Pensioners could alleviate the aged care staffing crisis – but will Labor lift the income threshold?


Article by Caroline Egan courtesy of HelloCare.

Age pensioners are well suited to working in aged care, and many do, but pension income rules mean they must limit the amount they work to avoid being taxed at the highest marginal tax rate.

With the benefits of working for longer well established, and the aged care sector in the midst of an intense worker shortage, there is a growing chorus calling for pensioners to be able to earn a higher income before a punitive tax rate kicks in.

Home care worker Lyn Allen, 65, works 15 hours a fortnight. She’d like to do more, but she closely monitors and limits the hours she works.

Allen would like the government to increase the amount pensioners can earn before they are taxed at 50 cents in the dollar or the pension cuts out altogether.

The age pension is the main source of income for about 1.5 million older Australians, which has a maximum rate of just over $25,000 a year for a single person.

Under the Age Pension income test, a single pensioner can earn an average of $180 a fortnight before they begin to be taxed at as much as 50%.

Allen, a registered nurse, performs a range of tasks including showering, housework, respite care, shopping, meal preparation and simply sitting with her clients so their spouse can go shopping.

She finds the work satisfying. “I absolutely love it,” she told HelloCare.

Allen retired from nursing a few years ago, but “wasn’t quite ready” to give up work entirely. Since her husband died 12 months ago, the impetus to work has been even greater.

Initially Allen worked as a carer with veterans, a role she enjoyed as her late husband had also served. She felt she was able to develop special bonds with her clients. Now Allen is working 15 hours a fortnight with home care agency Home Instead. However, she would prefer to work two to three full days a week.

“You’ve got to weigh up working four days and getting paid for two. It just doesn’t make much sense,” she explained.

Allen would like to see the weekly income threshold doubled and would be happy to pay some tax on it, but not 50%. “That way [the work] is worth your while,” she said.

“It’s giving back to the community. But the government is also getting some tax back.”

Allen plans to continue working for about another five years if she is able to. She loves giving back to the community and is passionate about keeping older people, like herself, engaged in work.

She said it’s “stressful” trying to stick within the income limits imposed on pensioners.

Even when a carer is required urgently, the threshold means Allen has to “say no because I’m right on my limit”.

Pensioners are living in poverty

Pensioner Pat Isaacs can’t afford to eat meat and recently told 9News, “I’m not sure I will survive with the age pension as my only income” now that prices have risen so dramatically. She can’t afford new clothes and her medical costs are increasing.

The government’s $250 cost of living bonus disappeared in one day when her car battery died.

She said politicians don’t understand how difficult it is to live on the pension alone. Isaacs added that politicians don’t understand her “reality” and are “out of touch with real issues”.

One-third of Australians over the age of 65 are at risk of living in poverty, according to OECD data. Of those, single women renting their home are the most vulnerable.

Serious staff shortages in aged care

The collective of aged care provider peak bodies, the Australian Aged Care Collaboration (AACC), reports their aged care provider members can’t find staff for a quarter of their shifts, meaning about 140,000 shifts go unfilled every week.

Allen said there are plenty of mature aged care workers, like herself, who want to work more but don’t because of the pension rules, and there are clients who miss out on services because staff can’t be found.

“It’s frustrating because there’s someone sitting at home that’s going to miss out on a service because they haven’t got the workers to do it,” Allen shared.

A client recently told Allen, “Sometimes I sit here waiting for them to come and no one comes.”

Allen added, “It’s really frustrating. These people deserve this service because they’ve been the backbone of our country.”

Mature workers have a lot to offer in home care

Allen believes mature carers are more empathetic towards their aged care clients and are well suited to working in aged care, particularly home care.

“Some of my clients are in their late 80s and 90s and they say, ‘I’m not moving too well today.’ As an older person, I’ve got arthritis, so I can fully understand where they’re coming from,” she said.

Younger carers don’t have the same “life experience”, she added.

“I’ve got a lot to give back … there’s certainly a lot I can offer,” she told HelloCare. “There are a lot of us out there with lots of knowledge and working in home care … we can use that experience.”

Allen finds working in home care “very, very satisfying” because she is able to give her clients her undivided attention, compared with residential aged care and hospitals where healthcare workers have to spread her time between residents or patients.

Addressing the skills shortage

With Australia’s unemployment rate at its lowest in more than 40 years, Home Instead Australia Chief Operating Officer, Georgia Downes, says the solution to the workforce shortage could be right in front of us.

Approximately 10% of Home Instead’s caregivers are aged 65 or above. Older caregiivers are attracted to working in home care because they are “looking for purpose and a way to give back” and it “provides extra income to top up their retirement savings”, Downes said in a recent op-ed.

“Many older Australians also report health benefits from their decisions to remain in the workforce – it helps them to remain physically and mentally active, while reducing feelings of loneliness, isolation and diminishing self-worth.”

Older workers also have leadership qualities that are an advantage in the workplace, Downes observed.

The “solution” to the skill and labour shortage is to “make it easier for [pensioners] to unretire by providing workplaces that welcome their wisdom, support their needs and reward their contributions,” she wrote.

“Grey army” could return to the workforce

Ian Yates, chief executive of Council of the Ageing (COTA), told HelloCare that considering the tight labour market, he would like to see the new government implement policy settings that entice retirees back into the workforce.

COTA is recommending a “detailed and evidenc- based” review of the adequacy of the aged care pension for those who are dependent on it, including looking at where current pension settings may be a disincentive to work.

Yates said the government should be facilitating a “longer transition” to retirement “where people stay engaged” in the workforce.

The pension was last reviewed in 2007, and since then the world has changed, he said. “The hard barrier between work and retirement is gone.”

Yates has heard claims of a “grey army” returning to the workforce.

Keeping older Australians engaged in the workforce can not only fill gaps in the tight labour market, it’s also good for the economy, pensioners’ finances and their health and wellbeing, Yates added.

Removing the pension test altogether could run the risk of creating a “universal pension”, which is generally lower, expensive and not desirable, Yates warned. It’s more suitable for the pension to “target the people who have less”.

New Zealand’s pensioners are not penalised for earning additional income. The participation rate of over 65s working in New Zealand is 25% compared with Australia’s 14%.

“People should be able to keep working if they are able to and they want to”

National Seniors Australia is compiling a petition to encourage the government to exempt employment income from the income test for pensioners with limited means.

They believe “pensioners with limited wealth” should be able to “work without losing their pension and help meet critical labour force shortages”.

Ian Henschke, chief advocate for National Seniors Australia, told the ABC, “We’re recommending that those pensioners that fall under the income test … should be allowed to continue to work on their pension, pay income tax … so they’re paying their way, and they will be better off, Australia will be better off, the businesses they work for will be better off.”

Henschke said the issue is particularly pertinent for women, noting that 85% of the people who work in the caring industries are women. “They have low super, low incomes. So we’re saying get rid of the pensioner work tax … and let pensioners work.”

Kathryn Greiner, former politician and former chair of the NSW Ministerial Advisory Council on Ageing, told the ABC the idea of retiring has become redundant. “I want to get it out of the language altogether. You just change chapters,” she said.

“People should be able to keep working if they are able to and they … want to.”

Older workers suited to working in aged care

Aged care worker Sue*, 70, told HelloCare she has been working in the same aged care home for 40 years and would be eligible for the full pension if she retired.

But she continues to work. “I am still very capable of the PCA work I do in a memory support unit,” she said. Helping those living with dementia is “rewarding” and she “loves” it.

She said she “could not stand” having to report her income and have the “threat” of “ending up with a debt” hanging over her. “So I will do my nine days per fortnight till I have to retire,” she shared – she has “no clue” when that will be.

Another aged care worker Jenny*, who has 40 years’ experience in aged care, told HelloCare she plans to retire in two years. “I love aged care, always have,” she said. “I’ve worked everywhere. I will miss it [when it comes time to retire].”

Allen says she becomes like “family” to her clients. Many live alone, and they “don’t have a lot of people popping in”. She can keep them company and feels her work is improving her clients’ lives, and her own, and she wants to do more of it.

“I feel like I’m giving back to them and I’m getting something out of it, too. It’s keeping me active and keeping my mind active as well. And the stories these people have to share are just wonderful. They are just wonderful.”

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