Interview - Neil Mitchell, 3AW

NEIL MITCHELL: Joining me is the Minister for Skills and Training Brendan O'Connor. Good morning.
 
BRENDAN O'CONNOR, MINISTER FOR SKILLS AND TRAINING: Good morning, Neil.
 
MITCHELL: Okay, we know there's a shortage. In fairness, you've got some good looking long term plans. What's the short term plan?
 
O'CONNOR: Well, there's a combination of things we need to look at. And we've already started to unclog these applications to fill vacancies in some sectors of the economy. As you know, I mean, the pandemic obviously stopped movement globally. We stopped the intake of skilled migrants and the permanent and temporary schemes were stopped, understandably. And because we didn't provide any support for those that were in the labour market, with JobKeeper or JobSeeker, they left the country.
 
So, we've got a big job to supply labour in that regard, but also, and my biggest, my main focus, Neil, is to train the labour market, the Australian workforce here in areas of demand. That's the agenda for the government. We've got a summit coming up as you know in four weeks.
 
MITCHELL: Okay. So the short term answer is visas. How long does that take?
 
O'CONNOR: Well, that's already starting to happen. There's great demand for some skills that are missing. But we've also got as you've made, and your listeners have been making clear to you, we've also got to utilise and to untap the labour that's in this country. You know, and that's why we're examining all of the people who have impediments to getting into work. And we want to make sure employers can fill those vacancies with people from inside our workforce. That's obviously the medium to longer term aim.
 
You know, we should be investing in the skills of our own workforce to ensure we've got a growing economy and people can participate in work. I mean, work is not just a job it's your identity. It's a sense of purpose. It's really about your dignity. It's very important in many ways, not just economically but socially too.
 
MITCHELL: Do you accept that a lack of staff is holding the recovery back?
 
O'CONNOR: I think that the OECD has said that Australia has the second highest labour shortage in the developed world. That says it all. We've got a major issue with supplying labour, not just a skills deficit, labour deficit, and we need to fix that in two ways. Firstly, untap and remove the impediments where possible in cost efficient ways to get people into the labour market, but also access skilled visas as well when we need to.
 
MITCHELL: So what impediments will you remove? What are you going to do there?
 
O'CONNOR: Well, for example, introducing changes to childcare will provide more opportunities for women to enter the labour market. If you look at our proportion of women that participate in the labour market, it's not as high as comparable countries. We can actually improve that. That is a very significant untapped area. I think we need to do more in breaking down discrimination of working age mature Australians who get discriminated at work. That's not an easy thing to do, because it's very, it's almost it's an inbuilt bias of some employers who just choose to pick younger workers.
 
Now, I want to see workers of all ages being employed, but we don't want to see this inbuilt bias against 50 year old workers who are hardly old, but are having trouble because of discrimination. Sometimes it might be just as simple as HR managers not wanting to pick up people who are older than them, but we need to try and break down that bias.
 
MITCHELL: Well, I'm delighted to say we're getting exactly the opposite message from businesses calling us saying they prefer older workers. In a sense isn't the system already discriminating against the older workers in the way that pensioners are being treated? Will you look at, will you fast track, if it's approved, the idea of reducing the penalty on pensioners who decide to work extra time? Work part time jobs?
 
O'CONNOR: Yeah, look, firstly, there is already the ability for pensioners to work 20 hours a fortnight. That's about $500 a fortnight without having their pension affected. That's important because, of that, 3 per cent of pensions take that up. So, we expect pensioners, if they can retire without having to work, of course they should. We also know that there are people of pension age who want to work, and we provide effectively the ability to work 20 hours a fortnight without the pensions being affected. The question then is do we open that up, do we increase that threshold? We'll look at that. I'm just saying right now only 3 per cent of pensioners take up that concession, and we will look at it. There is an impact on the budget.
 
So, we will look at that because we have to be fiscally responsible. Because obviously if there's going to be no effective marginal tax rate for pensioners to work, then there's an issue. Now there are people like my father who worked beyond the pensioner age but he didn't receive a pension. He worked full time as a storeman, and he was happy to do that. And when he retired, he got the pension. Others obviously want to work part time and they can work up to 20 hours a fortnight without their pensions being affected. We need to look at whether we can do that without costing the budget too much.
 
MITCHELL: What is the impact on the budget?
 
O'CONNOR: It's a big impact on the budget.
 
MITCHELL: What is it, how much?
 
O'CONNOR: I don't know the exact amount that's something for the Treasurer to obviously come to. But it is it is a significant amount. But look, can I say...
 
MITCHELL: Hang on, just so you're not moving on from that. There'll be a cost, sure, because you keep paying the pension rather than reducing. But won't there also be a benefit because those people working the 20 hours or more than 20 hours a week if they're working more than 10 hours a week, if they're working 20 hours a week will start paying tax on that income.
 
O'CONNOR: Well, it may well be and that's what we're looking at. We've already made clear. We've already said we will consider this option. It is something that has been put to us by a number of people, a number of organisations and we've made it very clear we'll examine that option to increase the threshold so that pensioners can work without their pension being affected. I think that's a reasonable thing to do. We're looking at that. We need to find ways to supply labour. That's an option that's definitely worth considering.
 
MITCHELL: Have you had a look at the New Zealand experience?
 
O'CONNOR: Yes, New Zealand is a different model. It's not the same, they don't have, for example, they don't have a universal super.
 
MITCHELL: But they have far higher percentage of pensioners working.
 
O'CONNOR: And arguably that's because they are compelled to, not just because they wish to. I mean, just on that it's a non means-tested pension that's taxable from the first dollar. So it's a very different system. And I think there's an argument to say that they're compelled to work because it's not as generous. But again, we'll examine that. We should examine other economies to make sure that pensioners are not coerced into work, but if they want to work, they can work, and they're getting a fair pay for a fair day's work. That's what we want to make sure.
 
MITCHELL: The penalty is pretty savage isn't it once you cross that threshold, you losing 50 per cent in the dollar.
 
O'CONNOR: It is, but the pension was only designed for people who had retired. That's why we now have a concession for people who work 20 hours a fortnight. Now we're looking at whether we open that up. As I say, my concern too is the people between 50 and 66 and a half who are not of pensioner age but are also not getting into the labour market and we provide subsidies for them.
 
So even though you've heard anecdotally employers saying they're willing to employ older people, and that's fantastic by the way, and they should be role model employers because we need more employers saying older workers in our workplaces are good for the workplace. And we really need those sort of flagship companies and small businesses talking about the benefits of older workers who are not of pension age, who don't receive an income and they can't find work.
 
MITCHELL: I agree. I agree. That's a good thing to do. But how urgently can this situation with the pensioners be reviewed? I raised it with Jim Chalmers.
 
O'CONNOR: We're examining it now. We're examining it leading into the summit which is in four weeks. So it is something that has been put to us, we take it seriously. We understand the employers’ concerns. We understand there are pensioners, who'd like to see that threshold increase. So we are taking it very seriously, Neil.
 
MITCHELL: Okay, and the skills you talked about, what areas is there a particular shortage of skills?
 
O'CONNOR: You name it, anywhere. The traditional trades, hairdressers, personal care services, aged care, disability care, so the care sector, engineering, cyber. Wherever you look, we have skill shortages, and it's partly because of the suspension of migration. That's part of it. But it's also a lack of investment in skills in this country in areas of emerging demand.
 
That's why we're creating Jobs and Skills Australia working with employers, unions, training providers and others to try to identify the skills that are in deficit now, and the skills that are emerging in the labour market so that we can invest. We spend a lot of money in training, we need to invest in the areas where there is demand now and demand in the future. And that's what we're looking to do.
 
MITCHELL: Are you happy with the prospect of 58, 60 year old apprentices?
 
O'CONNOR: I think you have to consider what their opportunities are. But, look, for anyone who's of working age and wants to participate and be productive and get a sense of dignity from work and put in a hard day's work should be applauded. And people are allowed to change their sort of skill set if they need to and wish to. But people, of course, of working age are obliged to work. That's the reality.
 
MITCHELL: I've had a few people, a woman call me yesterday, 57 and just finished her apprenticeship as a hairdresser. That's a good thing, isn't it?
 
O'CONNOR: That is a very good thing, and she should be applauded. And to hear stories like that will just inspire others, frankly. I mean, really we're no longer going to set and forget. We're going to have a workforce increasingly that will have to continue to change their skills through their working life. Not everyone has to do that to a great degree but because the economy and because technology trends are moving so rapidly, people will have to continue to learn throughout the course of their working life.
 
MITCHELL: To summarise my argument on the pensions, I have been banging on about it for months. It restores some life and dignity in people who probably may well want to work, but in an economic sense, it increases productivity, addresses labour shortages, and the money goes back into the economy. It's a no brainer.
 
O'CONNOR: That's why we're taking it seriously. As I say, there are people of pension age who work full time and don't receive the pension and others who obviously want to get the fair deal of getting to be able to work some of the time and receive the pension, and we fully understand that. There's a question of how far do we go to increase that and what cost there is to the budget.
 
We have got a very significant public debt, as you know, Neil, and we have to be mindful of that. But we do look at the benefits as well. It is a cost benefit analysis that's needed here, but we are focused on it. And we'll have more to say about that in the in the near future, I'm sure.
 
MITCHELL: Good. Thank you very much for your time I appreciate it.
 
O'CONNOR: Not at all, Neil.