Aged care homes are suddenly closing. They say they can’t get the required nurses and care workers to meet the new standards mandated after the Royal Commission.

But the answer to this problem could be to listen to the workers and employers themselves.

Betty is a 75-year-old dementia care nurse. She’s worked in aged care for 31 years and she’d work more if she wasn’t penalised so harshly.

She loses 50c in the dollar on her earnings above the pension work bonus limit. That’s $11,800. (It was raised from $7,800 per year after the Jobs Summit. But it drops to the lower figure on December 31.) She needs a calculator to work out her optimal hours and she must report to Centrelink.

That’s another level of bureaucratic pain. Oh, and she pays income tax on top of the pension penalty.

Her employer says there are plenty of others like Betty on his payroll who tell him they would work more if the system was simpler and fairer.

In our budget submission, National Seniors says we should help the tens of thousands of care workers and nurses like Betty by exempting their work income from the pension income test. Just let them pay tax. This will encourage them to work more or return to the workforce.

A survey we conducted found 20 per cent of pensioners would consider returning to work, so we are talking big numbers.

These recent closures come as two reforms are set to change aged care from July 1.

Homes will need a registered nurse 24/7. They’ll also have to employ more carers to provide more care minutes per resident.

But 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.

The latest ABS figures show 72,400 vacancies in the care sector. It’s blown out from 60,200 last year. While a government campaign, A Life Changing Life, encourages careers in the care and support sector you also need financial incentives.

That’s why Nationals Seniors supports the 15 per cent pay increase from the Aged Care Royal
Commission. But we argue part of the solution is to give a pension income test exemption to encourage older workers to remain in the industry, work more, and return to work.

Currently, many walk away because it’s all too complicated understanding what you can earn before your pension takes a hit.

We’ve offered a practical solution in our budget submission and Employment White Paper.

We propose care sector workers get an exemption 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.

It could be trialled first in the health care and social assistance sector. If it works there, it can be expanded to other critical sectors such as agriculture and to other payment recipients.

Our policy has the support of employer groups, the National Farmers Federation, and the ACTU, which included it in its 2023 budget submission.

Encouraging people to work more and work past pension age boosts GDP.

According to modelling commissioned in 2012 by the Australian Human Rights Commission, conducted by Deloitte Access Economics, a 5 per cent increase in older worker participation boosts GDP by $47.9bn ($60bn today). That’s also billions in extra tax dollars.

So, our policy won’t just help the care sector, it’ll help repair the budget.

To test it, we commissioned Deloitte to do cost-benefit modelling. It found the policy cost neutral if only 8.3 per cent of pensioners go back to work or work more. Beyond this it pumps more money into treasury through income tax alone. But what’s the cost of not implementing the policy? More closures?

Look at New Zealand where 25 per cent of over 65s are in the workforce. We have just 15 per cent and only 3 per cent of our pensioners are working. They let pensioners like Betty work as much as they want and just pay tax. And they do both.

We can and should do the same. Let’s hope Jim Chalmers announces this change in his budget on May 9.

– By Ian Henschke, Chief Advocate, National Seniors Australia
As National Seniors Australia’s Chief Advocate, Ian Henschke works to raise the profile of
older Australians and strengthens the collective voice of National Senior Australia members.

Get local, national and world news, plus sport, entertainment, lifestyle, competitions and more delivered straight to your inbox with the Canberra Daily Daily Newsletter. Sign up here.