Saxon Davidson On Australia's Worker and Housing Shortage Crisis Nine News Perth

On 25 August, IPA Research Fellow Saxon Davidson joined Monika Kos on Nine News Perth to discuss the federal government’s latest Intergenerational Report.

Below is a transcript of the interview.

Monika Kos:

Australians are set to live longer in the coming years and decades. The average life expectancy is expected to rise to 87 for men and 89 and a half for women by 2063. This latest research is part of the Treasury’s Intergenerational Report and flags how the nation’s piggy bank could be affected as more people use government funded healthcare for longer. So is it time to rethink the options for older workers? This is an untapped workforce. Joining us is Institute of Public Affairs, Saxon Davidson. Welcome to you. Saxon, the proportion of our population over 65 is set to double. How could this cost the younger taxpayer?

Saxon Davidson:

This could cost the younger taxpayer quite substantially. The Intergenerational Report shows that Australians age 65 and older is set to double as well that the federal government is expecting to be in systemic budget deficits over that coming period as well. This means increased government spending that will be reliant on to be spent by a decreasing proportion of working age Australians.

Monika Kos:

Is there an opportunity here then? Can we look to open up to older workers who in turn will pay tax to support our aging population?

Saxon Davidson:

It has never been more critical to allow older Australians to reenter the workforce. Currently, an Australian age pensioner faces an effective marginal tax rate of 69% if they choose to work over a day and a half, just over minimum wage per week. This is why only three in 100 Australian pensioners work compared with our neighbors in New Zealand who do not have these unfair tax barriers. One in four New Zealand pensioners work.

Monika Kos:

Well, making it easier for older people to work then that could be a quick fix. But what could be some other ways to boost the nation’s savings?

Saxon Davidson:

Well, Australian veterans and Australian students on the Youth Allowance additionally face similar effective marginal tax rates. But IP analysis has shown that this is the easiest and most effective and most efficient solution to solve these long-term and also short-term costs. Currently, there is a worker shortage crisis in the nation over 430,000 job vacancies, and the government has proposed quite a shortsighted approach to simply fill these with migration, despite the fact that other IP analysis has shown that this has set to cause a housing shortage of about 252,000 homes.

Monika Kos:

Okay, so the job vacancies are there, but WA’s unemployment rate fell yet again according to latest figures. Are there jobs for older workers?

Saxon Davidson:

Absolutely. Critically, there are. Leading surveys have shown that 20% of Australian pensioners would reenter the workforce if these tax barriers didn’t exist. If 20% of pensioners reentered the workforce, the number of job vacancies in WA, which is currently around 52,000, would fall by 90%. Now, I’m not saying that every job vacancy in the economy would be suitable for an age pensioner, but that’s when you have the conversation about sustainable and planned migration.

Monika Kos:

Can the current system last the way it is?

Saxon Davidson:

Not at all. I don’t think so. You going to need to expand the participation rate amongst Australians who want to work. Australian pensioners want to work. 20% of all Australian pensioners want to work but cannot because of these unfair red tape and tax barriers.

Monika Kos:

And if it’s working in other countries, why isn’t it working here?

Saxon Davidson:

Well, the federal government tinkered with the system and allowed and added an extra half day of work penalty free. But however, this just hasn’t worked and we know that pensioners wanted to work. Since this tinkering of the system was introduced, the job vacancy rate has only decreased around 3% nationally, and worker participation amongst pensioners has stagnated.

Monika Kos:

We have a few viewers solutions to raising more tax dollars. Azaan Khan says more kids, every couple should have at least three to five kids. What do you think of that?

Saxon Davidson:

It’d be very hard to mandate. Listen, we know that the birth rate in Australia has been declining. This is what’s causing this aging population. However, I think it’s easier to be able to get the Australians who are here already to get back into work and people who want to get back into work.

Monika Kos:

Michelle Michelle asks, “Why do we need to be raising more tax dollars? After 50 years of age, how about paying no taxes and not penalizing aged workers and pensioners who’ve paid taxes all of their life?”

Saxon Davidson:

Absolutely. It is ridiculous that an age pensioner would be paying an effective marginal tax rate of 69%. No country has ever taxed their way to prosperity. We need simple budget reforms concentrated spending on productive sections of the economy so that spending is no longer inflationary. We’ve seen that inflation has been a problem in the last 18 months as well as interest rates.

Monika Kos:

Jonathan Fry has this solution, halving politician salaries.

Saxon Davidson:

Well, I find that highly doubtful that a politician would vote to halve their own salary, don’t you?

Monika Kos:

I’m not even going to answer. Institute of Public Affairs, Saxon Davidson. Thank you very much for being with us.

Saxon Davidson:

Thank you for having me.

This transcript with Saxon Davidson talking on Nine News Perth from 25 August 2023 has been edited for clarity.

In this article, Saxon Davidson contextualises and disseminates the federal government’s latest Intergenerational Report, along with how it ties into Australian housing and worker shortages.

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