“As Australia’s worker shortage crisis enters its fifth year, the nation will not see productivity growth if the federal government continues to refuse to remove the regressive and unfair tax and red tape barriers stopping Australians who want to work from working,” said Saxon Davidson, Research Fellow at the Institute of Public Affairs.
Today, the latest Australian Bureau of Statistics’ job vacancy data reveals that worker shortages are 42.9 per cent higher than pre-pandemic levels, increasing by 2.9 per cent in May 2025 to 339,400;
- Job vacancies have been over 300,000 for four years straight.
- Job vacancies in the construction sector increased by 20.5 per cent from February to May 2025, damaging the push to build more homes during the current housing shortage.
- In the last three months worker shortages have got worse in South Australia (9 per cent increase), Victoria (7.9 per cent), Tasmania (1.9) and Queensland (1.7 per cent).
- Worker shortages in all states and territories are higher than pre-pandemic levels.
- South Australian worker shortages are still almost double what they were prior to the pandemic, with Queensland 84.9 per cent and Tasmania 58.8 per cent above what they were prior to the pandemic.
“Chronic worker shortages hurt economic productivity because businesses cannot create wealth and invest in the economy without the workers they need,” Mr Davidson said.
“The Albanese government has over the last three years used Australia’s worker shortage crisis as a means to justify its record, out-of-control migration intake. Today’s data again reinforces that this approach has failed.”
IPA analysis has demonstrated that removing red tape and tax barriers facing Australian pensioners, veterans, and students is the most effective way to address this elevated job vacancies:
- Australian pensioners and veterans still face an effective marginal tax rate of 66 per cent should they earn over $226 per week.
- This occurs as a 50 per cent claw back is applied on their pension for every dollar earnt over $226, with normal tax rates on top. Similarly, students face an effective marginal tax rate of 76 per cent should they earn over $288 a week.
- Even after the tax cuts in 2026 and 2027, pensioners, veterans and students will be the highest taxed Australians by a significant margin, only reducing by 2 per cent after 1 July 2027.
- In New Zealand, pensioners who choose to work pay tax on their combined pension and income at a tax rate as low as 10.5 per cent, and their pension is not reduced for simply working. This is why a quarter of pensioners work in New Zealand, compared to just three per cent in Australia.
“This model is the key reason why New Zealand did not have a worker shortage crisis during and following the pandemic. If our federal government adopted this model for our pensioners, veterans, and students, Australia could see 520,000 extra workers enter the labour force,” Mr Davidson said.
“Treasurer Jim Chalmers recently spoke at length about the need for tax reform. His push for change in our tax system is the perfect opportunity to both fix our worker shortages and remove a barrier to employment preventing hundreds of thousands of Australians from working.”
To download the IPA’s previous research click here.
