LABOR has today launched a battle against a little-noted government attempt to forgive employers who have “stolen” workers’ superannuation payments for up to 25 years.

At stake is unpaid super the Australian Tax Office calculates could be worth more than $2.85 billion.

Opposition Leader Bill Shorten used Question Time to attack the proposed 12-month amnesty for non payment of superannuation contributions, just as the government was promoting its efforts to make the scheme fairer to vulnerable workers.

Today the Productivity Commission release a scathing draft report which accused funds of short-changing members or not being sufficiently transparent, and of imposing expensive and little-used insurance policies.

READ MORE: Superannuation system could be retired, Productivity Commission suggests

The government wants to argue it has already acted on superannuation problems. Labor claims not enough has been done.

Mr Shorten asked Prime Minister Malcolm Turnbull to explain “government policy to forgive businesses who have illegally failed to pay the employee superannuation for over 25 years by

waiving all penalties and rewarding them with tax deductions”.

Mr Turnbull did not appear to know the legislation Mr Shorten was referring to. When again questioned on it he deferred to Financial Services Minister Kelly O’Dwyer, who announced the proposal on May 24.

“It is very clear that the government is not letting anybody off the hook from paying the superannuation guarantee entitlements that they ought to pay,” said Ms O’Dwyer.

“Far from it. This government has put in place a mechanism to allow small and

medium-sized businesses, who otherwise have not paid superannuation guarantee entitlements, to come forward, under an amnesty, and make good every single dollar, every single dollar, that they owe their workers.

“And why? Why are we doing this? We are doing this because we actually care about these superannuation entitlements of every single worker.”

Under current laws employers who don’t pay compulsory contributions into superannuation funds can lose tax deductibility for the contributions, and a fine of up to 200 per cent of the unpaid money.

And they have to lodge the money with a nominal 20 per cent interest addition. The government’s legislation said the amnesty would apply to superannuation contributions unpaid from July 1, 1992 to March 31 March 2018.

That could mean an employer keeping the money from an employee for more than 25 years would not face any penalty if repayment was made within 12 months.

Employer contributions to their employees’ superannuation are tax deductible against the employer’s assessable income. However, if the employer fails to pay superannuation, the superannuation guarantee charge is not tax deductible.

Labor claims the amnesty would deliver employers a tax break for doing the wrong thing.

Shadow treasurer Chris Bowen said Labor would demand an amendment removing the amnesty.

“Only someone as out of touch as Malcolm Turnbull would reward dodgy businesses who have been robbing workers for 25 years,” Mr Bowen said in a statement.

“When employees steal from employers, they rightly have the book thrown at them. Why is it one rule for business and another rule for everyone else?

“Businesses who do the wrong thing and steal from workers should pay the price for their misconduct, not get another tax break from Malcolm Turnbull.”

Finally catching up on the issue, Mr Turnbull said Ms O’Dwyer was introducing “legislation which is designed to recover over $200 million, hopefully more, of unpaid contributions for the benefit of employees”.

“What the government is foregoing, as part of that amnesty, is some fines,” Mr Turnbull said.

The objective of the amnesty was to get “more money for more workers”.

“And here, the champion of the workers, does not want to help them out,” Mr Turnbull added, referring to Mr Shorten.