender inequality in retirement savings. Many women, after a life spent in unpaid caring work, face prospects of financial insecurity and poverty in retirement, often solely relying on the Age Pension. Around 73% of those on the single rate of the Age Pension are women.^[6]

15. During her national Listening Tour, the Sex Discrimination Commissioner consistently heard deep concerns from women about financial security in retirement and the adequacy of the Age Pension. Reducing the gender gap in retirement savings to increase financial security across the lifecycle is a key priority for the Sex Discrimination Commissioner as part of her Plan of Action Towards Gender Equality.^[7]

16. The Commission considers that Australia’s retirement income system must be underpinned by the principles of equality and fairness. To fulfill Australia’s international human rights obligations, particularly under the International Covenant on Economic, Social and Cultural Rights (ICESCR),^[8] at a minimum, the retirement income system as a type of social security,^[9] should protect individuals from poverty and provide for an adequate standard of living.^[10] The system should ensure that all individuals are able to live with dignity and respect over their lifecycle. As required by ICESCR and also the Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW), this outcome should be achieved without discrimination between women and men.^[11]

17. The current retirement income system needs urgent attention to redress the disadvantage experienced by women due to its link to paid work. Additionally, the Review should consider how the system can recognise the value of unpaid work to the nation’s economy, work such as caring for family members, the large majority of which continues to be carried out by women.

18. The Commission urges the Australian Government to adopt women’s financial security in retirement as a national policy priority. Economic independence for women across the lifecycle is critical to achieving substantive gender equality and economic and social security for all.

19. The Commission recommends strategies in the following areas to increase women’s economic security in retirement:

    • removing barriers to labour market participation for women and those with caring responsibilities

    • increasing life-time earnings for women by reducing the gender pay gap

    • extending initiatives to increase superannuation contributions for low income earners and those on welfare payments

    • ensuring the Age Pension protects individuals from poverty and fulfils Australia’s international human rights obligations for women and men to equally enjoy a right to an adequate standard of living,^[12] and to social security^[13]

    • introducing measures to achieve equality in women’s representation in superannuation fund governance positions

    • regular monitoring and reporting on the gender impact of Federal budgets and reforms

    • independent monitoring and reporting on Australia’s progress towards achieving substantive gender equality

    • reviewing the superannuation exemptions in the Sex Discrimination Act 1984 (Cth).

3 Recommendations

3.1 Remove Barriers to Women’s Workforce Participation

Recommendation 1: Extend family and carer responsibilities protection under the Sex Discrimination Act 1984 (Cth)

Implement recommendation 13 of the Standing Committee on Legal and Constitutional Affairs’ report on the Effectiveness of the Sex Discrimination Act 1984 in eliminating discrimination and promoting gender equality:

The committee recommends that the prohibition on discrimination on the grounds of family responsibilities under the Act be broadened to include indirect discrimination and discrimination in all areas of employment.^[14]

Recommendation 2: Positive duty to reasonably accommodate the needs of workers who are pregnant and/or have family or carer responsibilities

Implement recommendation 14 of the Standing Committee on Legal and Constitutional Affairs’ report on the Effectiveness of the Sex Discrimination Act 1984 in eliminating discrimination and promoting gender equality:

The Committee recommends that the Act be amended to impose a positive duty on employers to reasonably accommodate requests by employees for flexible working arrangements, to accommodate family or carer responsibilities, modelled on section 14A of the Equal Opportunity Act 1995 (VIC).^[15]

Recommendation 3: Strengthen the right to request flexible work arrangements National Employment Standard

To strengthen the right to request flexible work arrangements National Employment Standard the Commission recommends the following:

• • qualification requirements that restrict the categories of employees who can make a request for flexible working arrangements should be removed.
  • the right to request flexible working arrangements should be extended to all forms of family and caring responsibilities.
  • the right to request flexible working arrangements be extended to employees with a disability.
  • same rights of redress applicable to the other nine National Employment Standards should be extended to the unreasonable refusal of a request for flexible work arrangements.
  • the right to request should be accompanied by an education campaign that includes clear information that employees may have access to the provisions of the Sex Discrimination Act 1984 (Cth) (and the Disability Discrimination Act) where flexible arrangements are denied.^[16]

Recommendation 4: Introduce a national scheme of paid leave for parents

The Australian Government should adopt the Productivity Commission’s proposed model for paid parental leave as a matter of urgency. The scheme should include compulsory additional superannuation payments.

Recommendation 5: Modify Family Tax Benefit Part B

Family Tax Benefit Part B should be modified to support choice within couple families around the sharing of paid work and caring responsibilities.

3.2 Increase life-time earnings for women by reducing the gender pay gap

Recommendation 6: Improve data collection and monitoring of the gender pay gap

The Australian Government should revisit previous recommendations made by the Commission in relation to data collection and monitoring of women’s pay and employment conditions in order to:

• • address gaps in data collection by resourcing the Australian Bureau of Statistics to collect and publish regular gender disaggregated data in areas of need identified by Women in Economic and Social Research^[17]
  • fund the Department of Education, Employment and Workplace Relations to conduct an annual national workplace relations survey to monitor gender differences in changes to pay and conditions and
  • establish a comprehensive set of indicators for measuring achievement towards gender equality in this area over time, either independently or as part of a broader set of indicators and monitoring to be developed by the Commission, subject to recommended legislative change to the SDA and appropriate, tied funding.

Recommendation 7: Strengthen legal and institutional arrangements to reduce the gender pay gap

The Australian Government should consider the range of alternative approaches for achieving pay equity as previously recommended by the Commission, including workplace audit processes, monitoring and enforcement processes.

Possible options include:

• setting up a specialist unit in the new wage setting body of Fair Work Australia to develop and monitor pay equity mechanisms

• requiring Fair Work Australia to undertake investigations focused on undervaluation and comparative worth in female dominated occupations and industries

• amending legislation to require pay equity audits and action plans to be carried out at the workplace level

• introducing the ability for the Equal Opportunity in the Workplace Agency and/or the Commission to receive gender equality action plans, from bodies other than employers currently covered by the Equal Opportunity for Women in the Workplace Act 1999 (Cth) (‘EOWW Act’), including specific plans on pay equity

• amending the EOWW Act or the SDA to provide for an auditing function for gender equality action plans which is properly resourced

• inserting into the SDA the ability to adopt legally-binding standards

• introducing specialised pay equity legislation.

3.3 Extend initiatives to increase superannuation contributions for those not in paid work due to caring responsibilities and low income earners

Recommendation 8: Provide superannuation for those not in paid work due to caring responsibilities

The Australian Government should make direct superannuation contributions for those who are not in the paid workforce because of caring responsibilities. These contributions should be made at the same level as the SG in addition to existing Centrelink income support.

This should include those eligible for the Carer Payment, Parenting Payment or in receipt of the Carer allowance in addition to other Government income support payment for people of working age.

The Australian Government should also extend the Superannuation Co-contribution Scheme to these groups.

Recommendation 9: Investigate establishing a superannuation scheme for carers

The Australian Government should investigate establishing a specific retirement income scheme to recognise the value of unpaid caring work.

This could include government funded carer superannuation credits to be paid at the time of retirement, or a national fund or social insurance scheme established specifically for carers.

Recommendation 10: Model the gender impact of any proposed changes to the Superannuation Guarantee

The Australian Government should model the gender impact of any proposed changes in the coverage or level of the Superannuation Guarantee with a view to minimising financial hardship for those on low incomes. This analysis should be made publically available.

Recommendation 11: Equity in superannuation tax concessions

The Australian Government should review and modify superannuation tax concessions to ensure that benefits are provided equitably between low, middle and high income earners, and to maximise gender equality.

Recommendation 12: Superannuation for those in the Community Development Employment Program

The Australian Government should make direct superannuation contributions at the same level as the SG, in addition to existing benefits, for those who are in the Community Development Employment Program.

3.4 Ensure the Age Pension fulfils Australia’s international human rights obligations for women and men to equally enjoy a right to social security

Recommendation 13: Ensure the Age Pension protects individuals against poverty and meets international human rights standards

At a minimum, the Age Pension should protect individuals against poverty, ensure an adequate standard of living and fulfil the right to social security for individuals in line with relevant international human rights standards.

The couple and single rate of the Age Pension should be raised progressively to eliminate poverty. This should start with an immediate increase of the single rate to 66% of the couple rate.

Recommendation 14: Monitor and track the incidence and impact of poverty

The Australian Bureau of Statistics should establish an agreed poverty measure and issue an annual report on the incidence of poverty, disaggregated by gender, age, Aboriginal and Torres Strait Islander status, disability, sexuality, cultural background, household type and location.

3.5 Regularly monitor and report on the gender impact of Federal budgets and reforms

Recommendation 15: Regular gender budget statements

The report from Australia’s future tax system review should include a section containing modelling and analysis of the gender impact of the proposed recommendations.

A Gender Analysis Unit should be established within Treasury to conduct gender disaggregated public expenditure analysis, gender disaggregated tax incidence analysis, and yearly gender budget statements.

3.6 Introduce measures to achieve equality in women’s representation in superannuation fund governance positions

Recommendation 16: Achieving equality in women’s representation in superannuation fund governance positions.

The Australian Government should investigate specific strategies to achieve equality in the representation of women in senior leadership positions, and specifically, in superannuation fund governance positions. This could include the introduction of mandatory quotas and targets, allocation of specific funding to train women trustees and board directors or tax incentives for funds that have an appropriate balance of gender in trustee positions.

At a minimum, superannuation funds should be required to report on the gender balance of their trustee boards as part of their annual compliance reporting to the Australian Prudential Regulatory Authority.

3.7 Independent monitoring and reporting on Australia’s progress towards achieving substantive gender equality

Recommendation 17: Independent monitoring of national gender equality indicators and benchmarks

Implement recommendations 33 and 34 of the Standing Committee on Legal and Constitutional Affairs’ report on the Effectiveness of the Sex Discrimination Act 1984 in eliminating discrimination and promoting gender equality:

The committee recommends that the Act be amended to require the Sex Discrimination Commissioner to monitor progress towards eliminating sex discrimination and achieving gender equality, and to report to Parliament every four years.

...The Committee recommends that HREOC be provided with additional resources to enable it to...perform the additional roles and broader functions recommended in this report...^[18]

3.8 Review the superannuation exemptions in the Sex Discrimination Act 1984 (Cth)

Recommendation 18: Review superannuation exemption in the Sex Discrimination Act 1984 (Cth)

With the objective of achieving gender equality, implement recommendation 36 of the Standing Committee on Legal and Constitutional Affairs’ report on the Effectiveness of the Sex Discrimination Act 1984 in eliminating discrimination and promoting gender equality:

The committee recommends that further consideration be given to removing the existing permanent exemptions in section 30 and sections 34 to 43 of the Act and replacing these exemptions with a general limitations clause.^[19]

 

4 Australia’s international human rights obligations

 

20. A review of the retirement income system in Australia needs to assess the extent to which people in retirement can exercise and enjoy their basic human rights. This section provides an overview of Australia’s international human rights obligations, particularly in relation to:

    • the human right to social security

    • the human right to gender equality.

21. The Australian Government has agreed to be bound by a number of international instruments relevant to the retirement income system. .

22. The UN Convention on the Elimination of all forms of Discrimination against Women (CEDAW) obligates Australia to take all appropriate measures to eliminate discrimination against women to ensure the equal enjoyment of the right to social security.^[20]

23. The right to social security is articulated under the ICESCR.

24. Australia’s international human rights obligations under the ICESCR include:

    • everyone’s human right to enjoy the right to social security^[21]

    • the human right for women and men to equally enjoy the right to social security.^[22]

25. One essential element of the right to social security is that it supports the realization of the right to an adequate standard of living.^[23]

4.1 Convention on the Elimination of all Forms of Discrimination Against Women (CEDAW)

26. CEDAW is scheduled to the SDA. Under CEDAW, Australia is required to:

    ...take all appropriate measures to eliminate discrimination against women in the field of employment in order to ensure, on a basis of equality of men and women, the same rights, in particular...The right to social security, particularly in cases of retirement, unemployment, sickness, invalidity and old age and other incapacity to work, as well as the right to paid leave...^[24]

27. The Committee on the Elimination of all forms of Discrimination against Women (‘CEDAW Committee’) is responsible for monitoring the implementation of CEDAW by those States which are party to it.

28. In reviewing state party obligations in this area, the CEDAW Committee has made several observations about the nature and extent of this obligation. For example, in its concluding comments on Canada’s report under CEDAW in 2006, the CEDAW Committee noted with concern that:

    In most Provinces and Territories, social assistance benefits are lower than a decade ago, in that they do not provide adequate income to meet basic needs for food, clothing and shelter, and that welfare levels are often set at less than half the Low-Income Cut-Off.^[25]

29. Similarly, in its concluding comments to the United Kingdom in 1999, the CEDAW Committee notes that

    Demographic change in the State party requires urgent action with regard to the situation of older women, and of related implications for women’s health, poverty and especially pension entitlements...[26]

30. Earlier, in its concluding comments to the United Kingdom in 1993, the CEDAW Committee noted that the UK had reported implementing independent taxation for husbands and wives, and was taking steps to make discrimination in occupational pensions illegal.^[27]

4.2 International Covenant on Economic, Social and Cultural Rights (ICESCR)

31. The ICESCR articulates what is meant by the right to social security.

(a) The human right to social security

32. Australia became a state party to the ICESCR in 1976, which provides:
    

    The States Parties to the present Covenant recognize the right of everyone to social security, including social insurance.^[28]

33. Under the ICESCR, social security includes:

    • Systems of social insurance: This is where individuals, employers and in some cases governments make contributions to ensure people have access to income support when their earnings are interrupted or cease. Old age or retirement is one of these circumstances. The Australian Superannuation Guarantee is an example.

    • Universal schemes of social assistance: These are met entirely through the general resources of governments and provide important financial support and protection for people who are particularly vulnerable or need particular assistance to realise basic rights such as older people, people with a disability or other marginalised groups. The Australian Age Pension is an example.

34. The Committee on Economic, Social and Cultural Rights (‘the Committee’) is responsible for monitoring the implementation of ICESCR by those States which are party to it. The Committee states:

    The right to social security is of central importance in guaranteeing human dignity for all persons when they are faced with circumstances that deprive them of their capacity to fully realise their Covenant rights.^[29]

35. The obligation to fulfill the right to social security requires the Australian Government to:

    • Adopt necessary measures directed towards the full realization of the right to social security.^[30]

    • Take positive measures including legislative and policy measures, to assist individuals and communities to equally enjoy the right to social security.^[31]

    • Ensure appropriate education and public awareness of social security schemes.^[32]

    • Establish non-contributory schemes and other measures to provide support to people who are unable to make contributions to social insurance schemes.^[33]

36. At a minimum, governments have a core obligation to ensure people have access to a social security system and benefits which allow them to acquire essential health care, basic housing, water and sanitation and food as well as the most basic forms of education.^[34]

37. The Committee has set out a number of factors essential to the right to social security.^[35].

    • Available, accessible and non-discriminatory: Social security must be provided under a system which is established under domestic law and administered or supervised by public authorities. Social security must be available and accessible to all people who are in need, especially people who belong to marginalised or disadvantaged groups. Social security must be provided in a way which is not discriminatory.

    • Comprehensive: Social security systems must provide income support in a range of possible circumstances or life events which affect people’s ability to maintain employment or provide themselves with an adequate standard of living. These include:

      1. Old-age – Governments must ensure that older people who reach an age specified by national government and who do not have access to an income based pension or any other income have access to old-age benefits, services and other assistance.

      2. Sickness, injury and disability – Governments must provide cash and other health benefits to people who are incapable of working either temporarily or permanently due to ill-health, injury or disability.

      3. Unemployment – Governments must endeavour to provide adequate protection for people who are unable to secure suitable employment.

      4. Maternity – Governments must provide all working mothers with paid leave or leave with adequate social security benefits. The right to paid maternity leave is also recognised in article 11(2)(b) of CEDAW.

      5. Families and children – Governments must provide cash benefits and social services to families including survivors and orphans.

      6. Health care – Governments have an obligation to guarantee the establishment of health systems which provide adequate access to health services for all.

    • Adequate: Social security benefits can take the form of cash payments and in kind benefits such as concessions. In order to be considered adequate, social security benefits must ensure that people are able to afford the goods and services to realise the other rights under the ICESCR, including adequate food, clothing and housing. Access to health care should also ensure people are able to enjoy the highest attainable standard of physical and mental health.

    • Participation and information: People who receive social security benefits must be able to participate in the administration of the system. Social security systems must ensure the right of individuals and organisations to seek, receive and impart information on all social security entitlements.

    • Affordable: Where a social security system requires contributions, the costs and charges associated with making those contributions must be affordable for all people and must not impinge upon the enjoyment of other rights.

38. Additionally, governments have the following obligations:

    • To avoid any deliberate retrogressive measures that will reduce the availability and accessibility (including coverage) of the right to social security.^[36]

    • To adopt a national strategy and plan of action to realise the right to social security.^[37]

    • To regularly review social security systems to ensure they comply with the right to social security.

(b) Relationship between the right to social security and the right to an adequate standard of living

39. The Committee has emphasized the special relationship between the right to social security (above) and other economic, social and cultural rights in the ICESCR - including the right to an adequate standard of living.^[38]

40. Article 11 of the ICESCR provides:

    The States Parties to the present Covenant recognize the right of everyone to an adequate standard of living for himself and his family, including adequate food, clothing and housing, and to the continuous improvement of living conditions.^[39]

41. The Committee has not yet authored a General Comment on the right to an adequate standard of living, although there are General Comments on elements of the right, including General Comment 4 on the right to adequate housing and General Comment 12 on the right to adequate food.

42. The Committee has considered the right to an adequate standard of living in General Comment 6 ‘ the economic, social and cultural rights of older persons’. The Committee attaches great importance to principle 1 of the United Nations Principles for Older Persons, which provides that ‘older persons should have access to adequate food, water, shelter, clothing and health care through the provision of income, family and community support and self-help’.

43. The right to social security, along with other complimentary measures to combat poverty and social exclusion and providing supporting social services, play an important role in supporting the realization of the right to an adequate standard of living. The Committee warns that the adoption of other measures to realize the right to an adequate standard of living will not in itself act as a substitute for the creation of adequate and accessible social security schemes.^[40]

(c) Equal enjoyment of the right to social security for women and men

44. Under Article 2(2) of the ICESCR and Article 3 of the ICESCR, the Australian Government has an obligation to prevent discrimination and ensure that all women and men equally enjoy their economic, social and cultural rights, including the right to social security.

45. Article 2(2) of ICESCR ensures the principle of non-discrimination is guaranteed for economic, social and cultural rights, such as the right to social security:

    The States Parties to the present Covenant undertake to guarantee that the rights enunciated in the present Covenant will be exercised without discrimination of any kind as to race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status.

 

46. Article 3 of ICESCR imposes a duty on governments not only to prevent discrimination, but also to ensure that women and men equally enjoy the economic, social and cultural rights contained within the Covenant:

    The States Parties to the present Covenant undertake to ensure the equal right of men and women to the enjoyment of all economic, social and cultural rights set forth in the present Covenant.

47. The Committee has stated that the definition of equality includes both formal and substantive equality.

    Formal equality assumes that equality is achieved if a law or policy treats men and women in a neutral manner. Substantive equality is concerned, in addition, with the effects of laws, policies and practices and with ensuring that they do not maintain, but rather alleviate, the inherent disadvantage that particular groups experience.^[41]

48. The Committee has directed governments to take specific action to ensure substantive equality:

    Substantive equality for men and women will not be achieved simply through the enactment of laws or the adoption of policies that are gender-neutral on their face. In implementing Article 3, States parties should take into account that such laws, policies and practice can fail to address or even perpetuate inequality between men and women, because they do not take account of existing economic, social and cultural inequalities, particularly those experienced by women.^[42]

49. Under article 2 of ICESCR, the Australian Government is obliged to:

    take steps... to the maximum of its available resources, with a view to achieving progressively the full realization of the rights recognized in the present Covenant by all appropriate means, including particularly the adoption of legislative measures.

50. Accordingly, there are clear international human rights obligations to which Australia is bound which should inform the outcomes of the Review, both in terms of the Review ensuring that the Australia Governments meets it’s obligation to fulfill a person’s right to social security and to ensuring that this fundamental human right is enjoyed equally between women and men .

5 The extent of the gender gap in retirement savings and retirement income in Australia

51. The Commission views the significant disparity between women and men’s retirement savings, and the high proportion of women with alarmingly low superannuation balances, as one of the gravest aspects of gender inequality in Australia. Several researchers and organisations have commented on the extent of the gender gap in retirement savings and retirement income in Australia.^[43]

52. This section provides an overview of the nature and extent of the gender gap in retirement savings and retirement income. It examines:

    • average superannuation account balances of women and men

    • distribution of superannuation account balances by gender and age

    • income and assets during retirement for women and men and

    • the impact of divorce and separation on financial security in retirement.

53. Retirement savings refers both to compulsory savings accumulated through the SG and voluntary contributions. Retirement income refers to income received during retirement from government transfers such as the Age Pension, superannuation or annuity, investments or capital income from assets.

5.1 Average superannuation account balances and payouts

54. The most recent assessment of retirement savings, compiled by the Association of Superannuation Funds of Australia, reports that in 2006, the average superannuation account balance was $35 520 for women, compared to $69 050 for men. This data may be compared with 2004, when it was reported that the average superannuation balance as $23 900 for women, compared to $56 400 for men. Between 2004 and 2006, women’s superannuation balances, as a proportion of men’s balances, increased from 42% to 51%. Accordingly, while there has been a slight improvement in women’s superannuation balances overall, there remains a significant gender gap. ^[44]

55. Similarly, in 2006, the average retirement payouts (determined by the average balance for those aged 60 to 64) were $63 000 for women and $136 000 for men. In 2004, the average payout was $37 000 for women and $110 000 for men. As a proportion of the average payouts for men, women’s average payouts increased from 34% to 46% between 2004 and 2006. Again, while this represents an improvement, a significant gender gap persists.^[45]

56. A gender breakdown of the total shares of superannuation assets shows that, in 2006, men held around 66% of total superannuation account balances, compared to 34% for women.^[46]

57. Further, a recent study released by Access Economics and AMP, based on data from 320,000 AMP members, reports that in December 2007 the average superannuation balance was $51,639 for men and $30,887 for women.

58. The data overwhelmingly reveals a significant gap in the average superannuation balances and payouts between women and men.

5.2 Distribution of superannuation

59. While the disparity between men and women’s average superannuation balances and payouts provides some indication of the gender gap in retirement savings, examining the distribution of superannuation amongst age groups, and within age groups provides further insight into the problem.

60. For instance, breaking the average superannuation balances down by age, shows that the gender gap widens over the lifetime for individuals, with women’s superannuation balances as a proportion of men’s balances decreasing from 71.1% (25-34 age bracket) to 46.1% (60-64 age bracket). These figures are set out in the following table.
    
    
    
    Table: Estimated superannuation balances by age, Australia, 2006^[47]

 

61. Further analysis of the data on superannuation balances shows significant inequality in the distribution of superannuation balances amongst women, with a significant majority of women holding superannuation balances that are alarmingly low. For example, in 2004, the Australian Bureau of Statistics reported that, despite average woman having $35 000 in superannuation, 30% of women have no superannuation, 50% have $8 000 or less and 70% have $25 000 or less’. A disparity between men aged 45-59 also exists. For example, although the average balance for these men is $87 100, 30% have $9 000 or less, 50% have $31 000 or less and 70% have $80 000 or less. However, a significant gender gap is still evident.^[48]

 

5.3 Income and assets during retirement

62. As a consequence of the gender gap in retirement savings, women generally have lower incomes from superannuation during retirement in comparison to men. In particular, single women are likely to fare worse financially in retirement, compared to women and men in couples and single men. This is compounded by the higher living costs for single individuals, compared to those in couples.

63. A report based on the data from the Household, Income and Labour Dynamics in Australia Survey (HILDA), found the average household disposable income for a single retired woman over the age of 65 was $14 000, compared to $18 000 for a single retired man. The average household income for a couple over the age of 65 was $28 000, shared by both members of the couple.^[49]

64. Another aspect of financial security during retirement in based on wealth acquired from assets. In Australia, property is the most common type of household asset followed by superannuation.^[50] Again, a gender gap becomes apparent in assessing the average household net worth. For example, in 2002, the average household net worth for single retired women over 65 was $160 000, compared to $238 000 for men.^[51]

65. Many women who participated in the Sex Discrimination Commissioner’s Listening Tour reported their struggles to meet their basic financial commitments. For example:

    Because I was unable to access superannuation funds through my work in earlier years I had to return to work at the age of 66 [years], because I found it was impossible to maintain a house on my own and pay service bills etc. on the old age pension. I am now 72 [years] old and still working. I love my work and am dedicated to it - but long hours are having a deleterious effect on my health and the constant worry of not being able to meet the greedy interest rate payments is very stressful...Paying [a loan] back, out of a pension, is impossible - and women don’t realise this until they have been forced in to the situation of using their only asset to try to achieve a liveable income.^[52]

66. The higher likelihood of poverty for women in retirement is the end result of women being unable to enjoy their right to social security on equal basis with men. This unequal protection of their right to social security is due to systemic disadvantage that women experience as a result of the current retirement income system being linked exclusively to paid work.

5.4 The impact of divorce and separation on financial security in retirement

67. Divorce and separation is a further factor contributing to financial insecurity for older women. The number of divorced women entering retirement is expected to rise significantly in the next two decades.^[53]

68. It is well established that women often experience financial hardship following divorce. However, a study examining the impact of divorce in retirement has found that divorce has lifetime financial consequences.^[54]

69. For example, examining the financial circumstances of individuals aged 55-74, by marital status and gender, shows that divorced women have the lowest levels of household equivalent income, superannuation and per capita household net assets compared to married women and men and divorced men. Divorced women were also less likely to own their home outright compared to married women.^[55]

70. Although divorced women are more likely than divorced men to own their home, women’s disposable income decreases following separation, thereby limiting their capacity to accumulate superannuation or make voluntary savings.^[56]

6 The implications of the gender gap in retirement savings

71. This section sets out the consequences of the gender gap in retirement savings. It examines the:

    • number of women in receipt of the Age Pension

    • incidence of poverty amongst older women

    • consequences of poverty for older women.

72. The most critical implication of the gender gap in retirement savings is the likelihood of poverty for women in retirement. Lower levels of retirement savings, a likelihood of early retirement and longer life expectancy places women at greater risk of a sharp decline in their standard of living during retirement.^[57]

73. The Commissioner heard many stories of women justifiably anxious about prospects of poverty in retirement on her Listening Tour, and working longer hours to redress their situation:

    As a baby boomer approaching retiring age and having spent most of my years raising children, I have very little hope of retiring and will need to work for as long as possible. I will not be independent financially...The pressure is really on women who have not been high income earners and the outlook for the future is bleak. I see many tired women who are working fulltime, supporting husbands and trying to be a helpful grandparent.^[58]

74. As a result of low superannuation savings, women are currently and will continue to be heavily reliant upon the Age Pension. The Australian Government has reported that 58.3% of all Age Pensioners are women and 73% of those receiving the single rate of the Age Pension are women. Of all retired households, single women are most likely to be reliant on the full Age Pension as their main source of retirement income.^[59]

75. The Commission is concerned that the current single rate of the Age Pension is below the commonly used poverty line of 50% of median income.^[60] This has a disproportionate impact on women due to the higher proportion of women in receipt of the single rate of the Age Pension.

76. The Commission views women’s vulnerability to poverty in retirement as a serious failing of the current retirement income system. Of all household types in Australia,^[61] elderly single women are at the greatest risk of poverty, with 56.3% of these households living in poverty between 2001 and 2005. Elderly single women are also the most likely household to experience persistent poverty with over one third consistently living in poverty for the entire 5 year period between 2001 and 2005.^[62]

77. There are a number of serious consequences of poverty for women in retirement, including the inability to pay for basic expenses such as food, housing, utilities, clothing and health expenses not covered by Medicare.

78. In a study on life after retirement, 43.5% of single women reported that their standard of living was worse or much worse after retirement. Of these single women, divorced women were even more likely to experience a decline in standard of living, with 54.3% of divorced or separated women reporting their standard of living had worsened, which was a higher proportion compared to women and men who were widows and women and men who were never married.^[63]

79. Reliance on the Age Pension in retirement results in women making major adjustments to meet their living expenses. Both single and partnered women are more likely than men to cut back on their normal weekly spending in retirement. Retired single women are almost twice as likely as single men to sell their house to move to lower cost accommodation because of their financial circumstances in retirement.^[64]

7 The reasons for the gender gap in retirement savings and retirement income

80. This section sets out the factors contributing to the gender gap in retirement savings. It examines the:

    • level of women’s earnings compared to men’s earnings

    • level of women’s labour market participation, and underlying factors

    • specific barriers to labour market participation for older women.

81. The Commission acknowledges that, since the introduction of Australia’s compulsory superannuation system in 1992, there has been a series of positive changes made to improve the coverage and level of superannuation for women. These developments include:

    • removal of the blanket exemption which exempted superannuation or provident fund schemes from the operation of the SDA

    • protection for small superannuation accounts (under $1000) against depletion from fees and charges

    • introduction of measures to assist in the roll-over or consolidation of small superannuation accounts

    • introduction of a spouse rebate entitlement to allow spouses to make contributions on behalf of a spouse who is not in a paid workforce or on a low income

    • introduction of super splitting provisions whereby one spouse can split their superannuation into two accounts and superannuation can be split in cases of divorce

    • introduction of the Superannuation Co-contribution Scheme to increase superannuation savings for low income earners.^[65]

82. However, the extent of the gender gap in retirement savings demonstrates that a number of significant systemic barriers remain for women’s equal participation in and benefit from the current superannuation system. Accordingly, these systemic barriers prevent women being able to equally enjoy their human right to social security.

83. The factors contributing to the gender gap in retirement savings are complex and interconnected. As the superannuation guarantee is linked to participation in the paid workforce and the level of individual earnings, this disadvantages women, as women generally have lower earnings over the lifetime and lower levels of labour market participation due to caring responsibilities.

84. Prior to the introduction of the SG, many women were excluded from superannuation schemes. This is a further contributing factor to the gender gap in retirement savings.

7.1 Lower earnings over the lifetime

85. One of the factors contributing to the gender gap in retirement savings is the ratio of women’s to men’s earnings – commonly known as pay inequity or the gender pay gap. This means that women will have lower earnings over the lifetime, resulting in women accumulating lower amounts of superannuation. As a further result of lower earnings, women generally have a lower capacity to make voluntary contributions to superannuation without significant detriment to current consumption.

86. The gap between men’s and women’s ordinary full time earnings is currently 16%.^[66] The gender pay gap is even greater when women’s part-time and casual earnings are considered, with women earning around two thirds of the amount earned by men.^[67]

87. In Australia, women constitute a higher proportion of casual workers, are more likely to be working under minimum employment conditions and be engaged in low paid occupations and industries. Whilst the gender difference overall for casualised work is modest with fifty-six per cent of casual workers being women, 82% of female casual workers are part time. In comparison, 52% of male casual workers are part-time, representing a significant gender difference.^[68]

88. Industries and occupations in Australia remain highly segregated by gender and women’s work is often undervalued. Women are generally concentrated in lower level work classifications with few opportunities for training and skill development.^[69]

89. An explanation offered by Listening Tour participants for the gap between women and men’s earnings is the lack of value ascribed to what is commonly characterised as ‘women’s work’. A woman working in the child care sector drew attention to the complex set of skills required in her work and the social benefit of high quality care for children. She pointed out that the pay and status of workers in this sector fails to acknowledge the skills required or the benefits returned:

    The amount of pay is incredibly low and the work is undervalued. Caring for children should be valued in our society but we are invisible.^[70]

90. A further explanation of pay inequity is women’s continuing greater responsibility for the care of dependent family members such as children, elderly parents, partners or people with disability requiring care.^[71]

91. Women may typically take on paid work to balance caring responsibilities which does not fully reward their skills and experience in order to work part-time or secure flexible working arrangements. Such trade-offs between conditions and pay were reported to the Commission throughout the consultations for the report, It’s About Time: Women, Men, Work and Family (‘It’s About Time (2007)’).^[72]

92. The Commission has also found that pay inequity is a major factor in determining who undertakes care in couple families, creating limited choices and opportunities for both women and men.^[73]

93. Along with an often unspoken assumption that women will undertake the majority of unpaid caring work, pay inequity in effect forces the higher earner to take on the majority of paid work while the lower earner is left with the majority of unpaid caring work. This occurs regardless of skill levels, preferences or the needs of those requiring care.

94. The gender pay gap means that women are generally further disadvantaged through the superannuation tax concessions. Current taxation arrangements in relation to superannuation are configured to advantage high income earners, which in turn generally disadvantages women because of their lower earnings. For example, higher income earners receive a greater benefit from superannuation tax concessions (contributions tax), compared to lower income earners. The flat contributions tax rate for employer contributions and salary sacrifice arrangements mean that high income earners effectively save more tax per dollar contributed towards their superannuation accounts. Given that higher income earners also have greater capacity to make voluntary contributions, this tax arrangement further perpetuates gender inequality within the superannuation system.^[74]

7.2 Disrupted and lower rates of labour market participation

95. The superannuation system has been designed to provide maximum economic security in retirement on the premise of participants’ maximum benefit on their investment following 35 years of continuous full-time labour market participation. However, this system inherently disadvantages women.

96. Women’s’ disrupted and lower rates of labour market participation is a key factor resulting in their lower capacity to make compulsory contributions to superannuation and their lower capacity to contribute to voluntary savings.

97. Overall, women’s labour market participation has steadily increased to 58.7%, but is still significantly lower compared to 72.9% for men.^[75] Further, 45% of women workers work part time,^[76] many of them mothers working part time in order to balance their paid work and family responsibilities. Seventy-one per cent of all part time workers are women.^[77]

98. Over the lifecycle, women spend fewer years in paid work compared to men. For example, women born between 1948 and 1964 are estimated to spend 60% of the time in paid work that is estimated for men in their age group.^[78]

99. In Australia, mothers’ workforce participation continues to be low by international standards. The employment rates for Australian women with children, particularly those where the youngest child is under six years of age, are low by comparison with other OECD countries. The employment rate of mothers with a youngest child under six years of age is 49.6%, compared with the OECD average of 59.2%.^[79]

100. Employment rates also vary considerably between different groups of women, such as women with disability,^[80] Indigenous women^[81] and women from culturally and linguistically diverse backgrounds.^[82] This results in even lower superannuation savings for these groups, increasing their vulnerability to poverty under the current retirement income system

101. The Commission has reported on the significant and persistent barriers to women’s workforce participation in the Listening Tour Community Report (2008) and It’s about Time (2007). The barriers to women’s full and equal participation in the workforce include, but are not limited to:

     • ongoing direct and indirect discrimination on the basis of sex, pregnancy, potential pregnancy and family and carer responsibilities

     • limited availability of flexible working arrangements and quality part time work

     • a lack of access to paid maternity, paternity and/or parental leave

     • a lack of access to quality, affordable child care and other care facilities

     • tax arrangements that provide a disincentive to women’s workforce participation.

102. These barriers must be addressed for women to be able to participate equally and gain benefits equally from Australia’s retirement income system.

(a) Ongoing discrimination

103. Women in Australia continue to experience workplace discrimination on the basis of sex, pregnancy, potential pregnancy and family and carer responsibilities. In the 2007-2008 year, the Commission received 438 complaints under the SDA, 84% of which were from women. 87% of these complaints were in the area of employment.

104. On the Listening Tour, the Sex Discrimination Commissioner heard that discrimination remains a reality of women’s lives, despite nearly 25 years of legislation. A participant at the Hobart community consultation described the experience of her daughter-in-law, which highlights how discrimination can impact upon women’s labour market participation:

     I have a daughter-in-law who works for a call centre. She fell pregnant and had a baby, at this time her boss said that if she wanted to come back she could. After six months, he gave her a hard time and said she had to work full time if she wanted to work. He did this because he thought women should be in the home. She ended up leaving. She knew it was discrimination but he is the boss.^[83]

105. To increase women’s labour force participation, and subsequently increase women’s retirement savings, the Commission views the need to strengthen legislative protection against discrimination, both in relation to sex, and also family and carer responsibilities, particularly given the ageing of the Australian population and the likelihood of an increasing number of women in particular combining child rearing and elder care with paid work.^[84]

(b) Lack of flexible work arrangements and paid parental leave

106. Perhaps the most fundamental barrier to women’s full participation in paid work is the struggle to balance paid work and family responsibilities, which prevents many women from participating in the labour market to the degree that they would like, thereby limiting their capacity to accumulate superannuation and voluntarily contribute to savings.

107. A recent survey of time-use has found that mothers of young children (where the youngest child in the family was aged 0 to 4 years) spend over 30 hours a week caring for children, compared to 11 hours for fathers. The same survey found that women spend double the time on unpaid domestic work compared to men.^[85] More time spent in unpaid and caring work means that there is less time for paid work.

108. The Commission views the current structure of workplaces as inherently disadvantageous to women. Workplace structures have evolved around an ‘ideal worker’ norm of the traditional male breadwinner who is supported by a wife at home full time raising children. The ‘ideal worker’ norm refers to a traditional male breadwinner pattern of continuous full time work with no recognition of caring responsibilities.^[86] A consequence of this model is lower rates of labour market participation for women and the resulting gender gap in retirement savings.

109. The Commission has identified a lack of access to family-friendly policies such as flexible working arrangements and paid parental leave as a key barrier to women’s workforce participation. However, often where these policies are available, resistant and inflexible management and cultures prevent their take up.^[87]

110. Increasing the availability and application of family friendly policies such as flexible work arrangements and paid parental leave will increase women’s labour market attachment. For example, retention rates for some companies with paid leave entitlements such as Monash University, GM Holden and other ‘Employer of Choice for Women’ companies are around 90%.^[88]

111. The Commission has also jointly commissioned research which shows that parents with children of school age nominate greater flexibility in paid work as a priority for providing better support in balancing their paid work and family responsibilities.^[89]

112. The Commission holds the view that measures to improve women’s labour market attachment, such as protection from discrimination on the grounds of family and carer responsibilities, for both women and men,^[90] and flexible work practices and paid parental leave,^[91] can be expected to improve their the ability of women to engage in paid work and to thereby accumulate greater lifetime earnings and subsequently higher retirement savings.

(c) Lack of access to quality, affordable child care and other care facilities

113. In relation to women’s workforce participation, the Commission has consistently heard that there is a dire need for access to quality, affordable child care and other care services.^[92] During the Commissioner’s Listening Tour, many participants reported that the cost and limited availability of child care often meant that it made better financial sense for one parent, commonly the female partner, to stay at home.^[93]

114. To improve women’s workforce participation, the Commission has previously reported that there needs to be: increased availability of formal child care, particularly in regional areas; improved affordability for parents; flexibility of child care for long and irregular hours workers; and integration of school and work hours and availability of outside school hours care.^[94]

115. With the rapid ageing of the population it is paramount also that the accessibility and affordability of other care services, such as disability and elder care services are also considered in the context of increasing women’s labour market participation.

(d) Tax arrangements that provide a disincentive to women’s workforce participation

116. The Commission has previously reported on community concern regarding the current tax arrangements where Family Tax Benefit Part B (‘FTB(B)’) is withdrawn on the income of the secondary earner in two parent families.

117. Researchers have argued that this creates a disincentive to labour market participation for secondary earners, primarily women, as it results in financial penalties through a higher effective marginal tax rate.^[95] In It’s About Time (2007), the Commission reported:

     It has been argued that this situation is inequitable towards second earners – overwhelmingly women – and damaging to the economy in respect of encouraging female labour force participation and that a fairer system lies in a return to a progressive individual tax system. Such a system would apply a lower rate of tax to the lower earning partner, improve vertical equity, allow the expansion of the tax base and thus provide greater resource to provide a more universal system of child benefits and improve women’s labour market participation.^[96]

 

118. The Commission considers that the family tax system should support choice within families about paid work and caring responsibilities.

 

7.3 Specific barriers to labour force participation for older women

119. The tendency of women to retire earlier than men has been documented as a further contributing factor for lower levels of retirement savings.^[97] For example, in the 50-54 age bracket, 17.7% of women are retired, compared to 8% of men. In the 55-59 age bracket, 31.4% of women are retired, compared to 17.4% of men.^[98]

120. It is commonly often suggested that older women should stay in the paid workforce for longer to accumulate greater retirement savings. The Commission notes that although increasing labour market participation for older women has some positive role in increasing retirement savings, this alone will not close the gender gap on retirement savings. This is because the system is designed upon the principle that contributions made early in life will accrue the most benefits over time.^[99]

121. Furthermore, older women encounter a number of specific barriers to workforce participation including sex and age discrimination, lack of flexible work to accommodate caring responsibilities and a lack of training and education opportunities. These barriers need to be removed to increase workforce participation for women in this age group.

(a) Discrimination

122. Older women experience unique forms of discrimination based on their age and gender. For example, some studies have found that older women are more likely to receive negative responses during recruitment and are more likely to be made redundant.^[100]

123. Research undertaken by Dr Barry Partridge of Workplace Images Consulting on ‘Age-Gender Based Discrimination in Australian Workplaces’ provides insight into this discrimination. Based on interviews with more than 100 managers from workplaces around Australia, the research investigates employment decisions made by managers across different age and gender employee categories. Decisions on promotion, selection, and training were considered.^[101]

124. Of the preferences expressed by managers, mid-aged women between 30 and 45 years of age received the highest percentage of positive selection decisions of all age and gender groups. Women less than 30 years of age received the highest percentage of positive training decisions. However, on the question of promotion, men aged between 30 and 45 received the highest percentage of positive promotion decisions. In stark contrast, across all decisions made on selection, training and promotion, older women (45+) received the lowest percentage of positive decisions from managers. Even older female managers would not hire, train or promote other women over 45.

125. The stereotypes and assumptions behind these results reveal the extent of negative attitudes towards older women workers. Managers saw older women as ‘loyal but lacking in potential’ which in turn impacts on their ability to be promoted. Older women were also perceived as being ‘low in energy’ and as ‘unwilling to accept criticism’ which again can effect manager’s selection and training decisions.

126. The Commission considers these discriminatory attitudes act as a barrier to older women being able to find and maintain employment, and consequently being able to build savings for retirement.

(b) Caring responsibilities

127. Secondly, older women also often find it difficult to find work that is flexible to support their family responsibilities including caring for children, grandchildren, relatives with disability, elderly parents or sick spouses.^[102] This accords with the research finding that women commonly retire early due to caring responsibilities.^[103]

128. The Commission considers that flexible work arrangements should be made available to women of all ages to maximise labour market participation across the lifecycle. Legal protection from discrimination on the grounds of caring responsibilities is also required.

(c) Access to education and training

129. Participants in the Commissioner’s Listening Tour reported a lack of access to training and return to work preparation programs for older women which presents another barrier to older women’s labour market participation.^[104] Current consultations being undertaken by the Commission in the area of age discrimination have also identified this is a key barrier for re-entry into the labour market.^[105]

7.4 The impact of women’s past exclusion from superannuation schemes

130. Until 1993, there was a blanket exemption in the SDA which allowed superannuation funds and insurance to discriminate on the basis of sex. During the early years of superannuation, prior to the 1991 amendment to the SDA and the introduction of the SG, many funds excluded women. For example, in 1988, only 47% of women working full-time were members of superannuation funds, compared to 64% of men.^[106]

131. Participants in the Commissioner’s Listening Tour, commented on the impact of this exclusion:

     When I worked years ago men could join the super fund but women couldn’t. My husband said, “Don’t worry about super because you’ll be leaving [the paid workforce] soon”. Then my marriage fell apart and I was left with no superannuation because all the money had gone into the house instead. I left after 15 years in the paid workforce with nothing, no superannuation, a bit of long service leave. I didn’t get the same wage as the males yet I was expected to take on more secretarial work. That is the way the work was structured. Everyone worries about retirement savings but let’s remember we were not invited to join the superfund until 25 years ago.^[107]

8 Solutions for increasing women’s financial security in retirement

132. This submission specifically addresses the gender inequality in Australia’s retirement income system. Whilst the Commission has not had the capacity to undertake detailed analysis of the retirement income system and the taxation system more broadly, the Commission considers that a broad range of immediate and long term strategies must be implemented in order to redress the disadvantage that women experience. A range of measures need to be adopted in order to ensure that women and men equally enjoy their human right to social security under article 3 and 9 of the ICESCR.

133. The Commission has developed recommended areas for action which draw upon its previous work and expertise in the following areas:

     • removing barriers to women’s labour market participation

     • increasing life-time earnings for women by reducing the gender pay gap

     • extending initiatives to increase superannuation contributions for low income earners and those on welfare payments

     • ensuring the Age Pension protects individuals from poverty and fulfils Australia’s international human rights obligations for women and men to equally enjoy a right to social security

     • regular monitoring and reporting on the gender impact of Federal budgets and reforms

     • introducing measures to achieve equality in women’s representation in superannuation fund governance positions

     • independent monitoring and reporting on Australia’s progress towards achieving substantive gender equality

     • reviewing the superannuation exemptions in the Sex Discrimination Act 1984 (Cth).

8.1 Removing barriers to women’s labour market participation

134. Increasing women’s labour market participation across the lifecycle is critical to closing the gender gap in retirement savings and increasing women’s financial security in retirement.

135. The Commission recommends the following actions to remove barriers to women’s labour market participation:

     • Extend legal protection from discrimination on the grounds of family and carer responsibilities; and

     • Introduce a positive duty to reasonably accommodate family and carer responsibilities;

     • Introduce a national scheme of paid leave for parents; and

     • Remove tax disincentives to women’s labour market participation.

(a) Extend legal protection from discrimination on the grounds family and carer responsibilities

136. Ensuring that women with family and carer responsibilities have reasonable access to flexible work arrangements is important for improving labour market participation and subsequently increasing superannuation.

137. If employees are able to access flexible work arrangements in accordance with their family and carer responsibilities, more women will be able to remain in secure forms of work that are commensurate with their skill levels, retain access to benefits, training and promotional opportunities. This in turn will increase their level of earnings.

138. The Commission has found that many men and women workers with family and carer responsibilities want to share the care of children and other dependents more equally. However, they face a number of barriers to doing so.^[108]

139. Increasing access to flexible working arrangements for both women and men will also facilitate greater choice for couples who wish to share their caring responsibilities more equally, thus creating greater opportunities for women to participate in the workforce and increase their superannuation.

140. The Commission has welcomed the proposed extended protections against discrimination on the grounds of family and carer responsibilities set out in the Fair Work Bill 2008 (Cth).^[109]

141. However in the Commission’s view, the family responsibilities provisions of the SDA continue to provide insufficient protection for men and women workers with family responsibilities. In the Submission to the Senate Legal and Constitutional Affairs Committee Inquiry into the effectiveness of the Sex Discrimination Act 1984 (Cth) in eliminating discrimination and promoting gender equality (2008) (‘SDA Submission (2008)’), the Commission reiterated its view that protection from discrimination on the grounds of family and carer responsibilities needs to be extended. Increasing legal protection in this area would have a significant impact on women’s labour force participation and earnings over the lifetime. ^[110]

142. While the SDA provides protection from discrimination on the ground of family responsibilities it is more limited than the other grounds, in that it only provides protection from:

     • direct discrimination; and

     • dismissal (including constructive dismissal) from employment.^[111]

143. To increase women’s labour market participation, the Commission considers that the SDA should be amended as soon as possible to ensure that all forms of discrimination on the grounds of family and carer responsibilities are unlawful. The amendment should:

     • make unlawful discriminatory treatment in all aspects of work, rather than restricting protection to discriminatory treatment in employment that results in dismissal.

     • make unlawful indirect family and carer responsibilities discrimination.

     • extend the definition of family responsibilities to include family and carer responsibilities, which is inclusive of same-sex families, and provide a definition of family members and dependents which ensures adequate cover for both children and adults to whom care is being provided.^[112]

144. The Report of the Senate Inquiry into the Effectiveness of the Sex Discrimination Act 1984 in eliminating discrimination and promoting gender equality (‘The SDA Inquiry Report (2008)’) adopted the Commission’s recommendation to extend family responsibilities under the SDA.^[113] The Commission urges the Australian Government to implement this recommendation without delay.

 

(b) Introduce a positive duty to reasonably accommodate family and carer responsibilities

145. Introducing a positive duty to reasonably accommodate family and carer responsibilities would provide a greater level of support for women and men who require flexible working arrangements. As stated in the section above, greater availability of flexible work arrangements for both women and men would increase women’s labour market participation. This in turn would increase superannuation accumulations.
146. Introducing a positive duty would also assist in clarifying employer responsibilities in this area.
147. In the SDA Submission (2008), the Commission recommended that the SDA be amended to introduce a positive obligation on employers and other appropriate persons to reasonably accommodate the needs of workers in relation to their pregnancy or family and carer responsibilities. This would complement the right to request flexible work practices in the proposed National Employment Standards in the proposed Fair Work Bill 2008 (Cth).
148. This recommendation was adopted by the SDA Inquiry Report (2008). ^[115]
149. In the Submission to the Senate Education, Employment and Workplace Relations Committee for the Inquiry into the Fair Work Bill 2008, the Commission made a number of recommendations to strengthen the proposed National Employment Standard on the right to request flexible work practices.^[116] These recommendations were made with the objective of removing barriers to women’s labour market participation. The Commission repeats these recommendations to this Review.