Saxon Davidson On Pension Reform And Worker Shortages Perth Live 6PR – January 10 2024

Written by:
10 January 2024
Saxon Davidson On Pension Reform And Worker Shortages Perth Live 6PR – January 10 2024 - Featured image

The Institute of Public Affairs’ Saxon Davidson joined Russel Collett on Perth 6PR to discuss the nationwide worker shortage and the data correlating to it from the ABS.

All media appearances posted onto the IPA website are directly related to the promotion and dissemination of IPA research.

Below is a transcript of the interview.


Russell Collett:

This is very interesting. The Institute of Public Affairs here in Australia has come out in response to ABS data that’s showing that Australia’s worker shortage, we’ve got a crisis on our hands in regards to we haven’t got enough skilled workers available to take these jobs. And we’re looking at over 350,000 jobs that have remained vacant since May 2021. And it’s the Institute of Public Affairs that are saying, “There’s got to be a solution to this.” Why aren’t we using our skilled workforce that is sitting on the sidelines but don’t want to pay extra tax, because they may have either semi or fully retired. Joining us to talk more about this is Saxon Davidson, the research fellow with the Institute of Public Affairs. Good afternoon, Saxon. Welcome to Perth Live.

Saxon Davidson:

Good afternoon. Thank you for having me.

Russell Collett:

Mate, this is a real crisis that’s been ongoing now for a couple of years. 350,000 jobs vacant since May of 2021. We’re now into January of ’24. And you’re saying, and the institute are saying there’s a very easy solution to this. What is that easy solution and how can we get it adopted by the government?

Saxon Davidson:

Well, absolutely. In November last year, the federal government increased the work bonus that aged pensioners and veterans can earn before they get subject to a ridiculously high amount of tax of 69%. While this is a fantastic step in the right direction, the crux of the issue is actually the unfair tax rate, not how much they can earn before it’s applied to them.

Veterans and pensioners in Australia cop a tax rate of 69% should they work just a day and a half, more or less on minimum wage, which is $226 per week. Now, simply for them, it doesn’t pay to work. And this is why only 3% of Australian aged pensioners are in work, when we have surveys available to us that indicate that 20% would return to the workforce. Now, just in WA, 20% of pensioners in WA would lower the amount of job vacancies, if they all return to the workforce, by about 90%.

Russell Collett:

That’s an amazing figure. But who could come up with such a policy where you’d have a pensioner working for, after they’ve earned $226 per week, every three hours they’re working, they’re basically working two hours of that for the federal government in tax.

Saxon Davidson:

Yes. It’s baffling really. And this is only part of the issue. We’ve had consistently high job vacancy rates for the past almost three years now. Nationally, we are 71% higher than what it was prior to the pandemic in February 2020. And in WA is about 80% higher than that pre-COVID figure.

Now, what I don’t understand is why there hasn’t been urgent action from the government to allow Australians who want to work to enter the workforce. Instead, they’ve been relying on unsustainably high amounts and record amounts of migration, which has a whole bunch of other societal issues, such as housing and critical infrastructure that has to be in use, or simply sometimes isn’t there. So federal government must immediately look into our own backyard for an easy fix solution.

Russell Collett:

I have no doubt you’re onto a great cause here. This has been pushed also by Australian seniors now for a number of years. I just don’t know why the current federal government is asleep at the wheel here. It’s a very simple solution. We need the skills, the skills is a real crisis here in regards to a skills worker shortage. And the answer is on our doorstep, and it doesn’t have all the associated issues, as you said, like the critical housing shortage we already have, the incredible numbers of migrants coming in who aren’t skilled, which are then frustrating the numbers again.

There has to be an answer to this at some stage. Are you, as the Institute of Public Affairs, making approaches to the federal government to try to fast-track this pretty simple solution to a pretty difficult problem?

Saxon Davidson:

Absolutely. We’ve been front and centre in this debate for around two years now, ever since the onset of the worker shortage crisis around the middle of 2021. We have made plenty of submissions to government. But unfortunately, the federal government seems to be blind to the issue at the moment, despite the fact that their unplanned record migration over the next five years will create a national housing shortfall of over 250,000 housing units across the country and over 34,000 in Western Australia.

And to that unskilled immigrant problem, a lot of the migrants that are coming in are actually international students who aren’t coming into work but to study. And they are taking a bunch of new housing supply across all the capital cities in Australia. In Perth alone, 63% equivalent of all new housing supply in the financial year of 2023 were taken by international students alone. And they’re not contributing to filling the job vacancies.

Russell Collett:

And we have a proven model here. We only have to go as far as New Zealand to see the experience of making change. Why isn’t the government envisioning what is happening over there and bringing it to our shores?

Saxon Davidson:

I’m unsure. Just to explain to your listeners, in New Zealand, pensioners and veterans are only subject to the tax rate on their combined benefits and earnings, unlike in Australia. This means that a pensioner and veteran in New Zealand is subject to a tax rate as low as 10.5%. And when you compare that to 69% in Australia, it’s no wonder why 25% of pensioners in New Zealand are employed, compared to only 3% in Australia.

Russell Collett:

And when you consider also that whenever they spend that money, they’re going to be paying GST on top of their earnings, it just… I don’t know, it’s mind-blowing to me that this hasn’t happened. It’s been a regular call now from the IPA and also, as I said, from Seniors Australia for a couple of years, but it just seems to be falling on deaf ears.

Saxon Davidson:

Absolutely. We implore the government to immediately enact this reform and to follow the New Zealand model, not just for pensioners and veterans, but also for students on the Youth Allowance. These three cohorts could desperately use the dignity of work, for veterans and pensioners, so that they can feel a connection to the community and they aren’t locked out of the workforce, even though they may wish to still be a part of it. And for students on the Youth Allowance, it’s an opportunity to grow their skill set and experience for a life in the workforce after they’ve finished university or TAFE study.

Russell Collett:

Well, keep up the good fight. To you and all the members of the Institute of Public Affairs, Saxon Davidson as the research fellow there, we do appreciate you coming on board with us this afternoon on Perth Live here in Perth. And we’ll get some feedback, obviously from our audience mate, but thank you for coming on board.

Saxon Davidson:

Thank you for having me.

Russell Collett:

Good on you there. Saxon Davidson there. It’s a good call. This is a big call, it’s been made by Seniors Australia. We’re not going to give up on it, and it’s now… But over a couple of years now that the Institute of Public Affairs have been calling for this. We do need to make change. The federal government needs to make change. They need to stop going down the immigration route. We cannot take too many more immigrants into this country with the housing shortage we have. We need a breather, so we can catch up on the housing shortfall.

But in the meantime, we’ve got a skilled workforce sitting there, waiting there, waiting for the opportunity to get back into the workforce itself. And they just won’t do it because they’re going to be working two days in a row to get one day’s pay. 69% tax rate. Work that out.

And if you’re out there, and if you’re one of those people that has a skill set still there and just refuses to go back to work because you’re going to be paying 69 cents on the dollar in tax, let us know, 133-882. We’d love to hear from you today. We’d really love to hear from you.

This is a real topic. It should be changed. Why the federal government are not doing it, I do not know. And lots of questions have been raised. Let us know. Would you take the opportunity, if we say fell to 10.5% or even 25%, as is the experience in New Zealand, would that make a difference to you rejoining the workforce and providing those skills that are currently needed, especially here in WA with the burgeoning economy? Let us know, 133-882. You’re on Perth Live, this is the Summer Edition, I’m Rusty Collett.

This transcript with Saxon Davidson talking on Perth Live 6PR from 10 January 2024 has been edited for clarity.

Support the IPA

If you liked what you read, consider supporting the IPA. We are entirely funded by individual supporters like you. You can become an IPA member and/or make a tax-deductible donation.