Aged care homes are closing as they struggle to meet new standards. From July 1 they need a registered nurse 24/7 and more workers to give more care minutes per resident.

National Seniors has put forward a solution in its budget submission to help retain and attract staff.

Chief Advocate Ian Henschke said pensioners are discouraged from staying in the work force, working more, or returning to work because they lose 50c in the dollar on income earned above the $11,800 work bonus limit. They also have to deal with Centrelink.

“Our research shows almost 20% of pensioners are considering returning to work but under current rules after about one day’s work they’re losing 50c in the dollar from their pension, reporting to Centrelink and paying tax on top,” Mr Henschke said.

“Many older workers walk away because it’s too complicated trying to understand what you can earn before your pension takes a hit.

“We propose care sector workers be exempt from the harsh pension income test. Then you can work as much as you want and simply pay tax. This would also stop the need to constantly report to Centrelink.”

The skills and labour shortage casts a shadow over more than aged care. It’s a growing problem in health care, disability care, and childcare. All are desperate for workers. A year ago there were 60,200 vacancies across the wider care sector. The latest ABS figures show this has blown out to 72,400.

Mr Henschke said the budget proposal could be trialled before expanding to other critical sectors like agriculture and to other payment recipients who are also overly penalised when they work.

“Our policy won’t help only the care sector; it will help repair the budget. Modelling by Deloitte found it’s cost neutral if only 8.3% of pensioners go back to work or work more. Beyond this it pumps more money into treasury through income tax alone.

“The cost of doing nothing, as we’re seeing, is so much more.

“National Seniors wants a New Zealand style system where pensioners work as much as they want and pay tax on their total income. Its simpler, fairer, and rewards those who want and need to work. It encourages not discourages. Importantly, it helps aged care homes stay open and older vulnerable people get the care they deserve.”

The policy is backed by employers and unions. We urge Mr Chalmers to consider a trial in the upcoming budget on May 9.

The policy is also outlined in our Employment White Paper Submission and Deloitte modelling.

Ian Henschke is available for comment, please call 0488 047 380 to arrange an interview.