Use ‘grey army’ to solve the labour shortage: Kean
Article by Samantha Hutchinson courtesy of the Financial Review.
Seniors and pensioners can fill vacancies in home care, hospitality and agriculture if the federal government removes financial penalties for them to work, NSW Treasurer Matt Kean says.
The outspoken state treasurer has thrown his weight behind a push to lift the income level at which pensioners get taxed, arguing that many older citizens would work if they did not face the threat of losing their benefits.
“We have a grey army of workers who want to get out there and work but there is no incentive to do so,” Mr Kean told The Australian Financial Review.
The call precedes Thursday’s national Jobs and Skills Summit where the federal government will discuss increasing the number of skilled migrant visas and other measures to tackle critical skills shortages.
NSW Premier Dominic Perrottet has lambasted the federal government for allowing the summit to be hijacked by trade unions, saying it will not deliver the gains in productivity needed to boost jobs and wages.
Mr Kean, who will not attend the summit because state treasurers have not been invited, has also attacked the heavy presence of unions at the gathering, and has called on the federal government to consider more straightforward measures to ease the labour crisis, which he says could be implemented faster than a migration program.
Changes to the pensioner income test could help an additional 445,000 workers who were already in Australia return to the workplace, he said. The move would solve the skills shortages and also boost the state’s productivity and economic output.
“We need to start opening the borders and stamping passports, but we also need to tap into the potential we have here and that is a pool of older Australians who would love to work more as long as their pension isn’t affected,” Mr Kean said.
“Using this skills base would deliver huge economic dividends to NSW where businesses are desperate to fill jobs.”
Single pensioners taking home the maximum pension receive $987.60 a fortnight. This rises to $1488.80 for a couple. Pensioners can earn up to $490 per fortnight without their pension being affected. But they can lose 50¢ for each dollar they earn over that threshhold each fortnight.
In Australia, only 76,000 of the 2.6 million people on the age pension do any paid work, largely as a result of financial disincentives. This equates to about 3 per cent of aged pensioners.
In New Zealand, where pensioners are not penalised for employment income, about a quarter of all individuals aged over 65 are engaged in some form of employment. Mr Kean reasons that if Australia had a participation rate of over-65s similar to that of New Zealand, it would result in an additional 450,000 available workers.
He said the federal government could consider offering pensioners an income-tax break or could reconsider the rate at which they get taxed.
The not-for-profit advocacy group National Seniors Australia is also lobbying the federal government to change the income threshold for pensioners, and says the move would also deliver an economic boost by unlocking latent skills and workers in sectors including home care, hospitality, agriculture and tourism.
It has started an online campaign titled “Let pensioners work” and a petition calling for change, which has attracted 15,000 signatures.
“The present income test penalises those with the most to gain from ongoing workforce participation,” the group says.
“With pension income also taxable, many question why they should bother working … they can only work one day per week without penalty.”
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According to the 2022 National Seniors Social Survey, 20 per cent of pensioners said they would consider re-entering paid employment but a cut to their pension was a major barrier to doing so.