Topic: Work Bonus income bank changes
TOM BADDELEY, HOST: If you're on the Age Pension or you're a Veteran on a pension then you'll be able to earn an extra $4000 before it affects your Government payment. That means if you're over the pension age and on an income support payment you'll be able to earn $11,800 before your payment gets impacted and that is up from $7800. Social Services Minister Amanda Rishworth is my guest this morning. Good morning, Minister.
AMANDA RISHWORTH, MINISTER FOR SOCIAL SERVICES: Good morning. Great to be with you.
TOM BADDELEY: Can you walk us through how this change will work?
AMANDA RISHWORTH: Well pensioners won't have to do anything. What it means is that each pensioner has what's called a Work Bonus income bank – that's effectively the amount of money they can earn before they get any deduction from their payment from paid work. That is working in a shop, or in a range of different areas. So today, automatically, there's an extra $4000 credited. It means that pensioners over the next 12-months will be able to do extra work without having their pension affected.
TOM BADDELEY: And the motivation Minister was?
AMANDA RISHWORTH: It really was an issue that was brought up at the Jobs and Skills Summit. At the moment there are a lot of businesses crying out for workers, particularly as we come into Christmas. And there are a number of pensioners that don't want to work all year – they don't want go to work all year, they've retired – but they might want to do a little bit of extra work to supplement their income. So this is a good example of where we're able to support pensioners earn a little bit more, in a more flexible way, but of course also support businesses that have pretty significant labour force shortages at the moment.
TOM BADDELEY: You would have done some numbers on this. How many people do you expect to respond to this? How many more people will be in the workforce?
AMANDA RISHWORTH: At the moment only a small number of pensioners actually do work. Most people when they get to pension age say to me that they've worked all their lives and they want to relax. Around three per cent of aged pensioners currently report employment income. But we hope that this will be a boost, we think even a small boost – whether it's the number of people or the hours worked. It’s not a silver bullet but it will go some way to helping fill some of those workforce shortages.
TOM BADDELEY: So $4000 was the threshold. Why wasn’t it higher?
AMANDA RISHWORTH: Well we've got to balance the fact that the pension is income and assets tested. Under the income and assets test we treat paid work – so actually going to a workplace or working for money as opposed to passive income – we treat that differently to support people into the workplace. But the $4000 boost comes on what is already $7800 so it does provide a boost but it also is able to be used flexibly. When I speak to a lot of pensioners, the good example is that there's many pensioners that perhaps would like to support Father Christmas out there in shopping centres at the moment and that's very seasonal work. I don't get a lot of pensioners saying that they want to work full-time. But what they do tell me is that they would like the flexibility to do a bit of work here and there and that's what we’ve based this on.
TOM BADDELEY: What happens if pensioners exceed that amount, even marginally?
AMANDA RISHWORTH: If they exceed that income limit marginally the current tapering rules apply. That doesn't kick you off the pension – it doesn't do anything like that – it just means that you would have a slight decrease in your pension. Obviously you can earn a quite significant amount of income before you lose your pension altogether. But even if pensioners were earning a lot more, under these changes they wouldn't have to reapply for payments. So say that you earned so much that you no longer got the pension, well under these changes when your income went down, you'd automatically go back onto the pension you wouldn't have to reapply. That gives people some comfort as well if they really get into a job. But look that's not the feedback I'm getting. A lot of pensioners have worked all their lives and they don't necessarily want to go back to work full time. What they want is to do is a bit of work on the side and to get paid for that and for it not to affect their pension.
TOM BADDELEY: This will clearly ease cost of living pressures for some people, but does the Government have a plan to alleviate cost of living pressure for pensioners who aren’t able to work? What happens if pensioners exceed that amount, even marginally?
AMANDA RISHWORTH: There have been a number of changes that we have made recently for senior Australians, particularly for a group that miss out on the Commonwealth Seniors Health Card. They are not pensioners, but might just fall short of getting the Age Pension. We've increased the eligibility for that, so more seniors can access that card and I would really encourage any of your listeners to now to check out their eligibility. We've almost doubled the income threshold that people can earn before they can access that. Of course, that not only gets you cheaper medicines and also cheaper visits to the doctor, but it also unleashes a number of state based payments. So very much encourage people to check that out. That change has just recently come in. The other changes that we've made to support pensioners is to freeze the deeming rate. At the moment you might be aware that your pension, as a part-pensioner, you would get your pension reduced based on what's called a deeming rate. With interest rates going up it could have meant that that deeming rate would have also gone up which would have meant pensioners would have lost their pensions sooner. We've frozen that deeming rate for two years so that pensioners can, and particularly part-pensioners, can keep more of their pension.
TOM BADDELEY: And Minister just quickly before I let you go, this $4000 increases is only for 12-months?
AMANDA RISHWORTH: It's available for a 12-month period, yes.
TOM BADDELEY: Thank you so much for your time this morning.
AMANDA RISHWORTH: No worries, have a great day.