Saxon Davidson On How WA Is Hardest Hit By Worker Shortage Crisis On 6PR

Oliver Peterson:
New research from the Institute of Public Affairs shows that Western Australia is the worst in the nation when it comes to worker shortages levels. Why is that the case? Let’s bring in Saxon Davidson, research fellow at the IPA. Good afternoon.

Saxon Davidson:
Good afternoon, Ollie. Thank you for having me.

Oliver Peterson:
My pleasure. Saxon, as we’ve been talking of Perth of being the best place to live, why are we the worst in the nation when it comes to worker shortages?

Saxon Davidson:
Well, our research has found that the state of WA is the hardest hit by our nation’s unprecedented worker shortage crisis. This is because the number of job vacancies in the state, it’s equivalent to just over 10% of people who are not currently in the labor force. This is the worst in the nation and is close to double states such as South Australia.

Oliver Peterson:
Okay. Why though? Why is Perth or Western Australia worse than even South Australia?

Saxon Davidson:
Well, it is just because of the proportion of people that are not in the labor market. But the solutions that we have found through our analysis has found that the best solution to this crisis nationwide, but particularly in WA, is to simply remove tax and red tape barriers facing Australians who want to work, but specifically pensioners.

Oliver Peterson:
Yeah.

Saxon Davidson:
Pensioners face a tax rate of about 69% should they choose to work over a day and a half just on minimum wage. This is why only about three in 100 pensioners work in Australia and in WA compared to New Zealand where one in four work where these tax barriers do not exist. It’s not as if pensioners do not want to work. There was a recent survey by National Seniors Australia, which found that 20% would rejoin the workforce if these tax barriers were removed. Now there are about 53,000 job vacancies in WA. If 20% of pensioners work, that would decrease the job vacancy number by about 90%.

Oliver Peterson:
Oh, there you go, Saxon. There’s more and more research. We’ve been talking about this for some time. As you say, National Seniors have been on board. I know the IPA’s been on board. Why will governments not listen, allow pensioners to work just a bit more? They’ll pay more tax. Isn’t this just a win-win?

Saxon Davidson:
It’s a win-win-win. This is because more income tax will be paid as also as everyone knows, there’s a cost of living crisis.

Oliver Peterson:
Yes.

Saxon Davidson:
Nationwide, the current job vacancy level is costing Australians $32 billion in lost wages and also the government $7 billion in income tax revenue. Now, this will put more money into the back pockets of Australians when there’s a cost of living crisis. It will put more money through income tax to governments which can be spent on roads, hospitals, schools, and it’ll help stimulate the economy because more people in work means that there is more productivity in the economy, which has been sluggish recently.

Oliver Peterson:
It’s going to let the state also go ahead, right, Saxon? It’s going to create these opportunities, which we’re talking about being such a livable place, but it’s going to create opportunities, work more taxes, you say there, Saxon. This is something that governments are reluctant to consider. Why do you think that’s the case?

Saxon Davidson:
Well, the federal government made a small change at the end of last year to increase the limit average pensioners can earn before they face these tax hikes by about $76 a week, but that’s only about half a day on minimum wage. And also what we have found is that it has not worked. The job vacancy rate in the quarter after that change was made only decreased by about 1.5% and the level of pension is working has stagnated at 3%. It just simply hasn’t worked. What we are calling is for new premier, Roger Cook, to go at the next national cabinet meeting with bipartisan support, not just from his state colleagues, but also from his federal colleagues to remove these barriers because Western Australia is the hardest hit and it’s a crisis that is affecting the WA economy statewide.

Oliver Peterson:
Yeah. Interesting research. Good on you. Saxon Davidson there, research fellow at the IPA, adding further weight to the discussion about allowing pensioners to work-

This transcript with Saxon Davidson talking on 6PR Perth from 23 June 2023 has been edited for clarity.