Saxon Davidson On Worker Shortage Research ABC Goldfields | 14 September 2023
The Institute of Public Affairs’ Saxon Davidson joined Peter Barr on ABC Goldfields to discuss the unprecedented nationwide worker shortage and how it is affecting regional communities the most.
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.
Peter Barr:
We have a critical shortage of workers and it has been the case for a long time now. I don’t think we can point at COVID anymore. So where are the workers and what effect is their absence in the regions having on productivity and the economy? The Institute of Public Affairs Research fellow Saxon Davidson says it’s a problem being ignored by city-based leaders. Morning Saxon.
Saxon Davidson:
Good morning. Thank you for having me.
Peter Barr:
It’s okay. Your research has identified some critical shortages in regional WA here. Where’s the worst hit Saxon?
Saxon Davidson:
Well, the whole nation is currently in the midst of an unprecedented worker shortage crisis. There are over 430,000 job vacancies across the country. This is about triple the rate it was three, four years ago and one in four businesses cannot find the workers they need. This is a roadblock to economic activity. It’s costing Australians approximately $32 billion in foregone wages in a cost of living crisis and the federal government’s $7 billion in foregone income tax.
The research that we released this morning analyzes the workers crisis at a more local level. We do this through the job vacancy crunch rate. This is the ratio of job openings to working age Australians who are not currently in the labor force and demonstrates the extent that local employment must expand to meet the number of jobs available for immediate filling. We use this measure in 35 separate zones across the country and we found that regional WA is the hardest hit by worker shortages, with Southern WA the hardest hit geographic zone in the country, with a current rate of about 11%.
Peter Barr:
So what is happening on the ground here in Southern WA then because of this continuing worker shortage?
Saxon Davidson:
Well, I was in a regional tour in Southern WA just a couple of months ago, speaking to business leaders and community leaders in towns such as Katanning and Augusta. And what was clear is that employees in the regions know how hard it is to find workers at the best of times. And this crisis is just exacerbating this to the nth degree. It is affecting the viability of many small and medium enterprises that simply cannot operate the level they need to.
And the other end of the scale is affecting our most productive and crucial industries such as mining and agriculture. The more employment we have in our regional communities, the stronger, more resilient the region becomes. And this means more Australians can build a long-term future in their communities with greater confidence. Something that is not being felt at the moment.
Peter Barr:
Clearly this is a challenge for the incumbent federal Labor Party, Saxon, but it has been a growing concern for all governments of all political stripes, hasn’t it?
Saxon Davidson:
Absolutely, it has. They attempted to address the worker shortage crisis in December of last year through minor pension reform by increasing the work bonus that they can earn before they start losing their benefits, but it just simply hasn’t worked and greater reform is needed. Pensioners and veterans in Australia face a tax rate of about 69% should they choose just over a day and a half on the minimum wage. This is through loss benefits as well as the nominal income tax on top of that. This is why only three in a 100 pensioners work in Australia and in WA compared to New Zealand where these tax barriers do not exist, where one in four work.
It’s not as if pensioners don’t 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. Similarly, students face an effective marginal tax rate of 79% if they’re on the youth allowance. Our research that we released this morning showed that if these red tape and tax barriers were removed for veteran students in aged pensioners and they were only subject to the normal 19%, Southern WA could potentially have their job vacancies completely eliminated. Now, I’m not suggesting that every pensioner, veteran student is going to be suitable for every job, but it is the first most effective and simple reform that we can address immediately.
Peter Barr:
I was just about to ask, a lot of pensioners listening this morning may be thinking, “Hey mate, steady on, I’ve done reworking.” But you’re looking at numbers that tell you they do want to get back into the workforce?
Saxon Davidson:
At least 20% would rejoin the workforce according to surveying from National Seniors Australia.
Peter Barr:
Okay, so removing that tax situation could provide that pathway to getting back in. That might be you. If you are listening this morning, you’re a pensioner, you’ve been thinking, “I do want to get back into the workforce,” tell me your experience, what’s been stopping you? 1300 560 222. Is it that simple though, Saxon? What else needs to be done to turn this around?
Saxon Davidson:
Well, there are other reforms that are available to us as well. Similarly, Australians on Jobseeker face tax barriers as high as this as well. I’m not saying eliminate the tax barrier for job seekers, but we can certainly increase the base number that they earn before these tax barriers start to be imposed on them as well, but we can also look to planned and sustainable migration. This is not currently the way that the government is pursuing though. The government is planning on bringing in about 1,700,000 migrants over the upcoming five years, which other IPA researchers found will create a housing shortage of 250,000.
And just earlier this week, the Immigration Minister, Andrew Giles, admitted that a migration worker shortage program had only enticed eight aged care providers out of about 3,000. So simply, the strategy that they’re going with isn’t working and they need to look to alternative methods such as eliminating tax barriers for Australians who are already here.
Peter Barr:
All right, we’ll leave it there Saxon. Thank you very much. Saxon Davidson is a research fellow at the Institute of Public Affairs
This transcript with Saxon Davidson talking on ABC Goldfields from 14 September 2023 has been edited for clarity.
