Shadow treasurer says working smarter will make up for deep migration cuts

Repairing a broken workplace culture will boost productivity and deliver many of the workers needed to grow the economy, shadow treasurer Angus Taylor has declared as the Coalition struggles to explain its planned cuts in immigration.

As the government accused the Coalition of not understanding its own plans to cut migration, arguing it would exacerbate the nation’s shortage of skilled workers, Taylor said reducing or removing the financial disincentives for aged pensioners and defence veterans would help boost the number of Australians able to work.

Angus Taylor says boosting productivity across workplaces will help deliver growth to all Australians.Credit: Alex Ellinghausen

But he conceded more gains would ultimately come from industrial relations changes that would drive productivity across the nation’s workplaces.

Opposition Leader Peter Dutton used his budget reply speech last week to promise a 25 per cent reduction in permanent migration, from 185,000 to 140,000 for the first two years of a Coalition government, followed by a target of 150,000 to 160,000 over the next two years.

But the following day, he pledged to cut net overseas migration – the total number after allowing for departures and arrivals across all residency visas – to 160,000, which would be a 40 per cent reduction on the government target.

The targets have been heavily criticised across the business and farming sectors as the cuts would hit skilled migrant numbers, potentially driving up the cost of goods and services or forcing firms to abandon planned investments.

But Taylor said as important as workplace participation and population were to the economy, lifting overall productivity was vital to make up for a steep fall over the past two years.

He said much of the drop in productivity is the fault of workplaces where employers and their staff had stopped talking about ways to improve operations.

Flexibility had been reduced, he said, because of the government’s overhaul of industrial relations with little emphasis on the importance of workers and bosses finding better ways to operate.

“The biggest bang for your buck is going to be labour productivity as it’s gone backward so much in the last two years,” he told this masthead.

“I think a fair bit of it is due to workplace culture.”

In his budget reply speech, Dutton said increasing the work bonus – the amount retirees and veterans could earn before it compromised their pensions – from $300 to $600 a fortnight would benefit more than 80,000 who chose to work.

He also committed to expanding the work bonus, which was put in place by the Albanese government and made permanent at an annual cost of $14 million in last year’s mid-year budget update.

Taylor said pensioners and veterans faced “draconian” effective marginal tax rates of more than 50 per cent if they worked a few hours.

“The aim is to take away this disincentive as much as possible,” he said.

Despite the introduction of the work bonus, employment of age pensioners remains quite low.

Figures released by the Australian Bureau of Statistics on Thursday showed the proportion of people aged at least 65 in the workforce has remained relatively stable over the past five years. During that period, the access age for the pension has increased to 67 while the country has enjoyed the lowest unemployment rate since the 1970s.

The employment-to-population ratio of women over 65 is just 12.2 per cent. Among women in their late 50s, the ratio is more than 70 per cent.

Experts say that among older women, employment drops in part because they take care responsibilities either for their partner or for grandchildren.

Jim Chalmers says the Coalition’s migration policy would hurt the economy.Credit: Alex Ellinghausen

Taylor admitted getting large gains in total employment or working hours out of pensioners and veterans would be difficult, but they should not have a financial disincentive that effectively made them worse off if they chose to work.

“We think we can get some mileage out of it,” he said.

But Treasurer Jim Chalmers said the Coalition’s approach to migration would harm the economy, leaving hospitals without staff or slowing down the construction of new homes.

On Thursday, deputy Liberal leader Sussan Ley said the Coalition’s cuts to net overseas migration would be “ongoing”. By the end of the decade, an ongoing cut would reduce migration by 210,000 people between 2027 and the end of the decade.

Chalmers said Ley, Taylor and Dutton were struggling to explain their policy which would cause economic pain to all Australians.

“You don’t solve a housing shortage by making the skills shortage worse. You don’t solve the issues in our hospitals with the shortage of nurses by making the skills shortage even worse, and that’s what his shambolic ham-fisted approach to migration will do,” he said.

“Their position on migration is a smoking ruin. They can’t explain the most basic details of what they’ve been saying about migration.”

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