Victorian Public Servants Face Superannuation Cuts
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Victorian Public Servants Face Superannuation Cuts
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Hundreds of Victorian public servants are experiencing a reduction in their superannuation contributions due to a change in how their retirement savings are calculated, potentially costing some thousands of dollars annually. This change primarily impacts staff at the Department of Transport and Planning and the Suburban Rail Loop Authority who utilize salary sacrifice arrangements for benefits like car leases.
The Department of Transport and Planning informed affected staff in an email that, under the new federal “Payday Super” law, super contributions “must” be calculated based on earnings *after* salary sacrificing. However, the Australian Taxation Office (ATO) and independent experts have stated that the Payday Super law, which came into effect on July 1, 2026, does not alter how salary sacrificing affects super contributions. The ATO clarified that it has always been at an employer’s discretion to pay superannuation on pre-salary sacrifice earnings.
Previously, it was common practice for the Victorian government to pay superannuation on pre-salary sacrifice earnings. The recent shift, spearheaded by the Department of Government Services (DGS) which manages the payroll for several public service sectors, has led to inconsistencies across the public sector. Some departments not using the DGS payroll software are reportedly still paying super at the pre-salary sacrifice level. For an employee earning $100,000 annually and sacrificing $500 fortnightly for a novated lease, this change could reduce their yearly superannuation contributions by $1560.
The “Payday Super” reform, effective July 1, 2026, mandates employers to pay superannuation contributions at the same time as wages, rather than quarterly, with funds to be received by the super fund within seven business days of each payday. This reform aims to improve the timeliness and tracking of super payments. While the new rules also introduced “qualifying earnings” (QE) as a broader base for calculating the Superannuation Guarantee, which includes salary sacrifice amounts, the ATO maintains that the treatment of salary sacrifice for other employee benefits remains voluntary for employers.
The Suburban Rail Loop project itself has been a subject of discussion, with new Victorian Premier Ben Carroll indicating in July 2026 that he would not rule out redirecting funds from the project to other infrastructure priorities. Reports in August 2026 suggest that cancelling the project could incur over $12 billion in costs, including money already spent and potential contract termination fees.