The Federal Government’s revamp of its mature age employment subsidy scheme will be closely monitored to ensure that it meets its goal of increasing sustainable employment after some commentators raised concerns that the changes might be counterproductive.

Changes announced in the Federal Budget to the Restart scheme – where employers are rewarded for hiring workers over 50 years of age who have been unemployed – will see participating businesses receive the full wage subsidy of $10,000 inside 12 months rather than over the previous 24 months.

Payments received at three monthly intervals will culminate with a $3,500 ‘bonus’ final payment after an individual has been employed for 12 months. The new regime replaces a payment schedule in which employers received half yearly payments over two years for the same total amount of $10,000.

The merits of keeping mature aged workers in the workforce has been long understood but COTA (formerly Council on the Ageing) chief executive, Ian Yates, said he was disappointed with the Government’s response to mature age employment.

“All we see in the Budget is tinkering with the existing Restart program which provides incentives to businesses who employ a long term unemployed person over 50. This includes reducing the time an employer needs to keep an older person on before receiving a full incentive payment,” Yates said.

“We are concerned that this could lead to some employers churning older employees on short contracts so employers benefit from the incentive but the workers become unemployed again,” he said.

“We understand that the government is introducing this change in order to encourage stronger employer participation in the program and we will watch closely to see if this is the outcome but at present we are not convinced.”

A spokesman for the Minister for Employment, Senator Eric Abetz, said the Government would also be watching the employment outcomes with interest.

“The issue (of churning) has been raised by a number of stakeholders and the Department has been instructed to monitor the situation and ensure that sort of thing does not happen,” the spokesman told Business Insight.

Yates said it was also “disappointing that the incentives only apply to older people who have been unemployed and on income support for six months”.

“Earlier eligibility would make the older person more attractive to an employer and ensure they maintain their confidence,” he said.

“We are also disappointed that other complementary measures were not put in place to counteract the prevalence of age discrimination in the workplace.”

Age Discrimination Commissioner and former Hawke Government minister Susan Ryan said recently that age discrimination was “a huge barrier preventing older Australians from continuing in the workforce”, a phenomenon that was denying the nation a major economic boost.

“Deloitte Access Economics research shows that increasing the number of Australians older than 55 in paid employment by 5 per cent would result in a $48 billion impact on the national economy,” Ryan wrote recently.

“This can happen. The percentage of the people aged 55-64 in the workforce in Australia is 61.5 per cent, and has remained stable since 2012. Compare this to New Zealand, where the percentage is 74.4 per cent,” she said.

In its 2012 report, Deloitte Access Economics said lifting the mature age workforce participation by 5 per cent “would represent a major change in Australia’s workforce, with participation among Australian’s in their 70s lifting by a half and participation among those aged 50-59 closing in on that of Australians in their 30s and 40s”.

“It is therefore no surprise that the resulting economic benefits would rank with the gains that Australia has achieved from some of the major economic reforms of times past,” the report said.

The Restart program is one of four employment incentive schemes that the Federal Government has consolidated into a single wage subsidy pool of $1.2 billion over four years. The other programs are the Long Term Unemployed Wage Subsidy, the Youth Subsidy and the Tasmanian Jobs Program.

From 1 November 2015, eligible employers will receive up to $6,500 if they hire an eligible young job seeker under 30 years of age, an Indigenous job seeker, a parent returning to the workforce, or a long-term unemployed job seeker.

Employers who hire an eligible job seeker will be able to receive a wage subsidy from the time they start in the job (currently employers are required to wait six months) and paid in fortnightly instalments.

The Budget also contained changed work experience arrangements “allowing job seekers to undertake up to 25 hours per week of unpaid work experience for up to four weeks where there is the likelihood of employment as a result”.

The work experience program is voluntary and aimed at job seekers who are 18 years of age or older. They will continue to receive income support and a supplement while on work experience.