Small business groups and representatives for older Australians have celebrated independent MP Rebekha Sharkie’s push to expand the aged pension income test, a move she says would remove barriers keeping experienced staff from the workplace.
On Monday, Sharkie introduced a motion to Parliament calling to either raise the aged pension income test cut-off point or remove it entirely.
Under her plan, pensioners without massive savings buffers could opt to work more hours without their welfare payments dropping off.
Currently, aged pensioners can earn $190 per fortnight in combined income — be it through work, investments, rent, or trust distributions — before their pension payments taper down.
Once pensioners earn more than $190 in combined income, their government payments reduce by 50 cents for every dollar earned past the $190 threshold.
As it stands, the Work Bonus offset allows aged pensioners to earn an extra $300 per fortnight through employment before their pension payments reduce.
This means pensioners with jobs can earn a total of $490 per fortnight before their social security payments are impacted.
Sharkie’s motion called for this $490 limit to either lift significantly or disappear entirely.
The move would encourage pension-aged Australians to return to the workplace, she says, as their take-home earnings would no longer carve into their pension entitlements.
“This scheme will allow thousands of senior Australians to return to the workforce without an enormous tax burden and will help alleviate critical workforce shortages felt by businesses across the country,” Sharkie said on social media.
Indeed, data suggests some older workers are keen to get back into paid employment. In May, data commissioned by National Seniors Australia found one in five aged pensioners would consider re-entering the workforce after retirement.
Sharkie’s motion is backdropped by an incredibly tight labour market and what employment groups have described as a severe shortage of workers in fields like retail, hospitality and agriculture.
With international migration yet to return to pre-COVID levels, the Council of Small Business Organisations of Australia (COSBOA) has called for policies which will boost the available workforce, including measures which would reduce pension reductions for older workers.
Alexi Boyd, the COSBOA CEO, appeared alongside Sharkie at Parliament House on Monday in support of the motion.
The Australian Retailers Association has previously called for the aged pension system to be reworked, removing disincentives keeping older workers from the shop floor.
Sharkie’s move was also backed by fellow independent MP and business advocate Dai Le, who called on the federal government to “let seniors work”.
“This opt-in scheme will ensure older Australians can take on work to ease cost-of-living pressures — without penalising their pension,” Le said.
Businesses in her electorate of Fowler “are understaffed and older workers can contribute with skills and experience”, she added.
1/ Today, I joined fellow Independent MP Rebekha Sharkie (@MakeMayoMatter) and other Australian leaders in urging the government to Let Seniors Work. pic.twitter.com/l5aBP962ij
— Dai Le MP (@dai_le) August 1, 2022
The skills shortage has been acknowledged by the new Labor government, whose Minister for Skills and Training, Brendan O’Connor, last month reflected on the “skills and labour shortages across industries that are vital to the health and wellbeing of Australians and our economy”.
The government has also recognised calls to welcome more older Australians back into the workforce.
In an interview with the Herald Sun, O’Connor yesterday said the government was “open” to policies which address the “terrible blight” of age discrimination in the workplace.
“It also comes down to what support you provide that person so they’re ready for work, and ready to work,” he added.
Labor intends to host its landmark Jobs and Skills Summit next month, providing another arena for industry groups and politicians like Sharkie to push their rethink to aged pension income cut-offs.
Senior Business Journalist
Focused on the small business sector, David’s work covers the political, regulatory, and economic issues facing Australian entrepreneurs. Prior to joining SmartCompany, he was a reporter for Business Insider Australia. You can follow him on LinkedIn.
