National Seniors’ submission to the Employment White Paper has called on the government to adopt policies that support workforce participation throughout a person’s life, boosting income and savings in later life.  

Workforce shortages are not going to be solved by immigration alone, so we need to simplify the tax and transfer system to boost participation. Critically, this will also increase tax revenue to pay for health, aged care, and other social services.  

Our call to simplify payment rules is consistent with our submission to the Retirement Income Review in February 2020.

In both submissions, we ask the government to recognise work as a key pillar of the retirement income system, with material outcomes for the health and well-being of older Australians.  

Because superannuation balances are directly dependent on employment participation and earnings capacity, we must address the barriers to workforce participation if we are going to make the system fairer.  

With Australia facing one of its worst workforce crises in decades, the government has a once-in-a-lifetime opportunity to reform payment rules for all Australians to boost workforce participation and with it, the income and wealth of older Australians.  

Almost half a million job vacancies are dragging business and economic growth down and fuelling a cost-of-living crisis. The hardest hit sectors include health care and social assistance, mining, agriculture, hospitality, and tourism.  

Rightly, the Terms of Reference guiding the Employment White Paper singles out the care economy as one in critical danger of failure. Difficulties attracting and retaining staff in aged, disability, health and childcare have grown significantly since the first COVID-19 outbreak. These are unlikely to ease any time soon, even as migration picks up.  

Older Australians on the cusp of relying on aged care services will be understandably nervous about their prospects of getting the services they desperately need.  

Equally, sectors such as agriculture continue to face difficulties getting workers to pick fruit and harvest other crops, which puts pressure on food prices and affect supply and export earnings. 

That is why the white paper process is so critical and why the government must adopt bold policy changes to get Australians back to work.  

National Seniors’ submission discussed the costs and benefits of a range of policy options, recommending that action be taken to reform the government payment income test rules as the most practical solution.  

Unfortunately, people receiving Centrelink payments are punished if they work, creating one of the biggest sources of inequality in Australia.  

To fix this we must “let people work.”  

We propose government adopt a simple, elegant policy to help all Australians on low incomes or with limited savings get out of poverty by increasing their workforce participation.  

We can do this by allowing aged pensioners, students, veterans, job seekers, carers, and disability pensions the right to work and pay taxes.  

Those eligible should receive a lower income test taper rate of 32.5 cents in the dollar on their Centrelink payment when they work (rather than 50 cents in the dollar or 60c in the dollar as is the case for some).  

Ideally, this would act as tax withheld with no ongoing reporting of income required, with taxes being balanced by the Australian Taxation Office (ATO) at the end of the financial year.  

As modelling conducted by Deloitte has shown, this policy would be cost-neutral if only 8.3 per cent of pensioners worked or worked more, and we would expect similar results for other payment recipients.  

This is not a universal basic income nor a universal pension. It is a universal right to work by providing an incentive for those who live in or are close to poverty, including pensioners.  

As the Prime Minister and others often say, those in need “need a hand up, not a handout.”

While our preference is to apply the new 32.5 cents in the dollar rate as tax withheld, this could alternatively be offered as a taper rate reduction, with recipients still required to report their earnings, helping to smooth the transition between payments and work.  

A third option is to provide only the 32.5 per cent income test taper rate reduction to workers in the care and agriculture sectors, where there are higher proportions of workers and critical labour force shortages.  

A fourth policy option put forward in the submission is for a dedicated mature age traineeship scheme to boost workers in home care using money redirected from the failed Restart mature age subsidy.