Defining the scope of the Inquiry

Terms of Reference

1.15 The Terms of Reference[28] direct the ALRC to consider Commonwealth legislation and related legal frameworks that either directly, or indirectly, impose limitations or barriers that could discourage older persons from participating, or continuing to participate, in the workforce or other productive work. The laws to be considered include:

  • superannuation law;

  • family assistance, child support and social security law;

  • employment law;

  • insurance law;

  • compensation laws; and

  • any other relevant Commonwealth legislation exempt under the Age Discrimination Act 2004 (Cth).

1.16 Defining the scope of the Inquiry required consideration of the meaning of a number of terms: ‘limitations or barriers’; ‘older persons’; ‘other productive work’; and ‘legal frameworks’.

1.17 The ALRC also had to determine the extent of barriers, if any, in the areas identified for consideration in the Terms of Reference. Some topics clearly sat outside; and in others that were considered, the ALRC concluded that no recommendations were to be made. These are noted below.

Terminology

Barriers

1.18 The Terms of Reference refer to the ‘obstacles’ to workforce participation by older persons and the desirability of ‘removing limitations on, or disincentives to’ such participation. The ALRC is then asked to identify ‘barriers’ in Commonwealth laws and legal frameworks to participation, or continuing active participation, in the workforce or other productive work. ‘Barriers’ to continuing active workforce participation may include specific limitations, such as age limits. Barriers in a broad sense may also include other things, such as disincentives to remain in the workforce and even incentives to leave.

1.19 How wide, then, is the notion of ‘barriers’ for the purposes of this Inquiry? The Terms of Reference required first, the identification of barriers in Commonwealth legislation and legal frameworks and, secondly, determining what, if any, changes to law and legal frameworks were necessary to remove them. The ALRC took a wide approach to the idea of ‘obstacles’ or ‘barriers’. In determining what changes should be made, the ALRC developed a set of framing principles—set out in Chapter 2. They provided the lens for the consideration of what, if any, reform recommendations were to be made in response.

1.20 The Consultative Forum’s final report included a summary of 14 key barriers to workforce participation.[29] They provide an instructive analysis in the wider context of the ageing population and a useful backdrop to the consideration of barriers in laws and legal frameworks considered in this Inquiry:

  • Discrimination in employment on the basis of age. Can manifest itself both directly and indirectly in the recruitment and retention of staff. Often, age discrimination interacts with other barriers.

  • Care-giving responsibilities. Significantly impacts the ability to secure and retain employment—in particular for those with disrupted careers due to child care and other responsibilities.

  • Flexibility of employment arrangements. Is an important factor enabling mature age people to extend their working lives or to increase the employment participation of older Australians who face other barriers.

  • Issues around private recruitment firm practices. The increasing role of private recruitment agencies in job search has opened avenues for age-based discrimination to be experienced at the recruitment stage.

  • Job search assistance. Mature age job seekers can have trouble finding employment because of outdated job search skills, and [this] may discourage them from seeking employment.

  • Leisure time trade-off. Efforts to increase employment participation of mature age Australians are challenged by a tendency for many to retire early to pursue leisure activities.

  • Mental health barriers. Evidence has demonstrated the connections between mental illness and early retirement, job loss, unemployment, or difficulties re-entering employment.

  • Mismatch of job skills and experience with industry demands. Changes in the economy in recent decades, including a decline in manufacturing, means that some mature age people have skills less suited to the modern economy.

  • Physical illness, injury and disabilities. Have a major impact on early retirement, job loss, unemployment, and can create difficulties re-entering employment.

  • Re-entry issues barriers of the Very Long-Term Unemployed (of 24 months or more in duration). Many mature age job seekers have experienced significant difficulties in re-entering the workforce because of structural changes in the economy, among other reasons.

  • Re-training and up-skilling barriers. The ability of mature age people lacking prior qualifications to find employment is reliant upon the availability of appropriate training opportunities, as well as their aspirations to upgrade their skills.

  • Superannuation. Individual superannuation decisions, as well as government policies, can significantly impact retirement timing decisions.

  • Tax transfer system. In Australia there is evidence that the tax transfer system is complex and may act as a disincentive for mature age people to work.

  • Workplace barriers. Improving the quality of workplaces with physically demanding occupations and inappropriate conditions can attract and retain mature age people in the workforce.[30]

1.21 The characterisation of ‘barriers’ in this list is a wide one. Some of these barriers are about law and legal frameworks; some are broader. Some are about incentives to leave work; some about disincentives to stay in the paid workforce. Some are personal—specific to an individual; some are structural—affecting whole groups.[31] For example, experiencing mental and physical illness may be a barrier to workforce participation at an individual level, and so may having care-giving responsibilities. In relation to such matters the focus of the ALRC in this Report is on enhancing a person’s capacity to participate in the workforce where laws and legal frameworks can play a role—for example, in the number of hours a person may work while in receipt of Disability Support Pension or Carer Payment.

1.22 The Consultative Forum’s list includes as a barrier that the timing of retirement may be an individual matter of choice—a ‘leisure time trade-off’. The Forum also notes that decisions to leave the paid workforce may also be significantly affected by superannuation settings. Both are listed as ‘barriers’. However in considering whether to make a recommendation in relation to superannuation settings in this Report, the ALRC’s framing principles for this Inquiry, set out in Chapter 2, became dominant considerations. In this context the principles of self-agency, independence and participation were critical.

1.23 Some stakeholders expressed objections to the ALRC’s approach to the breadth of the ‘barriers’, suggesting, for example, that adding a right or entitlement for older workers was not about removing ‘barriers’.[32] The ALRC considers that an approach that enhances the position of older workers by recommending, in some instances, the expansion of an entitlement, is appropriate where to do so addresses an obstacle affecting workforce participation. For example, flexible employment arrangements may enable mature age people to extend their working lives or to increase their employment participation.[33] The ALRC considers that facilitating such flexibility removes a barrier by enhancing the capacity of older persons to maintain workforce attachment.

Older persons

1.24 The Terms of Reference define ‘older persons’ as anyone over the age of 45 years, which is consistent with the definition of ‘mature age worker’ used by the Australian Bureau of Statistics (ABS).[34] This is a very wide group, with varying capacities and needs stretching over several decades—raising particular challenges for the development of policy responses.

1.25 The Advisory Panel noted that there is no agreed definition of ‘seniors’ or ‘older Australians’, and that ‘the effects of ageing vary from person to person in terms of their capability’.[35] The Australian Institute of Health and Welfare refers to older Australians as being 65 years and over;[36] and older Indigenous people as being 50 years and over.[37] The Population Division of the Department of Economic and Social Affairs of the United Nations refers to older persons as 60 years and over.[38] Its 2002 report on World Population Ageing divided its consideration of older persons into three cohorts: 60 years and over; 65 years and over; and 80 years and over.[39]

1.26 Stakeholders in this Inquiry noted the difficulty of characterising persons as ‘older’ from the age of 45 years.[40] The Brotherhood of St Laurence, for example, described the term ‘older people’ as a ‘slippery concept’ and pointed to the problem of cohort differences:

Even setting aside individual characteristics, there tend to be considerable differences between the interests and needs of cohorts aged 50–65 and those aged 65–80 or 80–100.[41]

1.27 In developing the recommendations in this Report, the ALRC has taken into account that public policy responses require consideration of ‘older persons’ as comprising many varied cohorts, with varying needs. As the Advisory Panel commented: ‘People do not suddenly become old at a set age. Rather all people age and are ageing’.[42]

Other productive work

1.28 The Terms of Reference recognise that ‘work’ is a wider concept than work in the labour market as paid work. ‘Work’ includes ‘other productive work’, which includes volunteer work and caring. The Terms of Reference also note the obstacles faced by older persons participating actively in the workforce. There is a tension, however, between the concepts of ‘work’ and ‘other productive work’, where other productive work may itself act as a barrier to paid work. This may particularly be the case with unpaid care work. The Consultative Forum identified ‘care-giving responsibilities’ in its list of barriers to employment participation, because it ‘significantly impacts the ability to secure and retain employment—in particular for those with disrupted careers due to child care and other responsibilities’.[43]

1.29 To resolve this tension, the ALRC focused on how to enhance the capacity to combine paid work and caring—recognising the value of that care but also looking to enabling paid workforce participation. This is considered further in Chapter 2. As a matter of terminology, where the expression ‘workforce participation’ is used in this Report, it refers to participation in the paid workforce, unless otherwise stated.

1.30 The tension between ‘work’, as income generating, and ‘other productive work’ in activities such as caring and volunteering, is considerable. It is a key part of the wider context of ageing and the challenges of developing policy responses. As noted in the Intergenerational Report 2010:

Policy responses need to reflect a sound understanding of the complex nature of mature age participation. Retirees make a valuable contribution to the economy and living standards through activities such as volunteering or carer activities.[44]

1.31 The Consultative Forum recommended that the Government should ask the Productivity Commission to examine the broad thematic issues around caring, beyond employment and beyond mature age carers.[45]

Legal frameworks

1.32 The Terms of Reference direct the ALRC to consider ‘all relevant Commonwealth legislation and related legal frameworks’. The Business Council of Australia criticised what it described as an ‘unusually broad view of legislation and legal frameworks’.[46] The ALRC considers that the reference to ‘legal frameworks’ means that the ALRC is directed to consider not only legislative instruments, but also policy and practice guides, codes of conduct, education and training about legal rights and responsibilities and other related matters.

Coverage of particular issues

Migration

1.33 In the Issues Paper for this Inquiry, the ALRC asked a number of questions relating to migration,[47] as the Terms of Reference directed the ALRC to consider ‘other relevant Commonwealth legislation exempt under the Age Discrimination Act 2004’, which includes the Migration Act 1958 (Cth).[48] The ALRC looked at issues concerning skilled migration visas and age limits imposed—for example, the 50 year age limit for entry as a skilled migrant under the General Skilled Migration (GSM) program.[49] A number of stakeholders supported either an increase in the age limitations for the GSM and employer-sponsored visas to 55 years,[50] or the removal of the age limitations altogether.[51]

1.34 During the next stage of the Inquiry, the ALRC concluded that the failure by an applicant to obtain a skilled visa, whether as a result of being barred from making an application or being unsuccessful, was not primarily a limitation or barrier to their participation in the workforce—the focus of the Terms of Reference—but rather a barrier to entry to Australia for the purposes of work. In light of this, the ALRC signalled that proposals for reform in this area would be beyond the scope of this Inquiry.[52] The ALRC suggested that, given the views expressed in this Inquiry, it may be appropriate for the Department of Immigration and Citizenship (DIAC) to consider the role of age as a criterion in the skilled migration program.[53]

1.35 DIAC supported this approach,[54] submitting that

Australia’s skilled migration program is carefully managed so as to yield the maximum benefit for the Australian community serving a range of economic, social and demographic objectives.

Demographic research indicates that, in the near future, our ageing population will also begin to act as a constraint on the supply of younger skilled workers. The department’s planned migration program will help address skills shortages. It will also offset the major decline in the size of Australia’s working age population, which would otherwise begin to affect the Australian community in a few years time, as the majority of ‘baby boomer’ generation moves into retirement.[55]

1.36 DIAC also drew attention to the series of reforms of the skilled migration program that commenced on 1 July 2012—including a review of the points test used to assess skilled migrants.[56]

Family assistance and child support

1.37 The Terms of Reference referred to legal barriers to work for mature age persons in the areas of child support and family assistance.[57] These laws may be relevant to mature age persons, in particular when they raise grandchildren.[58] Specific barriers to work for mature age persons within these laws have not been identified.[59] Consequently, the ALRC makes no recommendation to reform child support or family assistance laws.

Tax

1.38 In the Discussion Paper, the ALRC noted that personal income tax laws may affect workforce participation, including for mature age cohorts.[60] The Issues Paper discussed several aspects of the income tax system in relation to mature age workforce participation, including:

  • effective marginal tax rates;

  • the complexity of the tax transfer system;

  • tax exemptions for social security payments; and

  • tax offsets.[61]

1.39 Responses from key stakeholders were summarised in the Discussion Paper,[62] largely focusing on systemic reforms to the tax system. For example, the Australian Council of Trade Unions (ACTU) stated that, having regard to the Inquiry’s framing principles of system coherence and stability, it would not support ‘significant structural change to one payment … in the absence of change to other forms of income support payments’.[63] Further submissions reiterated the concerns identified in the Discussion Paper.[64]

1.40 While several aspects of the income tax system that may be relevant to mature age workforce participation were traversed in the Discussion Paper, the ALRC concluded that addressing them required consideration of systemic reforms to the tax system—a task beyond the scope of this Inquiry. Further, such a project was completed in 2009, when the Tax Review recommended comprehensive reforms to the tax transfer system with a particular focus on ensuring appropriate incentives for workforce participation.[65]

1.41 Following the release of the Discussion Paper, three stakeholders raised the issue of the tax treatment of redundancy payments.[66] Preferential tax treatment is accorded to a ‘genuine redundancy payment’, a component of which is based on the person’s years of service.[67] There are two limitations on what amounts to a ‘genuine redundancy payment’: namely, if the dismissal occurs after the employee’s 65th birthday, or ‘if the employee’s employment would have terminated when he or she reached a particular age or completed a particular period of service—the day he or she would reach the age or completed the period of service (as the case may be)’.[68] In such cases, an employee may pay ‘considerably more tax on their termination payment than a worker who has the same period of service but has not yet attained 65 years of age’.[69]

1.42 The Superannuation Committee of the Law Council of Australia (Superannuation Committee) submitted that, ‘as an employee now generally cannot be compulsorily retired at a particular age or after a particular period of service, this restriction ... is now effectively obsolete’.[70]

1.43 While reaching a certain age is clearly a relevant criterion to the determination of whether a payment is a ‘genuine redundancy payment’, the ALRC considers that this does not sit within the Terms of Reference as a ‘barrier’ to workforce participation. As the Superannuation Committee commented, ‘employees generally have very limited control, if any, over the timing of their redundancy’, hence it did not have a view ‘as to whether the different tax treatment is a disincentive for older workers, who are made redundant, to seek further work’.[71]

Re-skilling

1.44 The Consultative Forum identified the difficulty that mature age people may face if the employment they are seeking requires certain qualifications, or they need to update or upgrade their skills—described as ‘re-training and up-skilling barriers’.[72] The Advisory Panel also noted that workers, or those seeking work ‘may need to look for re-skilling opportunities’:

The Australian economy has transformed significantly in recent decades. We have seen a decline in manufacturing jobs and an increase in occupations in the services and information technology sectors. Some older Australians have skills that were well-suited to jobs of the past but may not be as relevant to the jobs of today.[73]

1.45 The third report of the Advisory Panel, Turning Grey into Gold, included four recommendations under the label, ‘Lifelong learning’, helping individuals to ‘remain active participants in a changing society and a changing economy’:

Lifelong learning contributes to an innovative and adaptable workforce, creative and strong communities, and more satisfying personal lives.[74]

1.46 The report suggested that to support people who want to remain in the workforce but want to take a different career direction—to pursue ‘encore careers’—educational settings ‘need to be flexible’. Having options in relation to vocational study at any age is ‘important in maintaining workforce participation’.[75] The Advisory Panel therefore recommended that:

The federal government, in conjunction with employer and employee peak bodies, examine mechanisms that support older workers to take up skilling and educational opportunities, including:

  • investigating the concept of ‘educational leave’

  • reviewing the availability of financial assistance and concessional tax arrangements to assist individuals to undertake vocational study in order to re-skill or change careers.[76]

1.47 The Intergenerational Report 2010 identified the need to support mature age participation through practical measures such as retraining and re-skilling programs.[77] The development of the Investing in Experience Tool Kit is an example of such a government response.[78] Additionally, since 1 January 2013, $35 million from the National Workforce Development Fund is available to businesses to provide training to new and existing workers aged 50 years and over.[79]

1.48 Concerns were repeated throughout this Inquiry about such matters as: the need for programs to assist carers to re-enter the paid workforce or obtain or regain skills;[80] and the difficulties faced by immigrants in having their qualifications and experiences recognised.[81]

1.49 The ALRC recognises the importance of retraining and re-skilling as issues affecting continued workforce participation. As seen in the work of the Advisory Panel, however, ‘lifelong learning’ is an issue that not only concerns workforce participation, but also contributes to community and personal wellbeing. To the extent that education touches on workforce participation, it is included in various ways in the text and recommendations in this Report.

[28] The full Terms of Reference are set out at the front of this Report.

[29] National Seniors Productive Ageing Centre, Barriers to Mature Age Employment: Final Report of the Consultative Forum on Mature Age Participation (2012), prepared for the Consultative Forum on Mature Age Participation.

[30] Ibid, 1–6.

[31] Ibid, 10.

[32] Australian Chamber of Commerce and Industry, Submission 85 and Australian Chamber of Commerce and Industry, Submission 44. See also Australian Industry Group, Submission 97; Business Council of Australia, Submission 93.

[33] National Seniors Productive Ageing Centre, Barriers to Mature Age Employment: Final Report of the Consultative Forum on Mature Age Participation (2012), prepared for the Consultative Forum on Mature Age Participation, 18.

[34] The Queensland Industry Tourism Council expressed concern about the use of the term ‘older persons’ and suggested replacing it with ‘mature age worker’, ‘given that the ABS definition for “older persons” is often an arbitrary classification that differs between each of their publications’: Queensland Tourism Industry Council, Submission 67. Given that the Terms of Reference for this Inquiry are headed specifically with the term ‘older persons’, the ALRC considers it appropriate to use this term throughout the Report.

[35] Advisory Panel on the Economic Potential of Senior Australians, Realising the Economic Potential of Senior Australians—Changing Face of Society (2011), 4.

[36] Australian Institute of Health and Welfare, Australia’s Health 2012 (2012) <www.aihw.gov.au> at 21 March 2013, 9.

[37] Australian Institute of Health and Welfare, Older Aboriginal and Torres Strait Islander People Cat No IHW 44 (2011), 1.

[38] United Nations, World Population Ageing: 1950–2050 (2002).

[39] Ibid.

[40] Eg, L Masters, Submission 36: ‘What is it that makes 45 the magic number?’.

[41] Brotherhood of St Laurence, Submission 54. Quoting: H Kimberley and B Simons, The Brotherhood’s Social Barometer: Living the Second Fifty Years (2009). Another stakeholder queried how the definition of ‘old age’ at age 45 years applied to women: ‘the term has always been based on the notion that men determine … what age is old, and what age is young. Women also have determinants of “old age” that differ to those that men hold true’: L Masters, Submission 36.

[42] Advisory Panel on the Economic Potential of Senior Australians, Realising the Economic Potential of Senior Australians—Changing Face of Society (2011), 4.

[43] National Seniors Productive Ageing Centre, Barriers to Mature Age Employment: Final Report of the Consultative Forum on Mature Age Participation (2012), prepared for the Consultative Forum on Mature Age Participation.

[44] The Treasury, Intergenerational Report 2010—Australia to 2050: Future Challenges (2010), xiv.

[45] National Seniors Productive Ageing Centre, Barriers to Mature Age Employment: Final Report of the Consultative Forum on Mature Age Participation (2012), prepared for the Consultative Forum on Mature Age Participation, 1.

[46] Business Council of Australia, Submission 93.

[47] Australian Law Reform Commission, Grey Areas—Age Barriers to Work in Commonwealth Laws, Discussion Paper 78 (2012), Questions 53–55.

[48]Migration Act 1958 (Cth) s 43.

[49] The requirement that a person be under 50 years of age is expressed as a criterion for making a valid application. See, eg, Migration Regulations 1994 (Cth) sch 1 item 1135(3)(b) in relation to a Skilled (Independent) subclass 175 visa. For applications made prior to 1 July 2011, the age limit was 45 years. Similarly, one criterion for applying for employer-sponsored visas is that the applicant is under 50 years of age: see, eg, Migration Regulations 1994 (Cth) sch 2, subclass 186—Employer Nomination Scheme, cl 186.221 (Temporary Residence Transition Scheme), cl 186.231(Direct Entry Scheme).

[50] Australian Chamber of Commerce and Industry, Submission 44; Government of South Australia, Submission 30.

[51] National Seniors Australia, Submission 27. The Brotherhood of St Laurence submitted that age restrictions create ‘risks of losing the global competition for older workers, losing potential knowledge and skills’: Brotherhood of St Laurence, Submission 54. An article by Professor Simon Briggs and others referred to the fact the Issues Paper had raised the issue of older workers in Australia’s migration program and supported the idea of valuing older workers, both within Australia and through immigration within ‘globalised economies’ to ‘capitalise upon this resource’: S Biggs, M Fredvang, Irja Haapala, ‘Not in Australia: Migration, Work and Age Discrimination’ (2012) Australasian Journal on Ageing 1, 3.

[52] Australian Law Reform Commission, Grey Areas—Age Barriers to Work in Commonwealth Laws, Discussion Paper 78 (2012), ch 9. The ACTU, for example, argued that ‘the Commonwealth Government’s priority should be on training and assisting Australian workers, including older workers, to find employment before looking to fill the gaps through migration’: ACTU, Submission 38.

[53] Australian Law Reform Commission, Grey Areas—Age Barriers to Work in Commonwealth Laws, Discussion Paper 78 (2012), [9.18].

[54] Department of Immigration and Citizenship, Submission 79. The ALRC concluded not to make a recommendation. This is not the same thing as a recommendation that ‘no changes be made to the age limits under Australia’s skilled migration framework’.

[55] Ibid.

[56] Ibid.

[57] Relevant statutes include: A New Tax System (Family Assistance) Act 1999 (Cth); A New Tax System (Family Assistance) (Administration) Act 1999 (Cth); Child Support (Registration and Collection) Act 1988 (Cth) and the Child Support (Assessment) Act 1989 (Cth). The policy guides are: FaHCSIA, Family Assistance Guide (2013) <www.fahcsia.gov.au/guides_acts/> at 21 March 2013 and Child Support Agency, The Guide—CSA’s Online Guide to the Administration of the New Child Support Scheme (2013) <www.guide.csa.gov.au> at 21 March 2013.

[58] The Inquiry did not consider barriers to work in child support and family assistance laws that affect mature age parents.

[59] For consideration of these laws as they may affect mature age persons, see: Australian Law Reform Commission, Grey Areas—Age Barriers to Work in Commonwealth Laws, Discussion Paper 78 (2012), 147–150.

[60] Ibid, Ch 7.

[61] Ibid, 25–28.

[62] Submissions dealing with these issues included: COTA, Submission 51; National Welfare Rights Network, Submission 50; Australian Chamber of Commerce and Industry, Submission 44; ACTU, Submission 38; National Seniors Australia, Submission 27; Olderworkers, Submission 22; Superannuated Commonwealth Officers’ Association, Submission 14.

[63] ACTU, Submission 38.

[64] For example, National Seniors Australia, Submission 92; Brotherhood of St Laurence, Submission 86.

[65] The Treasury, Australia’s Future Tax System: Final Report (2010), pt 1, vii, Terms of Reference.

[66] J Constable, Submission 98; Law Council of Australia, Submission 96; C Lanyon, Submission 61.

[67]Income Tax Assessment Act 1997 (Cth) s 83-170.

[68] Ibid s 83-175(2)(a).

[69] Law Council of Australia, Submission 96.

[70] Ibid.

[71] Ibid.

[72] National Seniors Productive Ageing Centre, Barriers to Mature Age Employment: Final Report of the Consultative Forum on Mature Age Participation (2012), prepared for the Consultative Forum on Mature Age Participation, 1–6.

[73] Advisory Panel on the Economic Potential of Senior Australians, Realising the Economic Potential of Senior Australians—Changing Face of Society (2011), 12.

[74] Advisory Panel on the Economic Potential of Senior Australians, Realising the Economic Potential of Senior Australians—Turning Grey into Gold (2011), 29.

[75] Ibid, 33.

[76] Ibid.

[77] The Treasury, Intergenerational Report 2010—Australia to 2050: Future Challenges (2010), xxiii–xxiv.

[78] Australian Government, Investing in Experience Tool Kit (2012).

[79] DEEWR, DHS and FaHCSIA, Submission 101.

[80] National Welfare Rights Network (NWRN), Submission 99.

[81] Federation of Ethnic Communities’ Council of Australia (FECCA), Submission 80.