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Let older Australians work, say Liberal backbenchers


Liberal Party backbenchers are pushing Treasurer Josh Frydenberg to use next week’s budget to unleash a “grey army” of retired workers to boost the nation’s stretched employment market, calling for an end to an effective tax rate of more than 60 per cent on their incomes.

In a policy that has strong support from retiree groups and even mining billionaire Gina Rinehart, several backbench members are pressing for Mr Frydenberg to trial a system under which people on the age pension could work without their entitlement being reduced.

Liberal backbenchers are pressing the government to trial a system that would enable retirees to work without losing their aged pension payments.

Liberal backbenchers are pressing the government to trial a system that would enable retirees to work without losing their aged pension payments.Credit:Rob Homer

Businesses are reporting difficulties finding staff in most industries, particularly in hospitality and sectors reliant on skilled migrants. Unemployment has fallen to a 14-year low of 4 per cent and the budget is expected to forecast the jobless rate will be even lower by year’s end.

This week, the Committee for Sydney used its federal election agenda to call for changes that would allow international students who completed a local university degree to have access to a four-year work visa and an easier path to citizenship.

But a group of Coalition MPs believes the government should tap the large number of retirees already in the country who face severe financial penalties even if they work one or two extra days a fortnight.

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Under current rules, a single person can earn up to $480 a fortnight without affecting their pension entitlement. Beyond $480, the pension is reduced at 50¢ for every dollar in income or an effective marginal tax rate of 50 per cent. That rate climbs above 60¢ in the dollar as income tax thresholds start to affect their pay.

The high tax rate has been blamed for the tiny proportion of pensioners who work. A briefing paper being circulated by those calling for change says fewer than 3 per cent of Australian pensioners earned income from paid work compared to almost 25 per cent in New Zealand, where people can work without losing their pension.

The briefing paper, a copy of which has been seen by The Sydney Morning Herald and The Age, argues if Australia matched New Zealand’s participation rate, an extra 445,000 people could enter the workforce. It also claims that if married pensioners earned $80,000 a year, the income tax they paid would cover the cost of their pension.



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