Saxon Davidson IPA Worker Shortage Research Perth Live 6PR – June 27 2024

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27 June 2024
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The Institute of Public Affairs’ Saxon Davidson joined Russell Collett on Perth 6PR to discuss IPA research into worker shortages and how mass migration has failed to fix it.

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:

We were chatting earlier about the IPA, the Institute of Public Affairs, and their push to make sure that even though we’ve got 352,000 job vacancies, their call, and it’s been a consistent call, is to allow pensioners who want to take the opportunity to do such, to allow them to work more, to rejoin the workplace without having their welfare affected. Pretty common sense approach in my view. Saxon Davidson, the Research Fellow at the Institute of Public Affairs, joins us on Perth Live. Good day, Saxon.

Saxon Davidson:

Good day. Thank you for having me.

Russell Collett:

Mate, lovely to have you on board. I think this is a very, very good promotion you’ve come up with. I do think that pensioners out there will take the opportunity if they’re not hampered or if their welfare is not affected by them taking on maybe one or two days a week of work.

Saxon Davidson:

Absolutely. And we know that pensioners would take up if they were able to work without these abhorrent tax policies because our frequent polling has shown that one in five pensioners would take up work. What happens is when a pensioner works a day and a half on minimum wage, they get taxed at an effective rate of 69%. This is through loss pension payments of 50 cents on the dollar, and also the notional tax rate. Now, this tax rate also applies to Australian veterans, and similarly, Australian students on the Youth Allowance also cop a 79% tax rate should they work more than two days a week on the minimum wage.

Russell Collett:

And Saxon, looking at the list of jobs and the required jobs through Jobs and Skills Australia, they’ve released this list of priority migrant skills for fast-tracking visas. We’ve just had nearly 1,000,000 people come into Australia on this pathway. Some of the jobs include yoga and martial arts instructors, jewellery designers, dog trainers, educators. Surely, we’ve got pensioners out there with that exact skill set that all they need is to know they’re not going to be punished for working to bring that skill set to the workforce.

Saxon Davidson:

Absolutely, 100%. But all we also know is that this migration programme has failed to fix our worker shortage problem. We’ve had a worker shortage crisis for almost three years now, and this government’s been in power for two years. And what we’ve learned is that they simply do not want to adopt this policy, and they do not want to accept that their migration programme has been a failure. As you said, 1,000,000 migrants over the previous year, but recent IPA research found that of that 1,000,000 migrants, it only filled about 40,000 net jobs in that one year period. It simply has not worked, and it has brought on other costs of living stress as well. We are currently in a GDP per capita recession. The pie might be getting larger, but everyone’s sliced. The pie is getting smaller. House prices are continuing to go up. We’re having a housing shortage.

The city of Perth, for example, price growth and housing is triple the rate of the other capital cities. This migration programme has just been an abject failure and the government just needs to change track. But unfortunately, they just simply do not want to.

Russell Collett:

And why is that? What is this great reluctance? Is it the fact that they don’t want to be proved wrong? Because certainly on the numbers, if only 40,000 of 1,000,000 migrants to Australia over the last 12 months have got a job, 40,000, they’ve certainly got it wrong because the whole purpose of this mass migration was to fill the jobs that we needed filled. And why would you have someone like a yoga instructor on that list when one of the biggest problems we’ve got is a housing crisis? We need trades people.

Saxon Davidson:

Yeah. They don’t want to admit failure, and we know this. The Social Services Minister, Amanda Rishworth, was on the ABC in Adelaide on radio just a few months ago and said, “We will not adopt the New Zealand pension tax model.” And it’s just outrageous. They simply do not want to accept that the policy that they’ve been pursuing for two years now has been an abject failure, and any commitment to reduce migration that was announced in the budget just last month is purely lip service because it’s actually not going to lower the numbers that are really affecting the increase in migrants.

Russell Collett:

And we’re still not going to get the houses, the apartments, the units built that we need to house all these people.

Saxon Davidson:

No, absolutely not. We are having a massive increase in the cost of infrastructure as well, like building infrastructure. And also, manufacturing and construction have large worker shortage problems as well. And you can’t bring in people who are not filling those jobs, which then exacerbates and prolongs the worker shortage crisis, and as well adds all that stress to other cost of living issues as well. It’s an endless cycle that the government can fix now by adopting different policies, by changing track, but they simply do not want to accept that they have failed on this front.

Russell Collett:

And the lived experience in New Zealand with their changes they made has been a real success. Can you tell our audience a bit about how that has worked? And again, what is the reluctance to bring it here?

Saxon Davidson:

So in New Zealand, pensioners aren’t subject to any penalty for earning employment income. So under current New Zealand rules, pensioners can earn income without their pension being reduced, and they only pay tax on their combined pension and income at a rate as low as 10.5%. This is why one in four New Zealand pensioners work, compared to only 3% in Australia. Now, at the end of last year, the participation rate in New Zealand was 5.1% higher than what was in Australia, which is why they’re not suffering through a worker shortage crisis. And 80% of those five percentage point gap is attributable to the pensioners in New Zealand that are working.

So this is the major reason why New Zealand have avoided a worker shortage problem. And if we adopted this model, we could have up to 520,000 additional pensioners, veterans and students participating in the labour force, which is far higher than the number of job vacancies that are currently in the economy.

Russell Collett:

And not to say also that the experience they would bring back into the workforce for the new workers would be enormous. There’s got to be enormous benefits there from a productivity side of things.

Saxon Davidson:

No, absolutely. But it’s not just economical. When pensioners are polled, it’s not just economic reasons. They feel more part of the community. There’s a societal part to it. They’re able to be a part of their local area, they get to meet new people. And also, they feel like it’s part of national pride to help the country get through a tough time, like a prolonged tough time now with the economic struggles that we’re currently facing.

Russell Collett:

And the government still gets the benefit of every time that if a pensioner earns that money, every time it’s spent, there’s a 10% GST involved. So that every time that dollar does its cycle around the merry-go-round of the economy, they’re coping 10% at each point.

Saxon Davidson:

Indeed, and this workers shortage crisis has a cost to it as well. So this cost of living crisis is costing Australians $32 billion per year in foregone wages in a cost of living crisis, and is also costing the government $8 billion per year in foregone income tax when we’re in a time of tight budgets and budget deficits and debt. So there are true economic and fiscal costs that aren’t immediately obvious until you look at it a bit closer.

Russell Collett:

And the Coalition, are they looking at running with this proposal going forward, towards the next election, say?

Saxon Davidson:

So Peter Dutton announced in his budget reply that they would double the work bonus. So about $300 to $600. Now, that’s a fantastic first step, but we believe that reform needs to be stronger to deal with this pressing issue.

Russell Collett:

And you are still lobbying government on that?

Saxon Davidson:

Absolutely, and we will continue to. It’s an important policy. This issue is not going away. Job vacancy numbers are stagnating. High job vacancies fuels inflation, stops people from earning money, it stops the government from earning tax revenue. It’s an all-encompassing issue that needs to be addressed now.

Russell Collett:

Look, all the very, very best with it to you and your team there at the Institute of Public Affairs. Saxon Davidson, our Research Fellow. I think he makes pretty good sense to me. Thank you for your time this afternoon on Perth Live.

Saxon Davidson:

Thank you for having me.

Russell Collett:

Love to hear from you.

This transcript with Saxon Davidson talking on Perth Live 6PR from 27 June 2024 has been edited for clarity.

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