Psychologists underpaid $50m in superannuation by the federal government

Thousands of psychologists and mental health social workers providing counselling for Australia’s soldiers and military veterans have not been paid up to $50m in superannuation for 12 years by the federal government.

The Australian government has underpaid thousands of psychologists and mental health workers – directly engaged by Open Arms, a trauma counselling service for serving Australian Defence Force members, military veterans, and their families – up to $50m in superannuation over 12 years.

Thousands of psychologists and mental health social workers ­providing around-the-clock trauma counselling for Australia’s serving soldiers and military veterans have not been paid up to $50m in superannuation for 12 years by the federal government, in a major and developing underpayment scandal.

The Australian can reveal that Open Arms, a government-­funded crisis support service run by the Department of Veterans’ Affairs, failed to pay superannuation between 2012 and this year for mental health professionals providing vital services to serving military personnel, veterans, and their families.

While the department and the Australian Taxation Office are calculating the scale of the historical underpayments, sources have told The Australian that at least 2500 workers have been underpaid their entitlements, and taxpayers may have to spend up to $50m to settle the back payments, plus interest.

A spokeswoman for the ­Department of Veterans’ Affairs said an internal review established mid-year found super­­annuation was owed to Outreach Providers “directly engaged ­between 2012 and 2024 to ­perform services on behalf of Open Arms pursuant to the Superannuation Guarantee (Administration Act 1992)”.

“Open Arms’ Outreach Providers, including psychologists and mental health social workers, play an important role in providing mental health and wellbeing services to veterans and their families across the country,” the spokeswoman said.

“Since July 2024, DVA has worked closely with the Australian Taxation Office to follow the necessary process to remediate outstanding superannuation payments for Outreach Providers in line with requirements. Historical back payments are being calculated. Outreach Providers will be paid superannuation on eligible payments made to them for ­services delivered, including appointments and reports completed for clients, as well as any sessions where the client did not attend, and the Outreach Provider was paid.”

Repayments to Open Arms psychologists and counsellors are expected to begin shortly and finish before next July.

On Tuesday, a spokeswoman for Veterans’ Affairs Minister Matt Keogh said he was advised about the matter when the department found out in mid-2024 and “was greatly concerned”.

“The department is now focused on righting the historical wrong to ensure everyone receives the superannuation guarantee payments they’re owed,” Mr Keogh’s spokeswoman said.

The Albanese government moved last year to make wage theft a criminal offence, declaring it was time to end a double standard. “If a worker steals from the till, it’s a criminal offence – as it should be,” said the workplace relations minister Tony Burke in September 2023. “But in many parts of the country if an ­employer steals from a worker’s pay packet, it’s not.”

The majority of the Open Arms underpayments occurred under successive Coalition governments. The most recent data shows Open Arms had a network of 1205 outreach counsellors at the end of last year, as well as 277 “in-centre clinicians”. In the 2022-23 financial year, more than 43,000 serving Australian Defence Force members, veterans and their families used the service, up from 16,472 in 2016-17.

Veterans' Affairs Minister Matt Keogh. Picture: Martin Ollman

In DVA’s 2024-25 budget, Open Arms has been allocated more than $134m.

DVA’s bombshell underpayments admission comes after critical findings about Open Arms in the Royal Commission into Defence and Veteran Suicide, which recommended a wide-ranging independent review starting in 2027 into the free, confidential counselling service.

Between 2013 and 2022, 200 serving ADF members or veterans who were also current or former clients of Open Arms died by suicide, prompting internal reviews that found “serious” clinical governance, workforce, and documentation issues. Of those who took their lives, 33 people had been in contact with Open Arms in the week before their deaths.

A 2022 study found about 65 per cent of the Open Arms workforce were labour hire workers and warned the high proportion posed “significant” risks including high staff turnover, recruitment and training costs, and concerns about the ownership of client records. Since then, Open Arms has offered labour hire workers temporary contracts and by December 2023, only one in five were still provided through labour hire.

Ryan Shaw, a former Army sniper, is now an advocate for veterans. Picture: Steve Pohlner

Veterans’ advocate and Afghanistan war veteran Ryan Shaw – who was briefly the LNP’s 2022 federal election candidate for the seat of Lilley before he withdrew, citing PTSD – said Open Arms’ underpayment of the mental health workers represented a “total collapse of governance and oversight”.

“For over a decade, this issue has gone unchecked, and while the current government uncovered the problem, they’ve done nothing to fix it in two years,” Mr Shaw said.

“Their ‘agreed-in-principle’ response to the Royal Commission into Defence and Veteran Suicide highlights a disturbing trend of deferring action and putting critical national issues in the too-hard basket. At a time when three current or former service members take their own lives every fortnight, the government’s failure to act is inexcusable.”

The royal commission also found some veterans had suffered months-long delays in accessing mental health care through Open Arms; the average in 2021-22 was that people had to wait about 22 days before seeing a clinician, which was reduced to 20 days in 2022-23. There were also criticisms that Open Arms’ staff lacked skills in dealing with war trauma, and that the organisation failed to collaborate with the rest of the healthcare system, resulting in poor outcomes for veterans and serving soldiers.

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If you or someone you know is at risk of suicide, call Lifeline (13 11 14) or the Suicide Call Back Service (1300 659 467), Beyond Blue (1300 224 636), or see a doctor.