Work bonus increase an ‘encouraging step’ to boosting workforce
An announcement by the government to permanently increase the work bonus for pensioners has been welcomed by Seniors Australia.
As part of the release of the Employment White Paper this week, Minister for Social Services Amanda Rishworth announced the work bonus would be permanently increased from $7,800 to $11,800.
“Starting on 1 January 2024 – pending the passage of legislation – all new pension entrants over Age Pension age and eligible Veterans will have a starting Work Bonus income bank balance of $4,000 rather than $0, and existing and new recipients will retain the current elevated maximum Work Bonus balance limit of $11,800 rather than $7,800,” she said.
The Minister said the government hopes the measures will motivate older Australians to take up, or increase, their participation in paid employment.
“These changes mean eligible recipients can earn more from work before their pension is affected, broadening their choices and increasing flexibility,” said Ms Rishworth.
National Seniors Australia said the permanent increase in the work bonus shows the government is willing to listen but must go further.
Chief advocate Ian Henschke said the government could reduce the barriers to workforce participation by trialling a targeted reduction in the income test taper rate for workers in the health and social assistance sector (and agriculture).
“In the health care and social assistance sector there are around 73,000 job vacancies,” said Mr Henschke.
“Demand for care and support workers is set to double by 2050. According to the National Skills Commission, we will face a shortfall of 211,000 workers (full-time equivalent) by 2050. How are we going to meet demand in the future if we don’t act now to change the policy settings?
“Older people are dealing with these desperate shortages now. By 2050, it will be their children. They deserve to know someone is going to be there for them, at a time when they need it the most.
The advocacy group said while there would be costs in implementing the policy, the consequences of not implementing it would be greater.
Seniors Australia referred to modelling by Deloitte which indicates that reducing barriers to workforce participation for pensioners would be a win for the government and the economy.
The modelling indicated that while there would be fiscal risks for the government in implementing the proposal, the risks would be modest and the potential increase in employment would be material.
“The results for the whole economy show that with 10 per cent of Age Pensioners taking up or increasing their work, the economy would benefit from an additional 209,000 workers and the government would, in fact, receive a small boost to fiscal aggregates,” National Seniors Australia said.
Ms Rishworth also announced that the employment income nil rate period would be doubled to almost six months (12 fortnights) and expand access to those who enter full-time employment from 1 July 2024.
The government said the measure would address concerns that losing access to concession cards, child-care subsidies and other supplementary payments, or having to reapply and wait for income support if things don’t work out, acts as a discouragement to taking up work, particularly short-term, casual and gig economy work.
This measure is expected to benefit around 138,000 recipients each year, particularly those on the JobSeeker Payment and Youth Allowance.
Treasurer Jim Chalmers said the changes were an investment to help build a bigger, better workforce.
“This is about putting the right incentives in place to get more Australians into work,” Dr Chalmers said.
“We want to make sure the stepping stones are in place to enable more Australians to take up a job or work more hours.”
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