Amanda Rishworth (Kingston, Australian Labor Party, Minister for Social Services) Share this | Hansard source

I move:

That this bill be now read a second time.

Of course, it has been widely reported across the country and understood by this government that businesses across Australia are experiencing skill and labour shortages and that this is constraining productivity and economic growth. In response to these challenges many global economies are facing, the Albanese Labor government is implementing a range of policies designed to address labour market issues the country is facing to boost productivity and address underemployment.

In early September at the Jobs and Skills Summit, our government announced 36 immediate actions to build a bigger, better trained and more productive workforce to help deliver secure jobs with growing wages, boost incomes and living standards and create more opportunities for Australians. If we're truly to unlock the full potential of our country and address our labour shortages, we need to take seriously that there are many who continue to be excluded from the labour force but want to join.

The Jobs and Skills Summit presented an enormous opportunity to examine potential solutions, and in the lead-up to the summit the Albanese government was continually consulting across portfolios in the ways and means that we could unlock workforce participation for those who wanted to work or work more but were finding barriers or penalties for them doing so. During this consultation, stakeholders and peak bodies representing older Australians advised that many age pensioners and other pensioners over age pension age are motivated to contribute to the workforce and are an underutilised group who may be willing to assist in addressing our current shortages.

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 would benefit the individuals and businesses. The measures in this bill are purposefully designed to further strengthen the existing incentives for pensioners over age pension age to take up work or increase the number of hours they work if they wish to do so.

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 pension begins to be reduced: the income-free area. For each dollar of income over the income free area, the single pension is reduced by 50c. For a couple, each individual pension is reduced by 25c a fortnight for each dollar of income the couple has 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. The 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.

Pensioners are able to build up any unused amount of the $300-a-fortnight concession in a Work Bonus income bank. This amount can be used to exempt future earnings from the pension income test. This means a pensioner could choose to do intermediate or seasonal work and still benefit from the Work Bonus.

At present, the maximum Work Bonus income bank balance a person can accrue is capped at $7,800. This bill delivers on one of the key outcomes of the Jobs and Skills Summit. From commencement until 30 June 2023, age pensioners, disability support pensioners and carer payment recipients over the age-of-pension age, as well as certain veteran entitlement recipients over qualifying age will have $4,000 credited to their Work Bonus income bank for use during this financial year. The maximum Work Bonus income bank will increase accordingly, taking the maximum balance from $7,800 to $11,800 until 30 June 2023.

Eligible pensioners who are currently working and have already benefited from the full value of the Work Bonus concession will have their income bank topped up by $4,000, taking it from $0 to $4,000.

Eligible pensioners who do not currently work and already have the current maximum income bank balance of $7,800 will also have their income bank topped up by $4,000. Until 30 June 2023, they will be able to have a maximum income bank balance of $11,800.

Because the $4,000 increase will be added to each eligible pensioner's Work Bonus income bank upfront, every pensioner will be able have an extra $4,000 of employment income disregarded from the income test from the start of this measure.

The bill will also give age pensioners and those receiving the equivalent Department of Veterans' Affairs payments increased flexibility to move more easily between the pension and periods of work.

Under this measure, age pensioners with employment income, whose total income exceeds their income limit, will be able to easily resume their age pension payments if they become payable again within two years, without having to do a full re-application.

This legislation, once passed, will enable a streamlined, simple process to accommodate pension recipients' flexibility in their approaches and choices to work.

At the moment, after 12 weeks at a nil rate of payment, those who are working can only resume their age pension payments if they complete a full re-application. This bill will allow Services Australia to suspend, instead of cancel, a person's age pension for up to two years if their payment is reduced to nil and they have some employment income.

Suspending, instead of cancelling, the person from payment ensures that the person can benefit from an abridged re-application process if, at any time during the two-year period, their income is at a level where they are no longer precluded from payment.

To enable a person to be paid their correct pension entitlement, the shorter, simpler process will confirm their current circumstances, including their income and assets information. This means age pension payments can be resumed quickly and effectively.

In addition, we know pensioners value their concession cards, and, even if they are able to work, older Australians often have additional medical needs. To support their ongoing care and cost of living, and in addition to this bill, we are also extending the time a person can keep their pensioner concession card while their payments are suspended. The pensioner concession card provides access to a range of Commonwealth health concessions, including cheaper prescriptions under the Pharmaceutical Benefits Scheme.

Currently, age pensioners who earn above the income limit keep their pensioner concession card for 12 weeks. Disability support pensioners who work more than 30 hours or have income, including some from employment, above the limit retain their card for 52 weeks. This bill will increase and align the amount of time age pensioners and disability support pensioners are able to retain their concession card to two years.

When a recipient of the age pension, disability support pension or certain veterans' entitlements is employed and has sufficient income that a pension is no longer payable, then they and their partner, who is also a pensioner, will both keep their pensioner concession card for two years. Both will also be able to easily resume their pension payments within the two-year period if their income reduces to the point they become payable again.

We know that participating in work improves one's quality of life, with financial and non-financial benefits. For pensioners, this could mean not only getting a higher income but getting stronger social connections, keeping mentally active and keeping physically fit. Businesses also stand to benefit from the skills and experience of older Australians, particularly in the context of current labour shortages.

We value the contribution that all senior Australians have made, and continue to make, to our economic and social wellbeing, and we will support those pensioners who still, themselves, wish to contribute to the workforce to do so.

Debate adjourned.

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