The Federal Government’s choice of Medicare as its free super clearing house for small businesses has baffled private service providers, who say the hasty decision smacks of a Band-Aid applied hastily to cover election promises . However, the Association of Superannuation Funds of Australia (ASFA) is cautiously optimistic that “SupiCare” (as industry wits have dubbed the proposed Medicare exchange) could introduce much-needed mandatory standards and possibly cut SMEs’ costs. In theory, the clearing house/ exchange service will be working from July next year for small- to medium-enterprises with fewer than 20 employees. But, as one industry source said: “It took us more than 10 years to get clearing house processes correct: how’s Medicare going to get it right in three months? “The announcement reeks of knee-jerk political opportunism.
They made an election promise to launch an SME super exchange, but not to make it work. ” Chris Bowen, Federal Minister for Superannuation, said Medicare was chosen because “it has significant capacity in payment processing which can be readily adapted for superannuation contributions”. But, as another industry source commented: “If it’s just about handling lots of money, then why not get the TAB to do it? Place your bets, and pay your super?” Pauline Vamos, CEO of ASFA, said her concern was that the announcement was “very short on detail. ASFA is urgently seeking meetings with Medicare and the Treasury, and this could be either a fizzer or a tremendous opportunity”.
The decision, announced in early November by Chris Bowen, has left super industry veterans puzzled. When Senator Nick Sherry was Minister for Superannuation until June this year, he had indicated that the private sector would be in the loop, and that the election-promise superannuation clearing house would be funded through a $16.1 million allocation in the 2008-09 Budget. However, no tender was announced, and the private sector clearing houses are wondering about the “fit” of medical claims and superannuation payments. The best that can be said, according to Peter Philip, CEO of the largest clearing house SuperChoice, is that the decision has “removed ambiguity from the market and funds are now willing to move forward on their plans”.
The Opposition spokesman on superannuation, Chris Pearce, MP for Aston, is also puzzled at the choice. Medicare is proficient in dealing with individuals, he said, but he questions its choice because there are more “businessaligned organisations better suited to this task”. “I think the Government panicked and the Minister has chosen Medicare because it’s in his portfolio, he can do it quickly and have complete control. Will $16.1 million be enough to get Medicare’s system infrastructure changed in time for the July 1 start date? I predict a significant Budget blowout on this.” Vamos identified four current problems that the Medicare exchange will have to address: • the often poor quality of data from employers • the fact employers are not compelled to pay electronically • the tax file number (TFN) cannot be used as an identifier because of privacy concerns • data standards are not mandated ASFA has been pushing for better data standards for at least the past two years, Vamos said. The employers’ portal at the front end would be relatively easy, she said, “but the back-end is the problem.