Pension Reforms Commencing Today Do Not Go Far Enough To Address Australia’s Worker Shortage

“Pension reforms commencing today still punish age pensioners and veterans who want to work and contribute to the community, and do not go far enough to address Australia’s worker shortage crisis,” said Daniel Wild, Deputy Executive Director of the Institute of Public Affairs.

Today, the Federal Government’s recently legislated age pension and veteran work bonus reforms commence allowing recipients to earn $226 per week, up from $150 per week, before their benefits start to be reduced by 50 cents on the dollar.

“These inadequate changes mean that once a pensioner or veteran earns more than $226 a week, equivalent to one and a half days of work per week, they could be subject to an effective marginal tax rate of up to 69% through lost benefits and income tax payment – it is just not good enough,” said Mr Wild.

According to the most recent data from the Australian Bureau of Statistics, there are over 470,000 job vacancies across the nation, and over a quarter of businesses reporting vacancies. The level of job vacancies represents a 270% increase from May 2020.

“At a time when Australia faces an unprecedented worker shortage, we need to be pulling out all stops to get people into work,” said Mr Wild.

The Institute of Public Affairs presented research to the Senate Standing Committee for Community Affairs in September, which showed it is fiscally and economically sound for the Federal Government to remove of all work barriers facing age pensioners and veterans.

“The IPA called on Federal Parliamentarians earlier in the year to remove this barrier to work once and for all. The slight increase to age pensioners and veterans’ annual work bonus is inadequate to help ease the burden on working pensioners or help solve Australia’s unprecedented worker shortage crisis.”

“Allowing pensioners and veterans to work is a win-win-win – it means more revenue for governments, more workers for business to fill shortages, and more opportunities for our most experienced citizens to work, which is a critical source of dignity and social inclusion.”

A survey conducted this year by National Seniors found that 20% of all pensioners would consider re-joining the workforce if work restrictions were adequately eased. That is equivalent to over 510,000 workers, currently only 3% of pensioners work.

“Our current worker shortage level costs Australians $32 billion in foregone wages and will cost the Federal Government $7 billion in foregone income tax revenue. This is revenue that could have been invested in roads, schools, and hospitals, or been used to help pay off our spiralling national debt,” said Mr Wild.