The higher Work Bonus maximum cap brought in by the government earlier this year as a temporary measure, will continue in the new year.
The extra $4000 on top of the $7800 Work Bonus was due to be scrapped on January 1, however the newly released Employment White Paper has confirmed the additional $4000 will remain allowing age pensioners to earn $11,800 before their income support payment is cut.
From January 1 new entrants to the age pension and eligible veterans will also receive a starting Work Bonus bank balance of $4000 instead of $0.
A government statement said the changes would mean eligible recipients could earn more from work before their pension was affected, broadening their choices and increasing flexibility.
The $4000 increase to the Work Bonus bank was temporarily introduced after last year's Jobs and Skills Summit. The cost of making it permanent is $42.4 million through to 2026-27.
The government will also double the employment income nil rate period to close to six months (12 fortnights) to reduce barriers for income support recipients to take up work by allowing them to retain concession cards and other supplementary benefits for a longer period when they first get back into employment. This will apply to recipients of JobSeeker, Youth Allowance, Austudy, ABSTUDY, Parenting Payment, Age Pension, Disability Support Pension and Carer Payment.
It is designed to address concerns that losing access to concession cards, child-care subsidies and other supplementary payments, or having to reapply and wait for income support if things don't work out, acts as a discouragement to taking-up work, particularly short-term, casual and gig economy work.
This measure is expected to benefit around 138,000 recipients each year.
Treasurer Jim Chalmers said the changes were an investment to help build a bigger, better workforce.
"This is about putting the right incentives in place to get more Australians into work," Dr Chalmers said.
"We want to make sure the stepping stones are in place to enable more Australians to take up a job or work more hours."
Social Services Minister Amanda Rishworth said, "Making permanent the temporary Work Bonus measure will ensure pensioners know they are supported and rewarded if they choose to work."
"Around 195,000 people commence on the Age Pension each year and will benefit from the $4000 Work Bonus starting balance. If these pensioners choose to take up work or work more their earnings will have less of an impact on their pension.
However, while welcoming the permanent increase to the Work Bonus, advocates have said the government could go further.
"The government could reduce the barriers to workforce participation by trialling a targeted reduction in the income test taper rate for workers in the health and social assistance sector (and agriculture). In the health care and social assistance sector there are around 73,000 job vacancies," said National Seniors chief advocate Ian Henschke.
Demand for care and support workers is set to double by 2050. According to the National Skills Commission, there will be a shortfall of 211,000 workers (full-time equivalent) by 2050.
"Older people are dealing with these desperate shortages now. By 2050, it will be their children. They deserve to know someone is going to be there for them, at a time when they need it the most," said Mr Henschke.
Deloitte modelling showed reducing barriers to workforce participation for pensioners would be a win for government and a win for the economy, he said.
"The White Paper is a forerunner to real reform, and we look forward to the release of the National Strategy for the Care and Support Economy."
Paul Versteege Policy Manager for Combined Pensioners and Superannuants also welcomed the permanent increase by $4,000 in the amount of Work Bonus available per year.
He said the CPSA would like to see statutory indexation applied to Work Bonus at the same time as income free areas are indexed.
"There continues to be a good case for annualising Work Bonus, so that it wouldn't matter in which periods of the year you worked. Currently, a one-off big pay packet can mean losing the pension for a period while total annual income may not exceed the annual Work Bonus amount."
"CPSA understands that the take-up of Work Bonus is relatively low and believes part of the problem is that onerous and duplicative income reporting requirements cause pensioners to opt out or not opt in at all."
Council on the Ageing (COTA) Australia said addressing the barriers keeping many older people out of the workforce is crucial
"Having a flexible working environment, free of conscious or unconscious biases like ageism is a good first step towards attracting older workers into your workplaces," said acting chief executive Corey Irlam
He said it was good to see commitments in the whitepaper aimed at addressing the issues facing older people including incentives for people to keep working while they receive the Age Pension or government concessions and action to address ageism in the workforce.
"This whitepaper takes important steps towards breaking down some of the barriers keeping older people who want to work out of the workforce," Mr Irlam said.
"Providing incentives for people to keep working while they receive the Age Pension by making the 'work bonus' a permanent feature will make a difference to many older people looking to continue to work.
"We know that systemic ageism is a key reason older people are locked out of the workforce and it's good to see that acknowledged in the employment whitepaper.
"The Treasurer says he wants Australians to be masters of their own destiny. Older Australians want that too, but there are a number of barriers getting in the way of that and many of those barriers boil down to ageism at the end of the day.
For more information on the Government's changes, visit the Department of Social Services website.