Andrew McKellar interview with Cathy Van Extel, host, Radio National Breakfast

Event: Andrew McKellar interview with Cathy Van Extel, host, Radio National Breakfast
Speakers: Cathy Van Extel, host, Radio National Breakfast; Andrew McKellar, chief executive Australian Chamber of Commerce and Industry
Date: 8 December 2021
Topics: Aged pension income threshold increase, skills and training, skill and labour shortages, international arrivals

E&OE

Cathy Van Extel, host, Radio National Breakfast: The Australian Chamber of Commerce is calling on the federal government to make it easier to employ older workers to address the workforce and skills shortages that we’re currently experiencing. The peak business body wants the government to raise the threshold on how much pensioners can earn in the workforce before their pension is cut. Andrew McKellar is Chief Executive of the Australian Chamber of Commerce and Industry and joins us from our Canberra Parliament House Studio. Good morning, Andrew.

Andrew McKellar, chief executive Australian Chamber of Commerce and Industry: Good morning, Cathy.

Cathy: Now, right now, pensioners can earn per day, I think they can earn one day a week on a minimum wage, which is basically $480 a fortnight, before their payments are reduced. So how much do you want the threshold to be raised by?

Andrew: Well, look, what we’re saying is that we do need to increase that income free threshold that’s linked to the pension. At the moment, as you say, they can earn in total about $480 a fortnight. After that, they start to lose 50 cents in every dollar. That’s higher than the top marginal tax rate, which when you’re on a very low income to be losing at that rate, it’s a
very severe penalty. So we would say, at the moment, if they can work really at minimum wage not much more than a day a week, really that needs to be significantly increased.

Cathy: So when you say significantly increased, have you got a number?

Andrew: Well, look, we think it certainly could be doubled, possibly more. I think to encourage people with this sort of experience who are looking quite prepared to come back into the workforce to give them the opportunity to work two or three days a week that would make a huge contribution at a time when the Australian economy is facing the most severe labor shortages that we’ve had in two decades. This is an important source of experience, and there are many people who they make the decision to retire, then they find that perhaps it’s not everything that they wanted. They still have the capacity to be active, to work, to contribute, and I think this is a huge resource.

Cathy: So what difference do you think it would make to Australia’s workforce and participation rate?

Andrew: We know there are tens of thousands of older Australians who are looking to work through this means. We’ve seen the hours that the ABS records for people over 65 wanting to get back into the force. I think in the last figures that we’ve seen that’s up over a million hours they’re looking to contribute. So we know there is an unmet supply here. They want to get back into the workforce. We just need to find the means to encourage them. And in this particular measure what we’ve seen is all of the state and territory Chambers of Commerce plus the National Chamber of Commerce coming together to say, “This is a good idea,” and asking the federal government to look at this proposal because it really is a wonderful way to encourage people back into the labor force. To encourage participation, that’s a key part of the approach that we can have.

Cathy: Have you had conversations with government about this yet?

Andrew: Look, yes, we have started to. We’ve had indications from the Employment Minister’s Office that they are certainly looking at what you can do to who encourage participation of older Australians. So, look, that’s a good start. We’re putting it on the table. We’re opening that discussion today. Obviously, this is something that we don’t expect an immediate response on, but as we lead into budget preparations for March next year, then really we urge the government to think about all of the pathways that we can take. And I think this is a very good idea.

Kathy: Andrew, when we discuss skills shortages on this program, we often hear of the need to train up the next generation of workers for the jobs of the future. Do older Australian skills match the skills shortages that we’re seeing across Australia. Would they have be retrained?

Andrew: No look, of course, they match. I mean, the people we’re talking about here, many of them have had 40 years plus experience in the workforce.

Cathy: Yeah, but things have changed a lot in 40 years. That’s the issue, isn’t it?

Andrew: Some of them have retired in recent years. Most of these people, of course, have just retired in recent years. The opportunity is there. They do have relevant skills and in many cases it won’t take a lot of retraining. They can use those skills, they can use that experience. It’s a wonderful resource that we have and we should be taking advantage of it. We shouldn’t be penalizing those people who want to come back into the workforce, particularly at this critical time.

Cathy: The other outside of the coin though, Andrew, of course, is employers’ attitudes. A national study found that one in four people over the age of 50 had recently experienced age discrimination at work. We know about age-ism in the workforce. Do you think there is an appetite among old Australians to rejoin the workforce and an appetite of employers to include them?

Andrew: Oh, look, I’m sure there’s an appetite for employers. Many employers know the benefits that these sorts of experienced workers can bring. And as I say, we wouldn’t have every single state and territory and the National Chamber of Commerce pushing for this measure if there wasn’t an understanding by employers that this is a very valuable resource. And we want to encourage people who are on the pension, if they think they can make a contribution again, then they’re very welcome. And that’s absolutely the right thing.

Cathy: As you say, the government is looking at the issues around the current skills shortages, which have been exacerbated by the pandemic. Federal Employment and Workplace Minister Stuart Robert yesterday announced $49 million for up-skilling and re-skilling more older Australians for work while “reducing their reliance on income support.” Are we punishing people who aren’t comfortably retired by asking them to work even longer hours?

Andrew: No. Look, I think here there’s an opportunity. We know people want to do this. And, look, we welcome what the minister is saying yesterday, but here we have a measure that is going to shift the needle, and the most powerful way to get people back into the workforce, which we need to do, is to provide a meaningful financial incentive and to remove the penalties that are in place at the moment. It’s very unreasonable to expect that somebody who might be on the pension who might have the capacity to supplement that income through two or three days of work that they’re paying or losing 50%, 50 cents in the dollar, if they enter the workforce again. That’s really a big disincentive and I think we’ve got to look at that. Make it much more attractive.

Cathy: We know that migration is key to the way that we’ve been addressing our skill shortage over the years. Australia’s border opening, of course, is being delayed, but it’s still supposed to open to skilled workers and international students from the 15th of December. So, when migrant workers return, will you still be calling for older Australians to join the workforce?

Andrew: Absolutely. Look, there are three elements that we have to have in an approach to addressing the labor skills shortages at the moment. The first of those is we need to encourage productivity through skills. So more investment in education and training. We have to encourage participation. That’s what this measure’s about. Not just older Australians, but younger Australians as well who’ve fallen out of the workforce. And we have to do something about population, and that’s where migration comes in. So it’s those three elements, a holistic strategy approaching this problem comprehensively. That’s the way we are going to promote much stronger economic growth going forward and get more jobs in the market.

Cathy: I spoke to a tourism boss earlier in the week who was concerned about, I guess, the slow recovery from migrants returning to Australia with the borders reopening. Is that how you feel as well, that it’s going to be a very slow process?

Andrew: Yes, absolutely. Look, we’ve been calling for the international borders to be reopened for some time. Of course, we understand in the face of the Omicron variant that governments have to pause. We said it was appropriate to pause for about two weeks. We need to get the evidence now about just how serious this variant is, how effective vaccines are. If the evidence stacks up that it’s not more serious than Delta, and we’re hopeful in that case, then we should move very quickly to open those doors again, to go ahead on the 15th, and to increase the flow of skilled migrants, of international students, and open up to the world, ultimately, to tourists and business people coming in.

Cathy: Andrew, on the issue of vaccines, there’s again confusion around the issue of vaccine mandates with the Fair Work Commission ruling that an attempt by BHP to force some workers into having the jab was unlawful. How is the business community navigating this issue? We know that business led the way with vaccine mandates. Will this ruling change things?

Andrew: Look, it’s an important case, but I think what it shows is that if you are going to go down that track, you need to step through all the processes correctly. So you do need to consult properly with your workforce. And we’ve been saying that all along. In this particular case, it was found by the Fair Work Commission that, that process hadn’t been fully and properly followed. So I think the signal’s out there to employers that, yes, you can do this, but it’s not an easy process. You do need to go through that approach of consultation. And I think in those circumstances, if employers think they need to do it, they can still do it.

Kathy: Andrew McKellar, thank you for time this morning.

Andrew: Thank you.