"It's a no-brainer." 

That is what we have been hearing since National Seniors began advocating for the Let Pensioners Work policy almost a year ago.  

The latest Australian Bureau of Statistics figures show 470,900 job vacancies across Australia. Every week, more people ask us, "Why won't the government just do it?"

The previous government insisted the present system was adequate. They said there was no need to change the income test rules to encourage workforce participation because raising the Work Bonus from $6,500 to $7,800 did not have any impact.  

The former Prime Minister went further, claiming he did not want to force pensioners to work.

However, as our survey results show, almost 20 per cent of pensioners said they were considering returning to work from retirement because they needed more money.

So, what is the truth?  

With a change in government, things have started to move forward slowly.  

The Opposition leader, Peter Dutton, has thrown his support behind doubling the Work Bonus. He said he would “be very happy to support the government if it wanted to go further.” 

In response, the government has announced a one-off, limited time, $4,000 boost to the Work Bonus, which starts in December 2022 and finishes in June 2023.  

In trying to fix the problem, both major parties are focused on the Work Bonus. But is that just a bad policy?

Under the current rules, if a pensioner wants to work, they face the risk of losing $0.50 on the dollar from their pension, and they also pay tax.  

National Seniors wants a New Zealand-style policy to allow pensioners to work as much as they want without affecting their pension. They pay tax on their total income, pension plus earnings. It is simpler and rewards those who need to and want to work.  

Not surprisingly, the New Zealand workforce participation rate of people aged 65-plus is 25 per cent.  

In Australia, the overall 65-plus workforce participation rate is 15 per cent. That includes pensioners and non-pensioners. But only 3 per cent of pensioners' work!  

National Seniors believes Australia has a heavy-handed, punitive system designed to reduce budget outlays by restricting access to the pension, which consequently discourages workforce participation at a time when Australia desperately needs workers.

Our Let Pensioners Work policy would help pensioners boost their superannuation savings. The super balances of women are generally less than men when they reach pension age. The average super balance for a man is $161,834 and $129,506 for a woman.  

Allowing women (and men) with limited savings to work and build larger superannuation balances will help alleviate pension poverty.  

The latest job vacancy figures highlight the need for decisive government action to mobilise workers. We cannot just tinker at the edges, as is being proposed with changes to the Work Bonus limit. We need full-throttle policy change.  

National Seniors commissioned consulting firm Deloitte to model the costs and benefits of an opt-in income test exemption as an alternative to increasing the Work Bonus.  

It shows the financial risk to the budget to be modest. The fiscal benefits, to quote Deloitte, could be material depending on how many pensioners and veterans respond.  

Deloitte found an economy-wide exemption would be revenue neutral if only 8.3 per cent of pensioners worked or worked more. If we exceeded 8.3 per cent and had a participation rate like New Zealand of 25 per cent, the government would make money from additional income tax alone. That is the money the government desperately needs to balance its COVID-19 budget blowout and meet spiralling aged care costs.

Whatever the government chooses, they must act quickly and decisively to signal to pensioners that they are valued and needed and can keep working, re-enter the workforce or work more.  

If Australia changed its policy, the older workforce participation rate would be comparable with New Zealand, Sweden, the United States of America, Israel, Japan, and South Korea, where older people are a valued asset, not a liability. Now that is a giant step in ending ageism and solving the workforce crisis.

Grattan Institute’s Danielle Wood gave a brilliant opening address at the Jobs and Skills Summit. She said that if women were an iron ore deposit, the government would think very differently about them.  

I suggest older Australians are also a goldmine we are ignoring at our peril.