Social Services and Other Legislation Amendment (Workforce Incentive) Bill 2022

SECOND READING DEBATE - HOUSE OF REPRESENTATIVES

The Social Security and Other Legislation Amendment (Workforce Incentive) Bill 2022 delivers one of the government's commitments to address Australia's market challenges through practical and targeted solutions consistent with its announcement at the Jobs and Skills Summit in early September. It strengthens existing incentives for people over age pension age to take up work or increase the number of hours they work, if they wish to do so. At present only around three per cent of age pensioners earn income from employment. By providing incentives and increasing opportunities to work more without penalty, even a marginal increase in the number of older Australians in work will benefit individuals and businesses.

Through the social security income test, with its income-free area and proportional withdrawal rate, combined with the work bonus, pensioners are better off financially if they earn additional income rather than relying solely on income support. Pensioners are able to earn an amount of income before their pensions begin to be reduced in the income-free area. For each dollar of income over the income free-area, the single pension is reduced by 50c. For couples, each individual pension is reduced by 25c a fortnight for each dollar of income the couple has earned over the income-free area. In addition, the work bonus allows pensioners over age pension age to earn an extra $300 per fortnight from work before the income test is applied. A combination of the income-free area and work bonus means a single age pensioner with no other income could earn up to $490 per fortnight from work before their payment begins to reduce.

Through the social security income test, with its income-free area and proportional withdrawal rate, combined with the work bonus, pensioners are better off financially if they earn additional income rather than relying solely on income support. Pensioners are able to earn an amount of income before their pensions begin to be reduced in the income-free area. For each dollar of income over the income free-area, the single pension is reduced by 50c. For couples, each individual pension is reduced by 25c a fortnight for each dollar of income the couple has earned over the income-free area. In addition, the work bonus allows pensioners over age pension age to earn an extra $300 per fortnight from work before the income test is applied. A combination of the income-free area and work bonus means a single age pensioner with no other income could earn up to $490 per fortnight from work before their payment begins to reduce.

I've listened to many of the speakers this evening on this legislation and the amendment, and I think some important points have been made. I note the member for Mayo referenced retired teachers in this space and I see them as potentially quite useful in schools, given the current staff shortages. Particularly, as it's my background, I would make the suggestion that highly skilled teachers who have retired might return to fill some of the chronic shortages we have around literacy and numeracy specialists. They might find work in a situation with a very small group of students or even one-on-one in a mentoring or coaching role. It would be good to have that kind of experience and knowledge and the years and years built up around literacy learning back in schools—not necessarily on a full teaching day, because I don't know that even I could return to a full teaching load, at my young age! A full teaching load is extraordinarily stressful. In a high school you could potentially have 300 students across that week, so when it comes to report writing that means you're going to write 300 reports. There's a good reason lots of teachers take time out of schools earlier than workers in other industries perhaps. But this would give us an opportunity to bring people back into those specialist roles in schools, potentially, and bring back their expertise, their insight and their many, many years of looking at ways to support students to make those next steps in literacy and numeracy which are critical in our schools. So, I can see this really working in that profession.

And I assume there are many other areas where someone on an age pension might relatively return to the workforce. Of course, I by no means would support the notion that this would mean we'd have age pensioners climbing trees. I think that would be very short-sighted in terms of people's physical capacities. I'm also of a mind to think carefully about those people who've worked in hard manual labour all their lives. I wouldn't want to create an expectation that they would return to hard manual labour past retirement. They might, however, find other work for those hours a week that they chose to and to create incentives where that might be possible. Some of the changes of late, whereby workplaces are more open to people working from home, might also suit some people who are wanting to take up these incentives.

The bill has two key policies that are designed to incentivise pensioners to take up work if they wish to do so. The first is temporarily increasing the work bonus income bank. The government has listened to the concerns of key community stakeholders and our parliamentary colleagues in this place and the Senate that seven months is not enough time to assess the effectiveness of this policy change. Today the government has amended the bill so that a temporary increase to the work bonus income bank would cease on 31 December 2023. This extension results in a minor increase in the cost of the measure of around $2.5 million.

I think with this measure, which came out of the Jobs and Skills Summit, the government is meeting the commitments it has made. We're hoping that, for pensioners who want to take up this opportunity, this bill will support them more readily to do so and will make the difference in terms of when they go over the incentive limits —that the bill actually shapes that so that it's less punitive for people and works in a way such that they might re-engage with the age pension if they get beyond the income point where they lose the pension. So, thought has been put into ensuring that this bill allows people on the age pension to re-engage in the workforce or to continue to work, to take up hours in the workforce and not be punished financially, through their pension. It's a bill that's thoughtful. It's a bill that allows the best of both worlds. As I said, the proportion of people on the age pension who are currently doing the hours of work is at three per cent, and some increase in that could potentially be expected with these incentives in place.

It is a hallmark of this new government that we are prepared to listen, that we are prepared to take things on board. That was seen in the Jobs and Skills Summit, where this first came up. The Jobs and Skills Summit created a space where many people gathered to share ideas about how we could best deal with the jobs and skills shortage. One of the responses can be seen in this bill, but obviously many other ideas came out of the summit.

The consultation with community stakeholders has been quite detailed, and this government and this minister have listened intently to the ideas coming from others. That means that recipients of the age pension and certain veterans' entitlements who have employment income and whose payments are suspended because their income is too high will also keep their pensioner concession card for up to two years. This is an important point, because losing that pensioner concession card would be an absolute disincentive because, often, as we heard the member for Dobell say earlier, ageing comes with an increase in health costs. So keeping that concession card for a two year period is something that's very thoughtful in this bill.

I would like to thank the minister for her work in making sure that this bill supports pensioners in thoughtful ways by ensuring that, if they do choose to take up work or increase the hours that they're working, the impact of that has been considered and things have been put in place in this bill to ensure that they are not negatively impacted.

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