Age Pension: time to include the family home

Simon Cowan explains why the family home should be assessed.

middle aged couple stand outside their home

The exemption of the family home from the Age Pension means test is one of the most emotionally charged elements of Australia’s retirement system. The mere suggestion that the value of homes be included in Age Pension eligibility tests draws the ire of many. 

Yet, reluctance to touch home equity is harming taxpayers, pensioners who do not own their home, and ultimately home-owning pensioners themselves.

Three in four pensioners own their own home, and almost all of them are free of a mortgage. For most pensioners, this represents the vast majority of their net worth. Indeed the combined value of pensioner home equity exceeds $700 billion, far outstripping any other form of savings.

Yet just one per cent of retirees use these savings to boost their living standards through a reverse mortgage. Nor do many seek to downsize. In fact most pensioners hold onto their home equity until they go into aged care, or until they pass those assets on to their children.

Instead they rely on taxpayer support — through the Age Pension — for the majority of their income.

Around a quarter of all pensioners have a net worth of $1 million or more and five per cent of pensioners are in the top wealth bracket. Pensioners with no other income, and less than $10,000 in assets, are sharing payments with those worth millions.

Yet many of those pensioners with million dollar homes are still struggling to make ends meet. They can’t afford to maintain their homes and lifestyles while pensioners a couple of suburbs away struggle with rental payments and daily living expenses.

The protected position of the family home, combined with a strong sense of the importance of home ownership, has led retirees to massively overinvest in housing assets, to the detriment of their standard of living.

It is wrong to expect that taxpayers, particularly those who are locked out of the housing market, will hand over more and more money to subsidise living standards (and bequests) for retirees. Projections that the cost of future pensions may exceed workers’ contributions to their own retirement, together with a rapidly ageing population, reflects the sobering reality that the age pension is unsustainable.

Three interlocking reforms will resolve this problem.

First, the family home should be included in the Age Pension assets test. The Age Pension asset test needs to properly reflect how pensioners hold their savings, and the simple fact is that pensioners with substantial home equity can and should support themselves.

The second step is to assist in unlocking that home equity by creating a government-backed reverse mortgage scheme. With a government guarantee, banks and superannuation funds could offer low-rate, low-fee, reverse mortgages that provide a regular income stream just like the Age Pension.

The last reform, which dovetails with the two previous reforms, is to deem reverse mortgage income in the Age Pension income test. This will encourage pensioners to take out reverse mortgages that will boost income, and allow pensions to automatically adjust if reverse mortgage income falls.

These reforms not only save taxpayers almost $15 billion every year, but mean that 98 per cent of pensioners would see a boost in their income of nearly $6000 on average – a significant rise for those wholly reliant on the Age Pension. These reforms could also fund a substantial boost in the Age Pension for the poorest pensioners, as well as lifting rent assistance for non-homeowners.

There are political, cultural and social issues to overcome when talking about an emotive topic such as the family home. However, refusing to even consider pension reform is entrenching unfairness, increasing government spending and lowering pensioner living standards. Unlocking home equity is the big-bang reform this government needs.

Simon Cowan is Research Manager at The Centre for Independent Studies and the author of several reports on the retirement system including The Myths of the Generational Bargain and The Age Old Problem of Old Age: Fixing the Pension.




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    COMMENTS

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    bobbalinda
    21st Apr 2016
    10:38am
    I worked all my life and paid my taxes, worked hard to buy a family home instead of spending madly on holidays and other extras and now you want me to pay again? House values rise and fall over time and what value do you put on it? Depending on where it is situated the same house can have a different value of thousands of dollars. By choice many people preferred to rent and now when they retire they have no home and feel we that saved and budgeted should now be made to pay again? If this comes in I will sell my house, go for overseas holidays and spend the money and then will also become a renter with less assets and will cost the govt. more in rental assistance etc. Leave our homes alone!
    Play Fairly
    21st Apr 2016
    1:32pm
    Well said. My sentiments exactly.
    Play Fairly
    21st Apr 2016
    1:59pm
    p.s. BUZZ OFF Simon and investigate some "politician leaners" instead of harassing Aged Pensioners. Sort out some of their finances, and find out why they can collect their pensions when they leave parliament instead of waiting to reach age 67, or in the future, age 70. Absolute disgrace. The government 'bean counters' are hoping we 'drop off the twig' before we reach aged pension age. Joe Hockey referred to us as "leaners" on the public purse. He collected a nice pension from Australian taxpayers....no waiting until age 67 for him.....and another government well-paying job with all its lurks & perks to boot. Go and contemplate some other solution that doesn't involve an aged pensioner's home. Crikey, we've struggled all our lives going to work everyday to pay off our house....let us enjoy living there until we leave it for the next life.
    particolor
    21st Apr 2016
    1:59pm
    Green Tick :-)
    Farside
    21st Apr 2016
    2:09pm
    It's a logical fallacy to use the pollie's pensions in an argument over welfare pensions. The pollie's pensions are a rort that should be discontinued; politicians should earn pensions as any other Joe and access the same as any other Joe.
    MICK
    21st Apr 2016
    3:19pm
    This piece sounds more like an advertisement from the banking sector wanting to cash in on reverse mortgages than anything else.

    I find it galling to reap this sort of crap from somebody purporting to be an 'expert'. Simon needs to comprehend that the FAMILY HOME and a PENSION are mutually exclusive. What that means Simon is that they are not related and that one does not determine the other.

    Your photo indicates to me that you are a genYer. That should say it all...but I would have thought even illogically thinking genYs with their distorted view of the world might like to be left an inheritance from their parents. This bright idea will end that one. Stupid!
    Hasbeen
    21st Apr 2016
    4:16pm
    Come on bobbalinda, of course we should be reverse mortgaging our homes, & using up all we have worked for. How is the left going to raise the money to give more to the no hoper, if they don't rip it off the productive folk, who put the effort into preparing for their retirement in the most logical way.

    We even paid a percentage of out taxes at one stage, in a similar way to suppuration today, to the government to fund our pension. How can you not want to give it to the yabbo, or use it so the disabled can drive a better car than you can afford?
    MICK
    21st Apr 2016
    4:33pm
    That's right Hasbeen. Give everything to the rich and leave average WORKERS on the street penniless.
    Your view is why 0.1% of Americans own 90% of everything and why coalition governments have for years tried to create the same class system in Australia.
    If you want to talk about waste then look at what our Tax Haven user PM did to the NBN: ruined the model and now it costs more. And let's not forget about the Royal Commission into an election coming. Total waste. And then there is the $8 billion a year this government threw away by repealing the Carbon Tax...which did not stop heaps of mines closing down AFTER THAT in Queensland.
    I'll support you on routing bludgers. I am sick of it but this sore comes from both sides of politics.
    GreyViper
    22nd Apr 2016
    12:55pm
    What the ...... ? Did you people read the same article as I just read? It seems perfectly logical and eminently sensible to me to include the family home as part of one's assets. Why should someone living in a $1 or $2 million home not use part of this asset to support themselves rather than expecting the tax payers of today to carry them? I will once again ask the question - what is the difference between someone with a $2 million home and $500,000 in superannuation or someone with a $500,000 home and $2 million in superannuation? They both have the same amount in assets and should be treated the same when it comes to receiving the pension. People who own an expensive home (regardless of how that home came to be "expensive) should look after themselves in retirement rather than expecting someone else to do it so that they can leave a large windfall to their children. Also why restrict yourself to a meager existence when you could have a better standard of living by utilizing the value of your asset to provide for yourself. It just doesn't make sense! Also with the increase of the number of people reaching their 60s get used to the idea. It's going to come as it is the only way either government can sustain the old age pension payout which has already reached something like $45 billion!
    Jenny
    22nd Apr 2016
    3:18pm
    Have to agree with the GreyViper on this one! If you own a 2 million dollar house then damned if you need the age pension to live. Reverse mortgage if you don't want to downsize. I speak from the perspective of one who is excluded from the pension due to assets, and am quite happy with this. The age pension is not a right, it is intended for those who have never been in the fortunate position to be able to provide for themselves.
    Radish
    22nd Apr 2016
    4:00pm
    Totally agree with GreyViper and Jenny. Why should the taxpayers of this country pay for pensions for people who have $2 million dollar homes plus.
    This will free up more money to go to those who deserve helping.
    The pension is "not" an automatic right.
    ex PS
    22nd Apr 2016
    7:48pm
    Nice sentiment Radish, but I doubt any money saved will find its way to the disadvantaged, the government is more likely to use it to reduce taxes for those needy people in the higher tax brackets. And if you reach retirement age and meet the requirements YES the pension is an automatic right.
    Farside
    22nd Apr 2016
    8:39pm
    ex PS, you may think rights and entitlements are interchangeable, but they are not the same. It is splitting hairs but the pension is not a right. Technically it is a conditional entitlement.

    A right can be acted on by individuals without the assistance of government and without forcibly interfering with other individuals.

    Entitlements, on the other hand, cannot be fulfilled except through specific government actions which require forcible interference with others.

    Either way it is far from automatic – firstly, one has to apply for a pension and then satisfy the eligibility requirements in order to receive it, hence it is an entitlement. You can read more on our rights at https://www.humanrights.gov.au/common-law-rights-human-rights-scrutiny-and-rule-law. You will not find pensions or income support mentioned.

    21st Apr 2016
    10:58am
    Simon Cowen has demonstrated total disrespect for retirees and gross selfishness on behalf of well-to-do taxpayers whose greed knows no bounds.

    Personally, I support including the family home in a much more generous assets test, simply because excluding it is unfair to those who choose to invest in other assets (particularly if those other assets fail to return well and are hard to sell) and because excluding it encourages over-investment in housing which distorts the housing market. BUT, and there's a massive BUT.... people's RIGHT to save for later-life goals and to leave something to their children SHOULD be respected. And there needs to be respect for the fact that today's retirees who have little or no super PAID for their pensions through a tax plan, and it isn't their fault that money was stolen by government.

    Scrub the compulsion to reverse mortgage. That will impose hideous psychological trauma and stress on many who struggled for years to pay off their homes and fear debt. Certainly, assess the home as part of a very generous asset threshold, and make loans available to those who want to take advantage of them, but DO NOT DEEM REVERSE MORTGAGE INCOME, and stop bashing retirees and blaming them for economic problems. They, as a class, have suffered more than any other Australians due to falling investment returns, and it's time the rest of the nation acknowledged that and gave them a fair go.

    Cowen, bugger off back to your burrow and stop sprouting self-serving nonsense. You have no idea what life was like for retired Australians, or why they choose to live as they do. And you clearly don't acknowledge the injustice they have suffered, OR that Australia carries a very low aged pension cost by world standards, one that ISN'T rising much, and one that is leaves vast numbers of retirees in poverty. And you certainly have no idea what it is like to face up to 35 years, or maybe more, with no income earning capacity, while having IDIOTS tell you how well off you are on $22,500 a year income, with a modest home, no pension concessions, hideous health and care costs, needy children and grandchildren you want to help, and a savings nest egg that, by the time you are 80, will be next to nil.
    A million in assets is bugger all for many younger retirees!
    Rae
    21st Apr 2016
    3:20pm
    Hi Rainey I think we are pretty close to Simon's generation living the consequences of the past 40 years. The international share index is looking very shaky, Aussie shares are over relying on financials and the junk bond bubble is out of control.

    They can't raise rates and I seriously doubt the government could finance this wild idea of Simon's to take the few people with no debt and join them up to the youngsters living the high life on redraws from bubble house prices and interest only loans.

    The numbers of home owners who took on mortgages for second investment properties and the overseas speculators buying up on the off chance they can pick up capital gains is starting to unravel.

    No one can really make any money at 2% or less, with stagnating and falling salaries, over indebted businesses unable to invest and rising unemployment.

    Even Harry Triguboff had a whinge today that he can't make the gains he once did poor darling billionaire.

    We will be alright Rainey. The neo liberal nonsense has a ways to go yet but once it is done hopefully some sanity will prevail.
    I read somewhere that 1927 and 1928 were pretty crazy times too.

    Anyone deliberately getting into debt to fuel consumption right now is crazy and this is exactly what this Simon is suggesting.
    Oars
    21st Apr 2016
    11:03am
    I read here that a person with a family home worth over a million is wealthy. In that case most of Sydney and Melbourne are "wealthy". The home prices jumped for reasons other than the owners- who had lived in therm for years, saved, yet the home was probably only worth $300K 30 years ago. Does that mean that because those people looked after their own home for 30 years, and worked hard to maintain those homes, are now penalised while scrubbers who found time to play pokeys, pub drools, and allround dropkicksa, get a pension. What sort of society are we aiming at- a family of hopeless cases that throw away all their money and want a hard working family to prop them up down the track. Please. Could somebody out there explain why I have to subsidize a dropkick- cos I saved and look after my home- which is worth a million. I built it for $20K years ago. Please explain somebody.
    Richied
    21st Apr 2016
    2:47pm
    The 'good' news is the median house price in Sydney has fallen back below $1million.
    Rae
    21st Apr 2016
    3:26pm
    Once the speculators take fright and walk away it could be back to a reasonable value Oars. We have been through property bubbles before but this one is a doosy due to all those trillions of debt created by Central Banks with no idea what else to do.
    particolor
    21st Apr 2016
    3:42pm
    Some people have Pokeys and Pubs on the Brain !! :-)
    Stop it or you'll start another Movement ! :-)
    "Offended Dropkicks against Discrimination"
    Haven't we got enough Weirdo Mobs roaming the Streets already ? :-( :-(
    Batara
    21st Apr 2016
    11:17am
    A breath of fresh air to read someone brave enough to analyse a sacred cow of the Australian society. Well said Mr Cowan. Pity there is not a politician game to follow your eminently sensible proposal.

    Amusing, but disappointing, to read the self centred reactions on this page. Think of someone other than yourself people.
    SydneySwan
    21st Apr 2016
    11:32am
    I agree completely. Mr Cowan should be commended and his ideas need to be given serious thought and debated in an open and calm manner, quite unlike the initial comments on this thread.
    SGW
    21st Apr 2016
    11:33am
    Why don't you think of someone other than yourself, people have many different circumstances forced on them, and like bobbalinda said may have gone without all there lives to pay off there home
    Saalbach
    21st Apr 2016
    11:39am
    Well, I agree with most of the comments here (except yours), but mine are not self interests. My home is not worth any where near the magical million, so the asset test wouldn't probably affect me. What would, would be the compulsion to mortgage people's home to survive. I am concerned that many people would end up with no assets by the time they need to go into a nursing home, and therefore wouldn't be able to afford to do so. Does Mr Cowan propose that the Govt subsidises this cost? Where would the money come from? - probably out of the savings from the pension. In other words, the Govt would be no better off, and many pensioners would be destitute.

    A more equitable and fairer system would be to perhaps introduce a higher tax rate for excessive contributions into super, but more importantly, introduce a system whereby high super incomes in retirement would be taxed. A very simple way would be to tax all super incomes at normal rates, but allow an additional $50,000 tax free threshold on top of the existing $18,000. That is income below $68,000 would be tax free, anything over that would be taxed. Income of $150,000 would attract tax of around $18,200.
    Surely this would be simpler and fairer?
    SGW
    21st Apr 2016
    11:45am
    Saalbach's reply seems to offer a fairer system
    Queensland Diva
    21st Apr 2016
    11:46am
    I totally agree with the author, and believe me, my husband and I are not wealthy. When we retire at the end of the year we will have to sell our house in the city and move to the country so that we can afford a small house outright. Not that that is a problem, we're looking forward to it. And hopefully, when we're gone, there will be something there for the kids. But I certainly don't agree that people should keep their big expensive houses for the next generation and claim full entitlement to the pension. It's very emotive as we can read here, but that's my opinion, like it or lump it.
    Dave V
    21st Apr 2016
    1:11pm
    Dear Saalbach, forgive me if I've misunderstood your comment, but I believe the Government already does hugely subsidize the cost of nursing home accommodation. Plenty of people go into nursing homes with no income, apart from a Gov pension. The Government pays for them.
    Retired Knowall
    21st Apr 2016
    2:52pm
    Saalbach, you make some good points. I believe a another solution would be to tax the value of the family home at say 20% of the value or the amount the Govt provided as a support payment, which ever is the lesser. The people with high value homes would contribute more from their estate.
    Queensland Diva, well done, it's refreshing to read comments from someone other than the Welfare Entitled lot.
    Dave V, you are somewhat right, but, try and get a decent place if you are relying on Govt support.
    MICK
    21st Apr 2016
    9:44pm
    I looked Simon up on Linkedin. This genY well off 'researcher' has done a fair bit of work for the Abbott government from what I could see. Sounds like the two may be connected at the hip. Please clarify Simon!
    Radish
    22nd Apr 2016
    4:02pm
    There are always places for those who do not have the funds to go into nursing homes and the government pays.
    Golfer
    21st Apr 2016
    11:31am
    It's the retirees or nearly retired who withdraw $300k, $400k, $500k and upwards from their super and tip it into home renovations that need to be controlled in some way. They're doing it a) because they can b) because they're increasing the value of their untaxable asset (the home) and c) because they become eligible for the pension or more pension dollars..
    In Sydney and Melbourne there are lots of home renovations happening and this is a significant reason why.
    Adding $500k to the value of your home as property values soar is very, very smart. It's better than the money languishing in a super fund or bank account and affecting your age pension. So tell me this is it right that one can increase the value of their untaxable asset by 50% or more and by doing so receive an increase in their age pension?
    happy
    21st Apr 2016
    12:21pm
    That's nonsense. Doubt anyone who has worked and saved all their life would ever spend the amounts of money you mention here so wastefully.
    KSS
    21st Apr 2016
    12:57pm
    No doubt some do act in the way you say Golfer, but much more likely is that shortly before retirement, some upgrade to a more expensive house, then use the 50% super you mention to pay it off on retirement (along with that world trip, cruise, new car etc) thus preserving a substantial sum to bequeath to their kids whilst rendering themselves eligible to an aged pension.

    Then there's those who bought property decades ago and are now reaping significant growth in assets in the hundreds of thousands or even millions and somehow see that as different to someone who say bought a truck load of low cost shares in some go-nowhere business that are now worth hundreds of thousands or even millions and are expected to liquidate to live on.

    Go figure!
    Sundays
    21st Apr 2016
    2:18pm
    Yes KSS except that people with significant investments usually own a home as well.
    Richied
    21st Apr 2016
    3:26pm
    Agree. Perhaps that's more of an issue with how super is treated, rather than treating the family home as an asset for means testing.

    Would it be better to ensure that people cannot draw lump sums from their super (isn't super supposed to fund your retirement? how can you do that if you draw it out and spend it - on anything), except in dire circumstances?
    MICK
    21st Apr 2016
    9:41pm
    Golfer: you are correct. Only thing is those home renovators account for many jobs in the building trades. That is the problem with letting people withdraw as a lump sum. Governments of both persuasion are already working on turning super into a pension which they administer so in time access to super will be stopped. Then there will be even fewer jobs in our economy. Add to that the effects on jobs of mass robotics and we all need to worry about where Australia will head in 20 years. Not looking good...and a good time to find yourself an island somewhere to escape what is going to happen in our society and other around the planet.
    ex PS
    22nd Apr 2016
    7:42pm
    Richied, re isue of how Super is treated. Yes I agree, as long as the people who choose to invest in Super are aware that this will happen from the start. It will then be up to them to decide if they wish to put extra money into the scheme.
    I started putting money into Super when I was twenty, long before they were even thinking about compulsory Super schemes.
    I was sold a package that would allow me to terminate the investment and take the money at 55 and take out lump sums as required, at that time it was not meant to be a pension replacement scheme.
    I doubt that I would have even considered putting money into Super at that age with the restrictions that are being advocated now, I'd probably just rely on the pension.
    Lescol
    21st Apr 2016
    11:35am
    For the past two years I have been "stunned, shocked & appalled" by what has been happening. The current right wing conservatives have squandered so many 'once in a decade' opportunities. As well their treatment of seniors has become a disgrace.

    A better solution - cut the nonsense. Give all people of retirement age the full pension and tax all income in the normal way. Simple. This gets rid of the bureaucracy associated with monitoring the current ineffective system and puts everyone on an even footing. Also you are not punished for saving to supplement your retirement as is happening in the current political climate.

    I am a swinging voter: I am not into parties; just policies; the only way to ever change things is to ensure a formal vote and mark the present government last. That sends a message to many.
    Cassius
    21st Apr 2016
    11:35am
    No Brainer, Cut foreign aid programmes, fix the health, welfare and education systems and if there is anything left over use that for Foreign aid. Charity begins at home!!!!
    particolor
    21st Apr 2016
    2:02pm
    Green Tick :-)
    MICK
    21st Apr 2016
    9:33pm
    So do debts Cassius.
    BigBen
    21st Apr 2016
    11:38am
    The politicians and civil servants all retire on state (taxpayer) funded pensions. Are we going to see the value of their homes taken into account and adjust their pensions accordingly?
    SGW
    21st Apr 2016
    11:40am
    totally agree, Bronwyn's laughing all the way to the bank
    particolor
    21st Apr 2016
    2:04pm
    That's tantamount to Insulting Royalty ! :-(
    Oars
    21st Apr 2016
    4:42pm
    BigBen you have cracked another insight. There are four different main factions that gain favours in Oz. 1. The poiticians who get a pension after stuffing upo our nation over a two term period( irospective of age- and a very generous pension and other perks) they don.t have their assets taken into account 2. The thousands of Federal, State, and local government servants ( ditto but they have to wait till they are 65 etc, but still don't have their assets assessed to gain that pension 3. the worker in the "real world" of private employment - has a miserable pension based on his/her income and employer';s input that may be minute, has no real advantages and is taxed out of the so-called beneit before he receives it, so with hard work scrimping and doing-without over 40 or 50 years has a neat house that has been updated, maintained at his own expense ( that's me folks), 4 then there are the others who have not really attempted to save, bludged consistantly, played the system with false names etc . This last group does not include the few genuine ones who really need a helping hand. So that's it. If you have a plan to talk big, spend other peoples money, work three months a year, walk away from your mess and get a great payout- be a politician in Australia. Any party- maybe the poppy-growers party or the Pups for Muts party, or the "Don't look now they're watching us " party. You name it, now is the time to be INDEPENDANT. !
    MICK
    21st Apr 2016
    9:32pm
    Agree Oars. Good to see that you have come around to my way of thinking and see that there is only one way out to fix the bastards at their own game.
    happy
    21st Apr 2016
    11:44am
    All very well to use up the equity in the family home, but what happens if the person needs to go into care due to their inability to care for themselves. No equity left to pay the huge costs to enter aged care which is probably extortionate any way. I doubt my mortgage free home would raise sufficient money to allow me to obtain a place. Leave age pensioners alone and look at those non taxpayers who have lived their entire life on welfare.

    21st Apr 2016
    12:22pm
    Once again we have this flawed assumption that one million - including the family home - makes someone wealthy. In today's world, a million isn't much at all, especially if you are looking down the barrel of a 30 - 35 year retirement with nil earnings, inflation, and rising health and care costs. And some worked very hard and went without a great deal to accumulate what Cowen and others now seem to imply they should just hand over for the benefit of folk who didn't work as hard or sacrifice as much. There's no respect for the right of people to benefit from their own endeavours and planning. It's all just greed and selfishness and green eyes!

    The assumptions of those who want to keep hitting at easy targets are so flawed it's astonishing. And the result of pursuing such flawed assumptions with equally flawed policy will be massive poverty and rising government costs.

    Those of us who saved for retirement and tried to secure our future are now being slaughtered for doing so. That can only reduce future savings and planning and drive the burden on the taxpayer far, far higher.
    Woody
    21st Apr 2016
    12:25pm
    All I can say is Don't encourage your children to buy a home of their own but rent and spend their excess money on holidays, cars, private education and a general good time all their lives because if you do save and have a respectably comfortable home the government will punish you.
    Anonymous
    21st Apr 2016
    12:43pm
    Spot on, Woody. And already people are waking up to that. Retirees are spending up big, because there's no benefit to holding on to savings. It costs them! Younger folk have decided not to put a cent more than is compulsory into super and to draw it out as soon as the law allows.

    Where does that leave the nation in years to come? Pension costs will skyrocket. Aged care costs will grow out of control. And all because a short-sighted government can't see that people need incentives and rewards to engage in behaviour that benefits the nation.
    marls
    21st Apr 2016
    6:44pm
    Woody
    What you say is so so true it's only smart people that think logical like us
    marls
    21st Apr 2016
    6:44pm
    Woody
    What you say is so so true it's only smart people that think logical like us
    marls
    21st Apr 2016
    6:44pm
    Woody
    What you say is so so true it's only smart people that think logical like us
    ex PS
    22nd Apr 2016
    10:32am
    Right on Woody, I had intended to live as a self funded retiree, and would probably have made it if the government hadn't started to put their sticky fingers into my finnances.
    My wife and I have just booked a four week holiday in Europe we will be buying new cars when we get back after which we will putting the house into my wifes name. This will allow her to sell it at a very reasonable price to our son who will then rent it back to us at a very reasonable price.
    We will then have a good amount left to invest, we will both eventually qualify for the full pension, rent rebate and all of the pensioner benefits.
    This government has destroyed all incentive to look after ourselves and I am going to do my best to make them pay for it.
    Is the government smarter than the average 70 year old? I don't think so.
    Radish
    22nd Apr 2016
    4:03pm
    Eventually a tipping point will come and there will not be the funds to pay pensions.
    margie
    21st Apr 2016
    12:26pm
    I'm so sick of government wanting to double, triple and any other dip they can. We paid for our homes, we pay rates every year, we maintain said home, we DON'T get 'mortgage' assistance, unlike renters. Most of us didn't get the first home allowance, that came in well after I purchased my home, I have scrimped and gone without to pay off my home, it's MINE. Because living in an up and coming suburb can greatly increase a very modest home in value, does not mean the homeowner is rolling in money. I built in a little township that had nothing forty years ago and is now a thriving city, but if I was to sell (and why should I?) I would need to move way out bush to get anything similar to the home I love. What a draconian measure, reeks of communism. Always people who think because you have something, they should have it too. How about the government giving up their massive perks and put back into the community, along with the big end of town paying their taxes and leave the hardworking ordinary Aussie alone.
    particolor
    21st Apr 2016
    2:10pm
    I like when someone Wakes Up and realizes it Reeks of Communism :-) :-)
    Rae
    21st Apr 2016
    3:41pm
    Perhaps back payment of the home owner's grant, childcare rebates and baby bonuses would give us a little nest egg margie. I know I never had any of that and the childcare alone was worth thousands of dollars. Oh and if you add in the interest we might be due several hundreds of thousands haha.

    Have a nice evening as this dumb idea is going nowhere very quickly.
    MICK
    21st Apr 2016
    9:29pm
    margie: this is coming from the current LNP government. Labor has not come after you. This bunch have since day 1.
    KSS
    21st Apr 2016
    12:49pm
    Interesting that in the other article about the possibility taxing super of the 'rich', under the banner of 'fairness' almost all contributors are all for it. After all, the tone and language of the responders would seem to imply that none of them would be affected so they are happy particularly if they would be the beneficiary of ....oh I don't know... say an aged pension!

    Yet when it come to the possibility that they themselves should be held responsible for their own pension by way of using their own asset(s) as collateral to even part-fund their own aged pension, suddenly they are not so keen.

    Double standards or what? Seems like a case of "What's yours is mine and what's mine is my own".
    Richied
    21st Apr 2016
    3:45pm
    It does look that way on the surface.

    I can't see a way that I'll ever be able to apply for even a part pension, yet I'm in that sweet spot where I've not saved sufficient in super through compulsory contributions to be able to live off that, and in the years when I've had sufficient disposable income, I've been constrained as to how much I can put into my super. I will be relying on selling my home to fund my retirement, because I couldn't put enough into super to fund it.

    I can see lots of problems with a blanket push for homes to be included for means testing (forcing people out of lifelong family homes, wealthier people shifting the home out of reach of means testing), and many reasons for including it (a more socially balanced approach).

    As to super contributions, Labor reduced the maximum concessional contributions to $25k for over 50s (arguably when people have more disposable income) - others like me were unable to put enough into super, so redirected that disposable income to other investments (or upgrading the family home). Someone in a slightly different position to me may have less super, no investments and may have upgraded their home, so currently may be eligible for full or part pension, but may find that with the family home included in means testing, they are now looking down a very bleak retirement.

    I don't think making changes to retirement funding policy can be done quickly, or piecemeal. Changes must be part of a long term strategy to allow people to adjust their personal planning. Otherwise, you get the reactive, self-interested responses we see here.
    Farside
    21st Apr 2016
    3:58pm
    Like Richied, I am also in that peculiar spot where I give plenty but receive little. In the good years I paid a heap in taxes but was limited to what I could put into super, in the not so good years I received no welfare and had to eat into savings because I could not average my income over a decade or so. Nevertheless, it was my choice to invest in a house and benefit when the property values boomed. I know others who invested in stocks and watched their portfolios boom and then fall during the GFC. In both cases money was invested in assets, and it is for that reason all assets should be considered when giving out welfare. It is not the role of government to indemnify investment decisions. All housing booms and bubbles bust given time, no exceptions.
    MICK
    21st Apr 2016
    9:28pm
    KSS: you miss the word 'fairness'. We do not need to be cannon fodder. The theft from taxpayers by multinationals and the rich needs to end as does their Tax Havens.
    Waiting to retire at 70
    21st Apr 2016
    12:51pm
    Simon, you're a d***head.
    Bunnyhawk
    21st Apr 2016
    1:20pm
    When Mr. Cowan has worked continuously for 49 years, brought up and educated 3 children (with no help from Centrelink, no baby bonuses, no family benefits) and paid off the mortgage on the family home through long hours at work and good saving methods, then let this fellow come out and spray his "expertise" on how the retirees and the aged pensioners should be treated. The fact that we saved, salary sacrificed, paid full taxes and lived modestly is our given right to now access a pension be it part or full together with retaining the right to the sanctity of the family home. LIke to see you face up to an auditorium of aged home owning pensioners Mr Cowan.
    MICK
    21st Apr 2016
    9:25pm
    I looked Simon up on Linkedin. This genY well off 'researcher' has done a fair bit of work for the Abbott government from what I could see. Sounds like the two may be connected at the hip. Please clarify Simon!
    Farside
    21st Apr 2016
    9:57pm
    Fair enough Mick, maybe check if Stephen Koukoulas or Andrew Leigh have reviewed his papers and given an opinion. Their credentials are left of centre. Even former Lib leader John Hewson is worth listening to when he has his academic hat on.

    21st Apr 2016
    1:29pm
    Is a follow-up article of how home equity is going to affect politicians' retirement pensions gong to be published by "Simple Simon"? I think not.
    FM
    21st Apr 2016
    1:40pm
    It is totally unacceptable that someone like Simon Cowan is given a platform on Life Choices to push his propaganda for the vested interests he represents. Did he make a contribution to Life Choices, cash for comment?
    Rodent
    21st Apr 2016
    2:08pm
    FM

    You beat me to the punch, I also believe that Simon C, should not be given this opportunity via this forum. Having read ALL his reports, especially the one re Family Home, Reverse Mortgages etc, I have commented before as to their value. Much of his data used is old and outdated. He does not even explain HOW to go about implementing his ideas in any practical way.
    Too much of his thinking is about the USA based Reverse Mortgage market. I believe however there is place for an IMPROVED version of the current Centrelink Pensioner Loans scheme for those people who MAY chose to take up that option.
    For instance some pensioners after Jan 2017 who LOSE part of their Pension MAY WISH to use this scheme to replace SOME or All of their lost Pension, as the 5.25%pa interest rate is the best currently available in Australia.
    Anonymous
    21st Apr 2016
    2:30pm
    FM, you beat me, too. This clown is almost as bad as Davidb4 who visits this site with his dodgy ads for some bidet bog of his and his female partner who have their photos shown, as well. Yes, unless "Simon the Conman" paid to have his opinion printed he should keep his biased strategies to himself and his brain-dead political employers.
    MICK
    21st Apr 2016
    9:24pm
    I looked Simon up on Linkedin. This genY well off 'researcher' has done a fair bit of work for the Abbott government from what I could see. Sounds like the two may be connected at the hip. Please clarify Simon!
    ex PS
    22nd Apr 2016
    10:38am
    As upalatable and faulty this mans thought patterns are, we need to let him have his say. The more publicly the better, how else are the voters going to see how one sided and out of touch he and his benefactors are.
    RonC
    21st Apr 2016
    1:42pm
    I totally agree with bobbalinda.
    The average worker (like a lot of us) don't happen to own a home without sacrificing expenditure in our earlier years. I consider it as a form of discrimination where those who have sacrificed spending to buy a home should be denied access to a pension when those who whittled their earnings away are rewarded for their lack of control or judgment.
    Leave my house alone and don't expect me to down size and move out of my familiar location and facilities into a cheaper house/unit where I have to build new acquaintances.
    To date I have cost the government not a cent to the point that I am still working in my 70's. When I do finish working I expect to be provided with the same privileges as those who have not put in the same effort that I have.
    MJM
    21st Apr 2016
    1:55pm
    Firstly Mr Cowan you are an ignorant pig. I work in aged care visiting elderly people in their environment. Some of these people have built and lived in these homes since marrying 60+ years. They have lost husbands children pets and other relatives... And now you want to make them financial confused and afraid. Many don't have families who care or visit. How dare you put them in a situation of fear. You want them to reverse mortgage the home because governments can't manage money. Thanks to you mongrels I was to retire on a pension in 3 years now I have to work 10. And then I may have to downsize so I can live?? Or my kids will have to sell everything for the payback of a mortgage. Get lost!!! leave the elderly alone take some of Bronwyns 200,000 a year and free travel allowance and share it around. Start taxing the wealthy. I'm sick of you all.
    Play Fairly
    21st Apr 2016
    2:21pm
    Yeah, I agree with you MJM. I'm sick of them all too. I see most politicians as being smiling assassins.
    Farside
    21st Apr 2016
    2:43pm
    And no doubt there are people tired of the asset rich putting their hands out for welfare so that they may have something to leave to their kids. Well, leave the welfare for those who need it. If the asset rich find themselves short of cash, then sell assets or borrow against them. I would like to see a loan to retirees where they could draw up to the pension amount and then the loan repaid from their estate. THe interest rate would be the RBA cash rate. Meantime any income, including pensions, is assessed at standard rates. Keeps the leaners honest.
    ex PS
    22nd Apr 2016
    5:57pm
    How about the family car Brian, should we set a maximum value on that and if your car is worth more than the max. you have to sell it and live off the profit? After all a pensioner should not have enough money to waste on travelling. And while we're at it we can do an audit on caravans, boats and the like, they all seem like wastefull extravagances to me,
    I mean why should someone that can afford all these things get a hand out?
    Anonymous
    22nd Apr 2016
    7:59pm
    ex PS, the car, caravan, boat etc ARE included in the assets test now. The family home isn't.
    ex PS
    22nd Apr 2016
    9:31pm
    I stand corrected, as I have no chance of getting a pension I admit i have not studied the process. I think that before I make further comments like this I will do a bit of research.
    Farside
    21st Apr 2016
    2:05pm
    The bleating from cash-poor pensioners sitting on millions of dollars in property assets should be disregarded as should their claims to welfare support. By all means let the cash strapped draw up to the pension amount from the government coffers but then recover the amounts advanced from the estate as well as interest charged at RBA cash rate.

    If I had my druthers I would give everyone the pension and then tax all income accordingly at standard rates. Perhaps funding could come from land tax, a very efficient tax that would encourage appropriate land usage and enable inefficient taxes to be culled.
    Rae
    21st Apr 2016
    3:52pm
    I have a feeling land taxes will be needed Brian and when that happens a lot of property will go on the market. The elderly will also start passing on in the millions and all that property will become available. Housing is over valued now but that will change.

    Anyone sitting on millions can easily get debt today. It is almost like America 2006 when all you needed to borrow was a pulse and in a few cases even that wasn't necessary.

    Stop spending and save for the land taxes. The government is too stupid to see consequences.
    BJ
    21st Apr 2016
    2:09pm
    leave our homes alone
    and if the government in power doesn't get rid of them let them know we wont be bullied stand up and fight for our rights thats the aussie way we have worked hard to get what we have so we are entitled to do what ever we want with our assets if we want to stay where we are we should be allowed to if we want to leave something to our children we should be allowed to the government needs to look at other ways to save money not attack the assets of the pensioners
    mareela
    21st Apr 2016
    2:14pm
    Mr Cowan probably earns a multi million dollar salary and owns several homes which are negatively geared. Why should people who have worked all their life and paid off a mortgage have that ONE home included in an asset test. Pensions are affordable if only the government would fix the unequal tax system in Australia. It's amazing how these so called experts refuse to mention the multinationals that pay no tax but are more than willing to rip money out of pensioners. This government does nothing more than try and get the younger generation to blame the older generations for all Australia's problems instead of putting the blame right where it belongs and that is the current and past governments that have sold everything that's not nailed down, off shored any manufacturing and depleted any jobs for Australians. Hence a much reduced revenue. Wake up Australia and get rid of Australia's worst government ever.
    Sundays
    21st Apr 2016
    2:26pm
    I agree completely. As to the idea of compulsory reverse mortgages, you should just tell people now that saving for their own home is a waste of time because you'll have to give t back to the government when you retire. A ridiculous disincentive to save
    Farside
    21st Apr 2016
    2:28pm
    Do you really think an acting manager earms a multi-million dollar salary ... what planet are you from? He would be lucky if he was on 10% of what you suggest, likely nearer 5%. If you want to know more about Mr Cowan https://www.cis.org.au/experts/research-scholars/simon-cowan
    Rae
    21st Apr 2016
    3:56pm
    How about a nice, simple little transaction tax of say 1% and we wouldn't need any other taxes or levies.
    Farside
    21st Apr 2016
    4:05pm
    financial transactions tax is a good idea Rae. FTT is very efficient, easily policed, discourages speculation and should be part of the overall conversation on fixing the current taxation system. It was a good idea in 1936 and remains so 80 years later.
    MICK
    21st Apr 2016
    9:21pm
    Why are we talking about how to tax people. GO GET OUR MONEY FROM MULTINATIONALS, CROOKED RICH AUSTRALIANS AND THOSE WHO USE TAX SHELTERS FOR TAX AVOIDANCE PURPOSES.
    Farside
    21st Apr 2016
    9:51pm
    Mick, the current tax system is broke and you will find that much of the profit has been shifted offshore through transfer pricing and loan repayments in accordance with the existing tax laws. A FTT as discussed, land taxes and the like are far more difficult to avoid and more likely result in multinationals and the über wealthy game the system. This would mean better funding for community amenities and less burden on the bottom 80%.
    particolor
    21st Apr 2016
    2:19pm
    Owning your own home nowadays in no better the Renting it off the Council :-) $100 a Fortnight :-) I'll stay where I am thanks ! And just walk away when I've had enough :-) :-)

    21st Apr 2016
    2:34pm
    Stick your head/s in the sand bobbalinda! This article makes so much sense - it is a 'nice' way of getting around re-introducing inheritance taxes. We all need to wake up - if you want a retirement income on a sustainable and equitable basis, this is a constructive way to go about it. Yes, it does to some extent penalize the 'savers' among us; but so be it. Maybe the next generation will be a little smarter!
    Richied
    21st Apr 2016
    2:57pm
    So let's play this scenario out a bit.

    Start including the family home in means testing.
    People are no longer eligible for benefits, because they are asset rich (the family home they've spent 30-40 years saving for).
    Those people can't afford to live on other savings (even if you've been paying into super at the compulsory rate since 1992, you won't have enough for retirement), so they have to sell the house and put the money into some other investment (which is taxable).
    Those people are unable to afford to move within the city, so are forced into the country (and probably can't afford a nice seaside house so move inland).
    With 15-20% of all properties in cities being bought by overseas investors, within a few years (let's say conservatively, 20 years) most of the city real estate is no longer locally owned, and rented to the next generations.

    Alternatively, people work around the system and flog off the family home to a family member (at or below market value). Or the home is sold to a family trust - as they approach retirement they are taken off the beneficiary list for the trust (therefore no longer seen as an asset), continue living in it at minimal rent and collect the pension. Of course, these options are only open to the really wealthy, so the middle class is hit again.
    Rae
    21st Apr 2016
    4:08pm
    If the Chinese speculators take fright and bail then the banks here will need bailing out big time by government. Simon please consider all the consequences.

    If suddenly houses start disappearing into family trust or SIV structures I would not be the least surprised.

    There will be no middle class. Either get rich fast and use every strategy available working as a family unit or lose it all.

    The neoliberal ideology at work. Use it or lose it.
    Pollyanna
    21st Apr 2016
    3:03pm
    Why should people who have worked hard to buy their family home give it up to live on the money they make for it. It is just as bad as living on a workcover payout when you are on an invalid pension until all the money dries up. What about all the bills you still need to pay for ongoing professional services. These are both rip offs for the average people. Your home is supposed to be your castle. It is yours There is no way it should be part of your assets. The amount you have in the bank is little enough anyway
    Rae
    21st Apr 2016
    3:05pm
    Simon you need to research the GFC and how the FEd missed completely the fact that home owners that they thought had no mortgage were up to their necks in debt using redraws, lines of credit, car loans and unsecured credit for everyday consumption.

    The graph of our growing corporate and private debt levels is horrendous and if interest rates rise even a teeny bit our economy is in deep trouble.

    I had a line of credit until late last year of $150 000 for investment but it wasn't counted as a mortgage. Now you want retirees to go into debt because the governments can't manage an economy.
    particolor
    21st Apr 2016
    3:54pm
    When you cant even manage a Chook Shed you get an Ambassador's job in Washington ! :-)
    MICK
    21st Apr 2016
    9:19pm
    Probably a case of the biggest liars, cheats and crooks are not dismissed as they should be just promoted, given golden handshakes and promotions.
    MICK
    21st Apr 2016
    3:20pm
    This piece sounds more like an advertisement from the banking sector wanting to cash in on reverse mortgages than anything else.

    I find it galling to reap this sort of crap from somebody purporting to be an 'expert'. Simon needs to comprehend that the FAMILY HOME and a PENSION are mutually exclusive. What that means Simon is that they are not related and that one does not determine the other.

    Your photo indicates to me that you are a genYer. That should say it all...but I would have thought even illogically thinking genYs with their distorted view of the world might like to be left an inheritance from their parents. This bright idea will end that one. Stupid!
    Farside
    21st Apr 2016
    3:36pm
    Mick, you doth protest too much and I suspect your intentions are not pure ... wanting to leave kids "an inheritance from their parents"??? Well, newsflash, taxpayers subsidising the asset rich so they can pass on a windfall to the kids is simply neither fair nor sustainable. Oh, and it matters little whether one is a boomer, a genY or just a cantankerous heckler to see the article has merit even if you disagree with it.
    Rae
    21st Apr 2016
    4:15pm
    Brian if we didn't want to subsidise the asset rich we would not have all the legitimate tax strategies that allow one to declare an income of $18000 whilst living in luxury on Sydney harbour, driving the BMW and mooring the yacht out the front.
    You know it happens more often than people think.
    I was a PAYG worker but I also ran a few businesses in my time including a wheat and wool enterprise.
    My accountant is a brilliant woman.
    If PAYG knew what business got away with they would be very angry indeed.
    Farside
    21st Apr 2016
    4:38pm
    Rae. I presume the "if we didn't want to subsidise the asset rich" was tongue-in-cheek, but it is our own fault that we have a tax system too complex to administer and regulate. You would have to have your head in the sand to think those with means will not take advantage of the opportunity, which is why when you think about it that is even more imperative all assets should be included in any assessment, including those buried in corporate and trust structures. It is those who have gamed the system to pay little tax and understate incomes that are most likely sitting in multi-million dollar homes, controlling family trusts and spending up on credit cards issued in Jersey.
    MICK
    21st Apr 2016
    4:40pm
    My intentions are always pure Brian. The family home, up to a reasonable level, has always been exempt from government attacks. Well at least since Estate Duties were abolished.
    People who feel like you have likely lived the high life for decades, have nix as a result and now want governments to come after citizens who have done the hard yards, saved rather than spent or self indulged and who to want to leave their children something to help them on the road of life.
    So you never got an inheritance from your parents?????? Rules for some and different rules for others?

    Good post Rae. There needs to be a bit of fairness and understanding and fairness rather than an attack on anybody who has a razoo.
    Farside
    21st Apr 2016
    5:03pm
    au contraire Mick, once again you are playing the man. Presumably you received an inheritance and want to preserve it????

    I have read your other comments and agree with some of the points made. I also lost my job as a result of the coal downturn.

    I never received an inheritance and fully expect to sell my house so I can retire with a modicum of comfort and give a little to help out my kids. I have never received a welfare handout despite financial hardships post GFC and have no intention of starting now. I have no objection in principle with estate duties however these should be unnecessary if we had an efficient tax system.
    MICK
    21st Apr 2016
    9:13pm
    Brian: Be very careful that you are not seduced by the lies from the current government. The family home should not be a bargaining chip until its value gets to a stage where it becomes offensive to not provide four oneself.
    Sorry you never got anything. Most children do and this is one of the best things a decent parent can do to help the next generation. I do not subscribe to either "spend the kid's inheritance" or 'sell the home and live off the capital'. Both are bad and the best way for the rich to destitute generations. Not happening!
    Farside
    21st Apr 2016
    9:37pm
    Mick, I am as far from being seduced by the lies and hyperbole from the current government muppets as it is possible to be, although they no dobt have a couple of capable operators. I also don't buy the BS and whining of the ALP equivalents however they also have some smart people. I come from at least five generations of folk that had squat financially however my kids will inherit enough after I pass on but not so much they become silvertails. It's just that emotive language and unsubstantiated hyperbole favoured by many do little to persuade me to their points of view.
    niemakawa
    21st Apr 2016
    3:28pm
    Surely many who do not own their own home, do so out of choice. Those that rent during their live time do so to free up their "capital" to spend on "consumer" items. They have not had the responsibility of the maintenance and upkeep of owning a property. So these same people who chose not to buy but rent now want house owners to foot the bill for their retirement. People have choices and must live with those they make and not expect others to make up for their mistakes. NO THE FAMILY HOME MUST NEVER BE INCLUDED IN THE ASSETS TEST.
    particolor
    21st Apr 2016
    3:46pm
    but Sir ! Some of us Peasants couldn't afford to Buy a Castle on the Pittance afforded us :-( :-(
    Rae
    21st Apr 2016
    4:24pm
    The share of profits afforded labour is a different issue. If workers had been paid fairly for the past 40 years we wouldn't be in this mess. That is another research topic for Simon and his Institute to explore. Where has all the money gone and how are we going to get it back?

    The very few holding all that wealth probably have private armies but then again there are an awful lot of us.

    And no home owners should not have to fork out for inefficient business groups and lack of regulations to ensure the "FAIRNESS' that neo liberals are on about.
    I'd be careful as if we really wanted to be fair you might not necessarily enjoy the results.

    Every time I hear fairness mention lately it makes me want to hide my wallet.
    MICK
    21st Apr 2016
    4:48pm
    You better read what you wrote (in capitals) niemakawa. Not sure you meant what you actually said!
    The reality of life is that there are many different groups. Surely we all have to have some compassion for those who have done it tough but a bit of moderation for those who a go of it through through other than high income and windfalls.
    My only caveat is reserved for those at the top who pay for avoidance advice as well as use every rort in our Swiss Cheese Tax Act to defraud the public purse and then want more handouts at the end of the day.
    Surely the way forward is to stop the crooked behaviour, not accommodate it until by sheer weight it has to be ended (Bottom of the Harbour Scheme.). Administrators need to act when they discover rorts. Not when the rorts become unbearable. And remember that coalition governments in particular are by their very nature the representatives of the biggest crooks amongst us including multinationals and Tax Haven cheats. The PM uses a tax haven. Why? And why will he not close them IMMEDIATELY? Pretty obvious.
    niemakawa
    21st Apr 2016
    5:05pm
    MICK. NO, THE FAMILY HOME MUST NEVER BE INCLUDED IN THE ASSETS TEST. The reality of life is you get what you deserve and everyone must be responsible for what they have or have not achieved. Excuses never work. Nobody does it tough in Australia, to believe otherwise is pure fantasy. Even on a minimum wage a person can buy property with a little planning and foresight. Many prefer to sit back and do nothing, then expect others to come to their aid, when they eventually wake up . Everyone regardless of income/assets should get a basic State Pension. Those that supposedly claim hardship should then be thoroughly assessed , including reviewing their tax returns for the last 20 years, before being given any further financial assistance from the public purse. No income or assets tests is the way to go, except for those that want more taxpayer funded assistance.
    Richied
    21st Apr 2016
    5:21pm
    There are good arguments for including the family home in the assets test, as long as it is developed equitably.

    The challenges are around those who use the family home as a means of storing wealth and then living off the public purse, and those challenges need to be addressed.

    This is not a simple 'yes it should be - no it shouldn't' discussion, as there are people who rort the system, and conversely there are people who have ended up with a high-value home simply through circumstance. The first should be stopped - the second should not be penalised.

    So, I agree that perhaps our current system that says 'never include it' is way too lenient, and the pendulum should swing to 'why shouldn't your house be means tested'.
    MICK
    21st Apr 2016
    9:09pm
    Sorry niemakawa. I was having a 'blond' moment. What you wrote was ok.
    ex PS
    22nd Apr 2016
    10:42am
    If you are going to include the family home in the assets test, it should be assessed on one thing only. How much disposable income is it bringing in annually.
    Any other form of measurement is simply the government trying to steal something that is not theirs to take.
    MD
    22nd Apr 2016
    11:22am
    Oh Mick , you big blond blousey girl, you can relax, you're virtue is still intact !
    MD
    22nd Apr 2016
    11:22am
    Oh Mick , you big blond blousey girl, you can relax, you're virtue is still intact !
    MD
    22nd Apr 2016
    11:22am
    Oh Mick , you big blond blousey girl, you can relax, you're virtue is still intact !
    MD
    22nd Apr 2016
    11:22am
    Oh Mick , you big blond blousey girl, you can relax, you're virtue is still intact !
    MD
    22nd Apr 2016
    11:22am
    Oh Mick , you big blond blousey girl, you can relax, you're virtue is still intact !
    FM
    21st Apr 2016
    3:39pm
    The banks manage much of the money invested in superannuation. They managed to lose an enormous amount of money people had for their retirement. Now they are back pushing for control and eventual acquisition of people's homes, including the homes of those they have deprived of their lifetime savings, via a reverse mortgage as is being advocated by this parasite.
    Bones
    21st Apr 2016
    3:54pm
    Simon should have been drowned at birth, total tosser who doesn't give a rats about anyone except himself!
    He doesn't mention people who could NOT join the super scheme because of various reasons. He fails to mention the 1904 (I believe) pension component of tax etc.
    But what a great idea, reverse mortgage oldies homes, then move more economic migrants into them. After all I don't see any of them out bush.
    What a Croc of shite this is
    particolor
    21st Apr 2016
    4:02pm
    Another Green Tick ! :-)
    Farside
    21st Apr 2016
    4:08pm
    having trouble coming up with an argument huh? I guess free speech and reasoned discussion is not high on your agenda Mr Bones.
    niemakawa
    21st Apr 2016
    4:24pm
    Brian, and your argument is????
    Rae
    21st Apr 2016
    4:31pm
    No need to be nasty Bones. I would think by the time The Great Recession is over Simon will have learned a little empathy, patience and compassion. This is just the beginning and it will be a very rude shock indeed for the generations raised on affluence and indulgence.

    At least the Boomers know how to house share and make do.

    We will be okay but I suspect the easy times are fast receding and this type of suggestion does nothing to ease those concerns.

    It has been over a hundred years that society was able to care for it's elderly and now it can't.

    That is a fail in any ones language,
    MICK
    21st Apr 2016
    4:49pm
    What do you expect from genY Bones? But the shoe will be on the other foot when mum and dad pass on and there is nix left to pass on.
    Richied
    21st Apr 2016
    4:03pm
    Attacks on the author demonstrate a lack of understanding of the organisation at which he works. The Centre for Independent Studies is not aligned to any political party of persuasion, and its research is not swayed by any supporter. Yes this is a contentious topic, but I think the author has brought it out in a balanced way.
    Farside
    21st Apr 2016
    4:12pm
    there are certainly more than a few blowhards (yeah, they know who they are) on this thread who would rather play the man than the idea.
    niemakawa
    21st Apr 2016
    4:23pm
    May I assume you are not a homeowner?
    Richied
    21st Apr 2016
    4:52pm
    I am a homeowner.
    MICK
    21st Apr 2016
    5:04pm
    I'll play the comment and the position Simon has taken Brian.

    Simon appears to be a high income earner and likely has his own retirement scheme set up. Perhaps Simon may like to clarify this with this online community.....and also make a statement about whether or not he uses a tax haven.

    Simon's views are at odds with the electorate and not consistent with the needs and expectations of most of our population. Given that some of his papers appear to have been written for the government he may also have political affiliations with the LNP government we have which has tried so hard to put tax after tax on average Australians. Please speak up Simon.
    Richied
    21st Apr 2016
    5:57pm
    Alas, I've not once seen an author of an article on YourLifeChoices enter the resulting discussion.
    Farside
    21st Apr 2016
    10:41pm
    No but Simon Cowan is obviously reading as he proudly tweets Follow

    ?@SimonJCowan
    I'm stirring up debate on YourLifeChoices talking fairness and the family home!

    Maybe those so offended by his ideas can engage him on Twitter.
    Rae
    22nd Apr 2016
    1:13pm
    He didn't mention that assets bought using borrowed funds allow the interest to be tax deductible. If the family home is suddenly classed as a measurable asset will deductions of interest to buy it be included in the discussion?
    Richied
    22nd Apr 2016
    1:25pm
    Yes Rae. If family home is included for means testing, it makes sense that it should be looked at totally as an investment asset, and therefore be given the benefit of tax deductions for buying, maintaining and selling (as with all other assets). It would also be subject to capital gains tax on its value (less depreciation and additional capital expenditure).

    So adding to means testing does open a whole hornet's nest for other parts of the tax system.
    cdbstock
    21st Apr 2016
    4:13pm
    It makes no sense that the family home is not assessed for pension eligibility - at least partially.
    A home valued above, say, $1.5M should be assessed for that amount exceeding $1.5M as adjusted by future valuations.
    Owners of such homes may avail themselves of 'reverse mortgages' or may 'downsize' to benefit from extra cash should they need
    We (Australia) cannot afford to pay part pensions to those with large assets.
    The determination of value could be contracted to Federally registered valuers with an appeal (by either by gov't or owner process
    Farside
    21st Apr 2016
    4:16pm
    huzzah, another reasoned contribution to the conversation. A figure of $1.5M is roughly 2 to 2.5 times the median price in most of our cities so it would be possible to develop a sustainable formula.
    niemakawa
    21st Apr 2016
    4:20pm
    And homeowners cannot afford to support those who made little or no effort during their "working" lives to achieve a better result for themselves in retirement. I bought my home, my money , paid exorbitant interest rates numerous Government fees and charges and you want me to hand my hard earned over to the likes of you. My assets belong to me and my family not to anyone else. Hands Off.
    Richied
    21st Apr 2016
    4:41pm
    Some merit in that.

    Land values are already assessed, using an averaged rate per suburb - a similar approach could be applied to houses. That would ensure that people didn't over-capitalise the family home (as a means of tax free savings) but still ensure that an equitable value was applied so as not to disadvantage those whose asset has increased with the market.

    I'm not sure reverse mortgages are a good idea. As they are presented now, the compound interest overtakes the value of the home relatively quickly. If the reverse mortgage is to fund an income stream, that income also drastically reduces the equity. The result of these two things means that very quickly, the house value exceeds the debt and the bank (or mortgage holder) can sell the property, leaving you not only without a house but without any income or equity. Using a reverse mortgage to fund aged care is probably good (as long as both in a relationship are in aged care).

    I agree that there should be a level of personal responsibility - if you have assets then you should pay your own way. The challenge is how to make the financial and cultural change in a considered manner, and without causing stress to those who have managed their finances within the current (perhaps flawed) rules.
    Farside
    21st Apr 2016
    4:44pm
    niemakawa, it would be a mistake to think that everybody who does not own a house did not invest the money they would have spent on mortgages elsewhere. In fact for much of the past few decades it has been advantageous to rent and invest surplus income that would have been spent on a property. Assets are assets and should be treated equally; there is no rule that says homeowners should be privileged to the detriment of those who invested funds elsewhere.
    Farside
    21st Apr 2016
    4:49pm
    Richied, no argument that the current reverse mortgages do not work as well as we might like but the idea of a loan backed by the asset, i.e. the house, is not a bad one. If it was a maximum withdrawal equivalent to pension per year and charged interest at the RBA cash rate then the worst case is government writes off loans upon death of the pensioner.
    niemakawa
    21st Apr 2016
    4:51pm
    Brian, if what you say is true where are these assets today?. Have they risen in value or been lost because of a person's greed in investing in high risk assets? I suggest the latter. Don't here of many pensioners who have rented and invested not claiming a pension. In a way by their mistake and frivolous investment strategies they have deprived themselves of assets, so why not include these in the TESTS.
    MICK
    21st Apr 2016
    5:06pm
    cdbstock: methinks your threshold is a bit low. Move to Sydney and you will find out why. I do share your sentiments but start at about $2.5 million indexed.
    Richied
    21st Apr 2016
    5:27pm
    Yep - a one-size-fits-all approach won't work. Provide house values (averaged across suburbs, like land values) and then means test based on the average for the suburb.

    If a flat high value was given, someone could have an enormous mansion in an outback town and still claim the pension.

    If a flat low value is given, someone in a modest house in the city may miss out on a pension.
    Oars
    21st Apr 2016
    4:20pm
    I am partly in agreement with you- but what if we all sell our homes as we reach pension age, then the sharks (real estrate fiddlers) will use us as guinea pigs, and the family homes will be tagged as "desparate sales" and the market will drop off. All these sentiments are well and good but we need a long term policy not a 5 minute band aid. If the people who WORKED ( put in a tax return) fore 20 years were all paid a pension, and their spouses ( for the same period of working) were to all gedt the pensions, this would solve two problems:
    1. Not many
    newcomers" would line up for welfare (as they do now) and secondly Couples may try harder to stay together instead of divorcing or even worse "mock- separation to gain two separate /single pensions !!!.,
    Think about that one gang. I'm off to walk the dogs and work up a THIRST.
    Richied
    21st Apr 2016
    5:01pm
    Exactly. The problem from both sides of politics over the past ten years or so has been tinkering, rather than a considered vision.

    That vision should be based on a simple premise - give people opportunity to save sufficiently for their retirement (but not to use that mechanism to horde for future generations - they can use other means to do that), and where a person is unable (as opposed to not want to) save, provide a government-funded mechanism (age pension) .

    In principle, that's what we have, unfortunately, with the tinkering, exemptions, means testing, benefits, etc put in place by both parties has resulted in a messy and inequitable system.
    MICK
    21st Apr 2016
    5:09pm
    Vision? I do not know of any politician who has one. Maybe Xenophon.
    Richied
    21st Apr 2016
    5:58pm
    Maybe if enough people vote for Xenophon and affiliated MPs/senators ....
    cdbstock
    21st Apr 2016
    5:00pm
    Brian - at least someone has sense - we have to reduce or at least stabilise pension spending - but not for deserving individuals who have no or little assets & rely on the pension - considered a 'safety net'
    niemakawa
    21st Apr 2016
    5:08pm
    In most cases self-inflicted. Australia a "bludger's" paradise.
    MICK
    21st Apr 2016
    5:17pm
    There are certainly more than a few niemakawa. If we had bipartisan governments (we don't) then both sides would get together and end the bludgers' sucking the lifeblood out of the country. But then WE DO NOT HAVE JOBS because governments have sold our jobs to the third world and turned us into an importer nation. Where does that go?
    niemakawa
    21st Apr 2016
    5:27pm
    MICK. An they are importing third world illiterates who are not wanted here and have nothing to offer our society. They are reliant on taxpayer handouts, lack appropriate skills, are unwilling learn the official language or integrate. Like I said a "bludger's" paradise.
    HarrysOpinion
    21st Apr 2016
    5:09pm
    If the Assets Test threshold were to be $2.5 million and if property value increased 5% pa, the property after 1 year will be worth $2,625,000. An excess of $125,000 This will result in pension reduction of $375 per fortnight, using the taper rate of 7.8% (not to mention the addition of the Income Test deeming rate affect) on the assumption there was no annual up-scale of the threshold. But, it is interesting to note that, the consumer purchase power of $1 dollar depreciates 10% every year and that if you sold your $2,625,000 home the future consumer spending dollar value after 1 year of the sale price would be worth $2,362,500. That's a huge consumer spending dollar value loss of $262,500. It would take 2 years or less for a full pension retiree in a $2.5 million residential home to lose the entire pension forcing the pensioner to sell their residential home, hopefully for them at $2,756,250 however, the value of the consumer spending dollar by then will be a loss of $523,687. The 2.8% pa bank saving interest is a piddly offset and it will be subject to the Income Test for pension payment as well as income tax. At the end the day, a retiree forced to sell up or reverse mortgage will be a loser.
    Whether you agree or not agree with the above financial model affecting home ownership of retirees, you can not disagree with the fact that the future spending value of the consumer dollar depreciates every year. If the retiree does not have sufficient income to offset the future consumer spending dollar depreciation or has no future income other than part or full pension, the baby boomer retiree’s future is bleak. One thing that Simon Cowan has not produced with transparency with all the ‘pros and cons’ is his own financial model to prove that baby boomer retirees will not be worst off financially if the government adopts his and his employer’s recommendations. Another thing that Cowan does not fully disclose is that the $80 billion property market in the hands of baby boomer retirees, if completely sold off, would result in a $10 billion future consumer spending dollar value loss for the economy at the end of 1st year. I wonder if the government took this into account. Forcing retirees in to invest on the share market is forcing them to gamble their life wealth retirement savings and equity, a reckless idea as is Cowan’s proposal! It’s a con!
    Richied
    21st Apr 2016
    5:44pm
    The purchasing power of a dollar doesn't depreciate at 10% per annum. More like 3-5%. But I see the concept you're trying to explain.

    I suspect the article is a snippet from a more detailed publication from CIS.
    HarrysOpinion
    21st Apr 2016
    6:25pm
    Richied, 10% pa depreciation, for future $1 purchasing power, is the 'rule of thumb'. 10% should always be used for future financial budget planning for fixed expenses such as utility bills, grocery expenses,rates etc

    Seniors welcome RBA chief’s interest rate warning
    21 APR 2016
    Australia’s seniors have welcomed statements by Reserve Bank Governor Glenn Stevens highlighting the impact of record low interest rates on their retirement nest eggs.

    Stevens warned that the rates were exerting pressure on superannuation funds to continue delivering returns for those on low fixed incomes.

    “Bringing this problem to the national agenda for discussion is a positive move for those who have lived on dwindling super returns and savings for years," said National Seniors chief executive Michael O’Neill.

    “This problem is not about to get better for retirees any time soon, particularly with Scott Morrison’s cuts to eligibility levels for pensions and part pensions from January 2017.

    “In some cases, people who have saved but who are no longer working will end up living on less than the full Age Pension from next year.”

    O’Neill said that seniors would welcome any announcements in the budget which would help them weather the continual erosions of their incomes.

    "EROSION" is the key word in regard to retirees future income and retiree consumer purchasing power.

    Reserve Bank Governor Glenn Stevens, more or less confirms the mathematical notion I presented.
    cdbstock
    21st Apr 2016
    5:16pm
    Niemakawa - and what should we do with those individuals who have not saved for retirement - consider low IQ, low socioeconomics, low paid workers, invalids etc? - Dispose of them?:"
    Lescol
    21st Apr 2016
    5:18pm
    Please tell me why we are even discussing this matter??? The best solution - cut the nonsense. Give all people of retirement age the full pension and tax all income in the normal way. Simple. This gets rid of the bureaucracy associated with monitoring the current ineffective system and puts everyone on an even footing. Also you are not punished for saving to supplement your retirement as is happening in the current political climate. cheers
    niemakawa
    21st Apr 2016
    5:23pm
    I agree. Tax income only. But envy and jealousy abounds in Australia so many would also see this as "unfair". They will not be happy until everyone is brought down to the lowest common denominator.
    Lescol
    21st Apr 2016
    5:32pm
    Envy and jealousy is always going to occur. It 's simple. and people need to 'grow up'. There will never be a solution that suits all. We need a solution that suits many but this is not going to occur until the people demand it! change the incumbent government. cheers.
    niemakawa
    21st Apr 2016
    5:53pm
    I will be voting ALA in the upcoming GE. They put Australia first and foremost. Forget Lib/Lab/Greens they are all out to destroy this once great Country.
    Richied
    21st Apr 2016
    5:53pm
    Changing the incumbent government is not the solution.

    We need to change our society's view of what the government should provide. And it should be done fairly (ie. removing all exemptions and exceptions).
    niemakawa
    21st Apr 2016
    5:54pm
    Richied, well they can start by removing people that bring nothing but trouble to this Country.
    Trevine
    21st Apr 2016
    6:54pm
    I too worked all my life, paid my taxes, supported the pensioners and now when it's my turn to retire they are trying to make all these rules. AwhT about the politicians pensions. Are they going to get rid it of? Bloody Simon get out with your stupid rules.
    marls
    21st Apr 2016
    7:02pm
    Vote for a party that will put Aust laws, culture and people first vote Aust Liberty alliance, rise up Aust party, Pauline Hanson, fortitude
    marls
    21st Apr 2016
    7:02pm
    Vote for a party that will put Aust laws, culture and people first vote Aust Liberty alliance, rise up Aust party, Pauline Hanson, fortitude
    in2sunset
    21st Apr 2016
    7:13pm
    So if you need some money - sell off a bedroom? Or the garage? - Bloody stupid idea!! I am a single female and I worked damn hard, bloody hard, often in low paying jobs, working 3 or 4 jobs, to get enough money for a roof over my head. Didn't go on holidays, didn't spend it on booze, and smokes, or clothes. What a bloody stupid fool I have been!! While my no hoper sister rents a govt house (has for over 20 years), goes off on a cruise every year, changes her car every 5 years, drinks, smokes, and now it appears SHE was the smart one!! leave our homes alone. Mine isn't a palace - it is old, small, but comfortable and adequate. Stop punishing me because I wasn't a bludger.
    Richied
    21st Apr 2016
    7:20pm
    Yep - we do live in an unequal society. Your sister is a good argument for food stamps or cashless welfare card, so any welfare is only spent on necessities.

    Any system that penalises people who have worked hard to meet their needs, like you, is flawed.
    Anonymous
    22nd Apr 2016
    7:51am
    Yes you are both correct what we need is food stamps or a welfare card only spent on necessities of life if you want booze etc use your own money if you have none stiff?
    Farside
    22nd Apr 2016
    9:06am
    not exactly comparing apples with apples here — in this case no-hoper sister has been able to live in govt housing so presumably she is either on welfare or low enough income to qualify. She has avoided the costs of home ownership and has no assets worth mentioning to leave to her heirs. She has also managed to budget so that she can enjoy a comfortable lifestyle, so what does that say about whether the pension is adequate. Meanwhile in2sunset has been industrious, gone without and scrimped all her life to afford her house so now she has a house to leave her heirs. Free will, who is to qualified to judge one is better than the other? Food stamps and cards is just tinkering at the edges and should not be selectively applied because of the preferences and choices she makes. Few welfare recipients are living the high life.
    Anonymous
    22nd Apr 2016
    9:22am
    Don"t know about that Brian I have a brother in law and his wife who are always at the pokies/tab he drinks like a fish and goes away when he wants all that on a pension and live in a unit behind their daughters, also a friend totally on pension generally goes on a cruise once a year and also travels up north with his caravan doesn't drink,smoke or gamble and lives in a poor suburb but he is more than happy with his lot.
    To me they are both living well on the welfare handed out.
    Farside
    22nd Apr 2016
    9:31am
    You may be right Robbo but if that is the case then maybe there is some headroom for reducing the amounts paid out in pensions. Maybe the pensioners on this forum would probably agree they could afford to give up some of the largesse given them. Roll on Jan 2017 and the pension changes.

    Both my father and mother in law say they save money on the pension but then neither of them are paying rent (both live in granny flats). My grandparents who were paying rent lived well but never had excess and left nothing when they died.
    ex PS
    22nd Apr 2016
    10:47am
    robbo,seems like your brother in law manages his money a lot better than you do. Better try getting some tips from him, it might make you happier.
    Anonymous
    22nd Apr 2016
    1:56pm
    I don"t have any problem exPS never been to a Centrelink office in my life no doubt your their all the time begging for more, its people like you that I like to see Grovell.
    ex PS
    22nd Apr 2016
    6:15pm
    Poor robbo, sorry to dissapoint you but I am a self funded retiree at the moment. I worked hard invested extra into Super and paid off my house. That doesn't mean i can't show compasion and respect for those who have no alternative than to take a well deserved pension.
    In Outer Orbit
    21st Apr 2016
    8:41pm
    This is all part of the international trend. Everything has to be interpreted in the context of the ongoing unprecedented massive transfer of wealth from savers (of all forms, including retired home owners) to recapitalise the banks. In the nicest possible way, responsible law abiding people right across the world are still being thoroughly screwed to try to fill the debt black hole.

    Europe and USA have faced all the same injustices and the worst of it is that we still haven't staved off the crisis. Look at Greece as the most obvious case. Such a small economy and yet the EU is still just kicking the can of unsustainable debt down the road while the common Greeks continue to suffer. The roosters are coming home and we'll all feel a lot more economic pain before this is really sorted.

    Additionally, economically Australia faces the immediate extra challenge of being a glorified mine stuck in a commodity down cycle. This is the flip side of the great economic advantage Australia thoroughly enjoyed, almost uniquely, of sustained economic growth while the rest of the developed world suffered recession in 2008. Nobody was complaining (or thinking) during the international commodities boom. So welcome to the bust.

    The only plausible tactic now seems to be to tighten every belt and hold on, waiting for the next up-cycle. It will come, and when it does there is a lot to be said from learning the lessons of history and the from example of others. So, like Saudi Arabia, and Norway, and Brunei and etc, this time for heaven's sake pay off all debt and put far more wealth aside for safe keeping via a Sovereing Wealth Fund. I'd say back any politician willing to acknowledge these long term realities rather than the immediate election cycle. Some hope.

    As far as housing policy is concerned, it seems inevitable that including the home in the Assets test is 'fairer', so it will come eventually. But when it does, this will knock a large dent in the value of Australian housing stock, ie house prices. As many observe, these are currently grossly over-valued by any international standard and in comparison to Australian incomes and rental returns.

    Exclusion from the asset test must be at least partly responsible for creating an artificial over-demand for home ownership. It's kindergarten economics to know that with a constant supply of housing, if you lower demand you lower prices accordingly. Home owners will find themselves taking a big hit. At least this policy tinkering won't be against all the renters, for a change.

    However interpreted, the clear injustice here is that Governments internationally are using changes in policy to effectively tax savers and reward banks. Home owners and pensioners have planned against one set of policies and assumptions, and now the goal posts are going to move, to their disadvantage. This is being done by governments throughout the world, again and again. Sadly this is still not doing the job and budget deficits continue and government debts keep on growing. Even if the medicine is right, which is debated, the dose is not yet enough.

    The money is of course there for this to be avoided. Penalising responsible savers is unnecessary. But not in a world where we also want to applaud 31 year old kids like Zuckerberg for creating US$325 billion dollar businesses, just for enabling the flow of utter trivia between us all. In the end we're all stuck with whatever the biggest minority voted for. Pity they were so wrong.
    Rae
    22nd Apr 2016
    7:44am
    Excellent insights.
    Richied
    22nd Apr 2016
    10:43am
    I agree with your key points.

    Debt is mostly a result of expenditure ahead of earnings (othertimes it is depreciating equity) - that is, people/companies have chosen to borrow with the promise of paying back.

    The excesses of the past few decades has allowed people to borrow more than they can afford, and the current changes in government policy are trying to put more responsibility on banks to lend more responsibly (including having sufficient capitalisation to handle bad debts, and of course to try to reduce those bad debts by tighter lending rules). So 'we' have borrowed too much and now 'we' are being brought back into line. Of course the banks shouldn't have loaned so easily - but 'we' have to take responsibility for that too.

    Greece's problems are exacerbated by not only easy money from the banks but massively generous government-funded social benefits (again, paid for by the government being able to borrow more than it could afford to repay, even if within the rules of the day). So whereas most other countries suffer from either too much capitalism ('let the market decide') with little regulation, or too much social welfare, Greece had the double whammy.

    With the commodities cycle, it is boom and bust, and it is interesting to see both iron ore and oil prices have risen substantially in the past few weeks - those playing derivatives or hedges are loving this gamble (of course, those markets have losers as well).

    For the past twenty or so years, our federal governments have been terrible at saving in the good times, in preparation for the bad (the GFC required us to accumulate further debt in a downturn as we had committed to benefits to the masses in previous years that spent all our savings).

    I'm not sure I agree with the point about injustice of taxing savers and rewarding banks. I think it is more about swinging the pendulum back towards a more sustainable model where people pay a more appropriate amount to get into debt, and banks become more responsible at lending (the previous model was far more advantageous to banks - profits were unsustainably high, to the detriment of those who borrowed too much). I think that governments were a bit slow in reacting (GFC is now 7-8 years old) and have now reacted with haste - too fast for people to be able to restructure their own finances.

    Prior to this discussion, I was pretty much in the camp of not including the family home on asset tests, and continuing to exclude it from CGT. However, a number of key points have been made here, including that it is an investment like shares or investment houses, and should be treated exactly the same way. That means, cost of purchasing and maintaining the asset should be tax deductible, capital gains (above CPI and non-claimed capital expenditure) should be taxed.

    Of course, there are huge challenges in moving from our current tax model to one that includes the family home, none less than the unfairness and hardship coursed for people who have diligently saved and bought a home so they don't have the worry of rent in retirement.
    MD
    22nd Apr 2016
    12:21pm
    In Outer Orbit - Richieds' (reply); both extremely well presented contributions and suggest insightful research. For my part these will encourage further thought. My grateful thanks to you both.

    I.O.O; your second last para re: "goal posts" is all too pertinent. Far, far too often, Politicians and their Departments unwittingly foist ill conceived policy change on all too complacent constituents with the result now being all too evident.

    Richied; I equally applaud your second last para re: "tax deductions and capital gains". There needs be some modicum of 'give and take' as opposed to what many herein see as a grab.

    Yes. The home should be included as an asset for those seeking social benefit however, the associated valuation and future indexation (allowing consideration for an individuals' factors)needs be addressed by an independent party.
    Richied
    22nd Apr 2016
    12:54pm
    Yes MD. Currently in NSW land values are determined generally by suburb by Department of Lands - perhaps this could be extended to determine average house valuation by suburb.

    This will reduce the instances of people over-capitalising the family home as a means of reducing their taxable income/assets, as they won't get any 'value' by spending more - they may be better of releasing that additional money into other productive investments.

    It may also provide a more level playing field across the country (a city person who has higher costs but higher asset value, vs a small town person with lower costs but lower asset value). Or maybe not.
    Dot
    21st Apr 2016
    9:30pm
    always have been a law abiding citizen in this country, always appalled the sort of things that happen to Politicians overseas, now I've changed my mind if the same should happen here I say bloody good and about time, there's no end to these thieving bastards who have destroyed and betrayed this country.
    The world is in a bloody mess, one only has to listen to BBC during the night.
    According to one news outlet 10,000 millionaires left France and moved else where because they were going to be taxed at higher rate, just let the little man pay for everything.
    If the world goes into recession it'll give us hard working bastards the opportunity to hunt the criminal dogs down.
    FORGET ABOUT THE ENEMY OUTSIDE AUSTRALIAN BORDERS, IT'S THE ONES THAT HAVE RUN THIS COUNTRY OVER THE LAST TWO DECADES THAT NEED TO BE DEALT WITH.
    FM
    21st Apr 2016
    11:45pm
    Hi In Outer Orbit You must have special posting privileges to be able to post almost 600 words at once.
    You talk about world wide trends but there are no worldwide trends in counting ones home as an asset when considering payment of an old age pension. That is uniquely Australian.
    The notion that people buy a house perhaps in their late 20s or early 30s so that they will not have to count it as an asset when they reach pension age is totally absurd.
    At the moment seniors who are receiving minimal returns on their superannuation are subsidizing home buyers who have the lowest mortgages on record but that is not enough to satisfy the inheritance impatience that has been unleashed.
    I agree MICK the total lack of leadership from our current batch of politicians is truly staggering.
    niemakawa
    21st Apr 2016
    11:59pm
    Yes ABSURD is the right word. I will not , under any circumstances, relinquish my rights to my home in exchange for a pension. If necessary I will transfer my property to a relative and if that means I lose the pension so be it. At least MY WEALTH will be going to the RIGHTFUL owners. I owe nothing to the general populace having paid my dues over many years. I may end up on the street but that will be better than handing over mys assets to a wasteful Government(s) to squander. But knowing the cunning politicians they will even prevent or make illegal such transfers.
    Farside
    22nd Apr 2016
    12:30am
    And it is absolutely your choice to prefer to scratch out a miserable existence rather than use your house or other assets to generate cash and the more comfortable lifestyle that goes with it.

    Even now there is nothing to stop you divesting or gifting your property however recognise there may be consequences resulting from your choice. If you do it more than five years before seeking a pension then it is not treated as a deprived asset. If you do it while receiving a pension then it is treated as a deprived asset for five years and will likely affect pension entitlements.

    Just don't beg for welfare handouts or expect taxpayers to fund or subsidise preservation of your estate so you can give it to your kids. Ain't free will grand?
    niemakawa
    22nd Apr 2016
    12:40am
    Brian, you are out of touch. The whole purpose of owning your home is to pass it to your family and I will do just that. I still expect a pension as that is my right. But as I said earlier if by doing so I lose my pension, I will rather that than give it to those undeserving majority of pensioners who have done little to help themselves during their working lives.
    Farside
    22nd Apr 2016
    2:03am
    The whole purpose of owning a home is not to pass it on to family; it is a form of residential accommodation pure and simple, that just happens to have the nature of an asset. The Australian Human Rights Commission agrees that older Australians have the right to claim income support as they age however eligibility for payments is subject to meeting certain criteria in determining eligibility and the rate of payment. For couples, combined circumstances are taken into account. In other words it is an entitlement or privilege that is dependent upon meeting certain criteria, not a right. And wanting to gift assets to future heirs does not feature in the criteria otherwise people could say I want to gift my multi million dollar shares portfolio, collection of art works etc. Fortunately most people in such wealthy circumstances also own property.

    Owning your own home can be forced savings and peace of mind however for the last couple of decades renting (combined with investing) may work out better financially than buying your own home. Who’d have thought?

    Here’s how it works : say you pay rent and at the same time invest in shares or super. If you invest the difference between the rent you pay and what you’d pay on a home loan—depending on the performance of your investments—there’s a chance you’ll be better off than if you bought a home.

    So you can see it could be a little unfair to judge those that have not purchased a home in their lifetimes as "undeserving" without being aware of their circumstances. There could be any number of explanation of how people find themselves homeless toward the end of their lives. Investment choice may be one of many possible reasons, natural disaster or illness are among others.

    No, I don't think I am the one who is out of touch. I am just not inclined to expect or seek welfare handouts while sitting on assets to pass on to my heirs when I die.
    Anonymous
    22nd Apr 2016
    9:37am
    Brian, each and every of yor comments indicate you seem to be an unhappy person. There is no reason to vent your unhappiness with nasty comments to other people. Go to the source of your anger and discontent by looking inside YOURSELF.
    Richied
    22nd Apr 2016
    11:10am
    I agree with the sentiments.

    You made the statement that it is uniquely Australian to include the family home in means testing. At a basic level, this appears to be correct, however in a more nuanced point this is not correct.

    In the US, the family home is treated as an asset throughout your life (including while you are retired). That is, you can claim tax deductions for buying, maintaining and selling, and you pay tax on income and capital gain. Additionally, under social security, you can claim an additional benefit if you are renting (which is not available to those who own). The effect is the same as treating the family home as an asset for means testing.

    In the UK, under the minimum resources mechanism, those renting can seek additional housing benefit on top of the pension - again this is not available to home owners - that is, the family home is treated as an asset under their social security model.

    The implication of your post (perhaps I read wrongly) is that because there is no trend we shouldn't follow it - conversely, if there is a trend we should follow it. Of course, that causes more problems - in France for instance, you get 50% of your highest earning years (that is, if you earned a lot at work, you'll get a higher pension than someone who earned a little). So, using trends as a basis is not always the right path.

    A simple system that treats all assets and income equally, and having a pension as a safety net (eg. a minimum living income for retirement) is, in my opinion, fair. How we get there from here without unduly hurting those who managed their finances under the current rules is the challenge.
    MD
    22nd Apr 2016
    12:32pm
    Brian; thanks also to you for offering some balance to this debate. Unlike others I do not percieve you to be either an "unhappy person" or (submitting) "nasty comments".
    Farside
    22nd Apr 2016
    3:54pm
    thanks MD but I don't take umbrage with remarks from the Fast Eddie's of this world. He see unhappy because maybe I have a different perspective, support free speech and don't think "Simple Simon" is a clown or others "brain-dead". Eddie's language adequately reveals his capacity for analysing a position so resorting to logical fallacies and character abuse is all he has in the absence of an argument.


    I believe my contribution has been consistent, polite and relevant. I don't expect everyone to agree with me but some facts should be provided to support the opposing view. Unfortunately there are many folk quick to voice unsubstantiated opinion who then take offence when others do not embrace it. There is clearly a group with a perceived right of entitlement, motivated by avarice and lack of consideration for sustainability and the burden welfare places upon future generations. Nobody has raised the fact that ratio of workers per pensioner has fallen from 15 to about 4 since introduction and is on track to around 3 by 2025 and 2 by 2050. This represents a significant challenge to all Australians, working and retired.
    Rodent
    22nd Apr 2016
    8:26am
    Richied

    re your post 21/4 @5.44pam- Yes the Article above is based on Publications by Mr Cowan and , and a Matthew Taylor- Specifically the 77 page booklet titled -The Age Old Problem of Old Age Fixing the Pension -To better understand his position( which I don't fully agree with, although parts of it has merit) you need to read that Publication in detail. Parts of it are hard going though.

    Simon Cowan has used every media opportunity to get his points across, sometimes choosing different words to suit the media , but the underlying message is always the same
    Pollyanna
    22nd Apr 2016
    10:14am
    This has been very interesting reading and at sometimes just a discussion between two people. I owned my own unit (I thought) but when I remarried we decided to sell it and travel this beautiful country. I then found I had only leased it and received 75% of what I paid not what Southern Cross Valued it at ,It was a great loss. Unfortunately I had an accident and we could not travel and just lived in the motorhome for nearly 2 years. Now sold we have to rent but we both worked hard and our philosophy is to live our life as happily as we can and spend the kids inheritance as we worked for it and so should they. More and more older people have come to the same realization.
    Richied
    22nd Apr 2016
    11:19am
    Yep - a search of Simon Cowan shows that he seems to be the 'go to' guy by all media outlets (News, SMH, Alan Jones, ABC have used him) for a position on this topic. Whether they are simply reacting to media releases by CIS or are actively engaging him when they research a topic is difficult to determine - I suspect the first.

    I found (and read) a number of publications by him, CIS and a couple of universities on this topic (I think I have too much time on my hands at the moment!), and like you don't agree with all the conclusions, but think parts have merit.

    With most research fellows, I suspect he did a fair amount of research on this CIS-commissioned topic. To achieve fellow status, his track record would have had to demonstrate thorough unbiased research.

    That doesn't mean he's right, or went down all the rabbit holes he should have to come to his conclusions.
    ex PS
    22nd Apr 2016
    10:19am
    It is quite obvious that we have all been blind to the real criminal element in Australian society. It's not the banks who conspire with each other to rip of mum and dad investors in orer to provide their valued clients with bigger profits. It not the few corrupt Union Officials who use members funds to furnish lavish life styles, or even politicians who will do anything or a nice fat campaign contribution.
    It seems the real villains are those greedy pensioners who deprived the pokie machine owners, the publicans, the tobacco companies, and the fast food providers of a good income. These selfish people wasted their money on paying off a house in the expectation that they were using their money in order to make their retired life a bit more comfotable.
    Well we will make them pay for their greed we will make them sell their homes which they have paid for with interest and use the money to subsidise all those realestate agents, publicans and bankers who they have stolen from.
    And let.s take it all the way, lets look at all those envious non-achievers complaining about people who own their own homes and make sure they haven't wasted money on new cars, furniture or other luxury items that they should have no right to if they are taking government money.
    My last comment was meant for the averice ridden whinners, not the majority of legitimate pensioners who are drawig a pension through no fault of their own and deserve the right to live some measure of comfort and peace.
    In a nutshell, try worrying about how you can improve your own lot rather than trying to bring others down, you may find that the energy spent envying your neighbours may just make a difference if applied in a posative way.
    Anonymous
    22nd Apr 2016
    2:38pm
    You have a real chip on your shoulder exPS your monica tells us that you are an ex public servant so whats your expertise apart from being a bludger but no doubt an expert in making a cup of tea.( that's all public servants ever do )
    ex PS
    22nd Apr 2016
    6:08pm
    Better luck next time robbo, try 20 years in the private sector, truck driving, sales assistant, factory hand, stores manager, bakery attendant, food processor and quite a few other jobs I can't remember. I admit I did cheat to get so much experiance, I did do two or three jobs at the same time when I was younger. Oh and twenty years in the Public Service so that probably qualifys me to have an opinion.
    Tell me how many years did you do in the Public Service? Your total lack of knowledge about the service would indicate you wouldnt have a clue, so I'd guess nil.
    Your irrational, illinformed comments do not do much to give you much credibility as far as your opinion is concerned.
    Anonymous
    23rd Apr 2016
    10:49am
    exPS so 20 years on the public purse not bad and probably on a juicy superannuation as well. Not too many people take much notice of public servants because they can"t think for themselves but you do learn to make a good cup of tea.
    ex PS
    24th Apr 2016
    8:23am
    robbo, as expected you chose not to answer the question about your work experiance, your credibility does not stack up at all.
    Instead we get more mindless schoolyard rhetoric. I don't mind being insulted especially by someone who hasn't got a clue about what they are talking about and whos' opinion I don't really care about. But I refuse to be bored, therefore I will no longer waste my valuable time reading your childish drivle.
    And yes I am enjoying my more than adequate Superannuation I paid for it so why shouldn't I? I will enjoy it even more when my wife gives up work and we can access hers.
    Have a nice life.
    libsareliars
    22nd Apr 2016
    10:38am
    Spot on bobbalinda and play fairly. Also, Centre for Independent Studies - what a misnomer, look at all the LNP members in it as well as Rupert Murdoch. They love to bash the little people.
    Richied
    22nd Apr 2016
    11:33am
    A bit like the IPA? I think I've discerned which public they represent. :-)
    Rae
    22nd Apr 2016
    1:58pm
    Or ACOSS whose main aim seems to have everyone living below the poverty level. More clients and power for them I suppose.
    libsareliars
    22nd Apr 2016
    10:44am
    Agreed Big Ben - when are the pollies going to live by the same rules as us - when hell freezes over I expect.
    Richied
    22nd Apr 2016
    11:27am
    In fairness, except for 'allowances', politicians live by the same rules as other public servants. The generous schemes of old are being phased out so newer public servants and politicians won't get the huge pensions for life, like dear Bronnie (who's been in parliament forever).

    Politicians' (and public servants' ) salaries have increased over the past ten or so years to bring them in line with corporate salaries. Unfortunately the benefits aren't reducing at the same rate (for example, they still get 15.4% super on top of their salaries) - and of course it is ludicrous for our prime minister to get a salary higher than that of the president of the United States.

    The 'allowances' are one area that needs to be addressed. Public servants work on expenses, and are driven to lower them. Politicians can spend up to their allowance (even if not needed) and the allowances are indexed so increase each year.
    ex PS
    22nd Apr 2016
    12:36pm
    Richied, Public servants do not get 15.4% on top of their salaries, most of that 15.4% was negoiated within the Enterprise Bargaining negotiations in lieu of pay rises.
    Public Servants wages have risen in line with those of of the private sector. I speak from the point of view of the workers as I have no idea what is happening with the upper echelon. However non wages personel work under salary contracts that are negotiated at the end of contract termination dates.
    As you said Public Servant Superannuation is much the same as the private sector and the payouts are based on the profits made by the fund.
    Unfortunatley the lowering of expenses by line managers has mostly been achieved by cutting staff and led to the lessening of services to the public.
    MD
    22nd Apr 2016
    1:09pm
    Richied; So are we to take it that your comment re: "bring them (pollies salaries) in line with corporates" suggests that the fat cats' take is justified. I for one think not. Personally I feel their remunerations are nothing less than unconscionable. Nobody , but nobody is worth the extortionate sums realized by the select few.
    Richied
    22nd Apr 2016
    1:13pm
    I was a public servant for 5.5 years (till two years ago, when my fixed term hire was terminated prematurely by new government policy). My salary was in line with what I could get in the private sector, and I got 15.4% super. I also got EA pay rises each year which were similar to CPI.

    Yep, there is little lattitude for government agencies to meet their 'efficiency dividends' except to reduce staff, so that effectively pushes up productivity for the remaining staff (ie. make them work more).

    In the last five years of working in the private sector I didn't get a single pay rise, even though I 'overachieved' according to my performance reviews. That means I effectively got a pay cut equal to CPI each year.

    I believe public servants are now better off than private sector employees.
    Richied
    22nd Apr 2016
    1:20pm
    Sorry ex PS, forgot to add that the companies I worked for in the private sector posted very good profits each of those five years.

    MD. Yes I think some politician salaries are too high (a backbencher starts at a higher salary than a executive leader in the public service, yet has far less accountability or authority), but the ministers are paid similarly to senior executive leaders in the public service (and they have authority and accountability at a similar level) - these are also aligned fairly closely similar roles in the private sector. The prime minister salary seems to be excessive, especially compared to other government leaders.
    Rae
    22nd Apr 2016
    2:14pm
    If the wage and salary stagnation was addressed a lot of the governments problems would be fixed. There would be a greater flow of money within the economy and tax revenue would rise as it once did.

    It is a bit extreme for all these organisations to continually target pensioners and retirees as being the ones to give up something for the Nation. How about business and CEOs giving up a bit so people can be paid properly for their labour and we can once again all share in the prosperity.

    In the 2014 budget the government wanted to do over students, the ill and unemployed and they were stopped by the media and the Senate and the subsequent hue and cry.

    In the 2015 budget the government wanted to do over self funded retirees and aged pensioners and the media thought it a great idea, the Senate ganged up and passed it quite readily and there was barely a whimper.

    Maybe we need to protest in the streets outside ACOSS a time or two. We are far to compliant and accepting of all the unfairness that has occurred in the past few decades.
    ex PS
    22nd Apr 2016
    7:30pm
    Richied, given what you say is true, and I have little doubt it is, why is it of any importance whether Public Servants get paid the same or more than the Private Sector? I am sorry that you didn't feel you could ask your boss for a raise but that is not the fault of public servants that may be doing the same job and getting paid what the job is worth.
    I can't remember getting an automatic pay rise every year, I must have been in a different department.
    And by the way, cutting staff to levels where they can't do the job properly is not efficiency it actually costs more money because of the mistakes that have to be rectified.
    Hoppy
    22nd Apr 2016
    11:33am
    It won't ever happen. No government will have the guts to implement this in a way that has a meaningful impact on the budget.
    Why not just introduce death duties. Most of us inherit when we are in our sixties and not in great need of a large windfall, the elderly would not have the worry of the mounting debt reverse mortgages incur and what is fairer - taxing the living when they are bringing up their kids and paying the heavy end of their mortgage or taxing the dead?
    Richied
    22nd Apr 2016
    12:56pm
    What about those poor elite, who have a lot of wealth? That's not fair on them. How do they minimise their taxes then? :-)
    The Black Fox
    22nd Apr 2016
    12:54pm
    Good on you Simon Cowan for raising this issue. It does need to be discussed, at least in terms of pensioner equity. I tell you that I have worked hard for 50 plus years in a low paying job and am worn out, we have a small house in a country town worth $120,000 if we can sell it at all - part owned because of considerable long term family health problems, and we cannot afford to move to the city and we pay more for everything here. How is it that some people can sit on a multi million dollar house, travel and get the same pension as we do? Thank you Simon for having the guts to raise this issue knowing you would be howled down by many who do very well thank you out of the current inequity.
    Richied
    22nd Apr 2016
    1:02pm
    I think it will actually hurt you more than the person sitting in the multi-million dollar house. A lot of those people have already moved their house to a family trust or similar vehicle, and pay a modest rent to live there.

    Adding $120,000 value to your asset base may adversely affect your pension, and you may be tempted to use a reverse mortgage to top up any income loss. Try the government's MoneySmart reverse mortgage calculator to see the impact this may have (especially if you want an income stream rather than just a one-off lump sum).

    A simple knee-jerk 'add family homes to the means test' may cause more harm to people than good, but the fundamental concept might be right if the loopholes for those with greater wealth can be addressed, and the solution doesn't adversely impact those genuinely in need.
    Rodent
    22nd Apr 2016
    3:33pm
    Dear Black Fox

    Yes there is a lot of inequity about in the current "system" Everybody should consider all points of view on this subject.
    If you have read his 77page Publication? and understood it you will note that the ONLY way for a Pensioner to be better off under his proposed changes is to use a Reverse Mortgage OF SOME TYPE .

    However when you run the numbers, (as I have done) its questionable if you are really better off. Using his example a Couple could take out a Reverse Mortgage over say 15 years, Receive Extra Income over that time, accrue an Outstanding Debt of Money Received, plus Interest owed , which effectively is deducted from the Value of the Family home when its finally sold.

    As an example using the Centrelink Pensioner Loans Scheme @ a compound interest rate of 5.25%pa with a Payment of say $717 per fortnight (Couple) the total received over the 15 Year Period would be $346,720, and the Interest would be $160,936- But the Total DEBT owed would be $507,656

    These figures are a real example, BUT of course would change based on a large number of factors, House Value, LVR, Amount paid by period, number of years etc etc

    Having read everything Mr Cowan , and many others have written in relation to including the Family Home in the Assets Test there are so many questions that just don't have simple answers. But as I have written before here, there is some merit in considering further the possible options, because as have many have indicated the current arrangements are inequitable and unfair for a lot of different reasons

    22nd Apr 2016
    8:05pm
    Cowan is of a social class that has no understanding of the psychological impact of debt on some older Australians. While there is some merit in his report, and certainly the exclusion of the family home from the assets test is causing gross unfairness, there is a major issue with forcing older Australians to incur debt. Many simply could not cope with the psychological impact of a mortgage on their home. I can conceive mental illness resulting from any program that compelled people to reverse mortgage or caused them to lose pension benefits if they didn't reverse mortgage.
    cdbstock
    22nd Apr 2016
    11:14pm
    Niemakawa -''My assets belong to me and my family not to anyone else. Hands Off.'
    No one is trying to get your assets - just to put a value on them - be it a boat, car(s), investment house, family home shares, jewellery furniture etc - As you say - 'My assets belong to me...'
    LiveItUp
    23rd Apr 2016
    9:00am
    Yes your assets belong to you but your pension is paid for by us taxpayers of today.
    ex PS
    26th Apr 2016
    8:23am
    It seems to me that there is an arguement for treating the family home not as a home but as a retiremnt asset.
    If this is the case surely as an investment tool the property investor should be entitled to claim such things as rates, maintenance, depreciation of fixtures and fittings and iterest against their tax.
    You can't have it both ways, it is either a home or an investment, either way it should be treated in a specific way.
    I think Bonny is right we as tax payers should be able to choose which services we want to contribute to and pay tax accordingly. I for instance have not used the services of the armed forces or police for a long tme, why should I have to pay for them, I have not used the education system for ages I would like to opt out of that service please.
    Joy
    22nd Apr 2016
    11:19pm
    We raised 5 children without a baby bonus family tax credits or subsidised child care ,We also built our first home without the first home owners grant which we sold 30 thousand less than valuation when we had the recession we had to have and my husband came out of work .We struggled for a couple of years while my husband studied ,He's 66 now and works away for months on end ,we bought a small three bedroomed house we knew we could afford and paid it off and before I reverse mortgage it I will starve ,In the 80s the top tax rate was 64cents in the dollar ,It is not we Tax payers that have caused the problem it is bad management of our money by governments and you will notice they are doing none of the heavy lifting .Maybe start with their perks and routs get rid of the so called entitlements the get when they leave office .for once I don't think I will be voting
    cdbstock
    22nd Apr 2016
    11:37pm
    Richied - re your:
    ''If a flat high value was given, someone could have an enormous mansion in an outback town and still claim the pension. If a flat low value is given, someone in a modest house in the city may miss out on a pension.'
    Doesn't matter - it's what the asset is worth - but for the family home place an assessable- free minimum (say $1.5M) Yes $1.5M would buy a mansion in the outback & a modest home in Sydney - & the owner of a modest home in the country area would get more 'part pension' than the city owner of a modest home - but the higher costs for: groceries, services, deliveries etc & the distances from hospitals, police, entertainments, galleries museums neighbours, schools etc are somewhat compensated
    HarrysOpinion
    23rd Apr 2016
    8:12am
    Why retirees aren’t spending their savings
    Simon Cowan Business SpectatorJanuary 13, 2016 6:22AM0 comments

    “The reluctance of retirees to spend their savings is symptomatic of the shortcomings of our pension system.” Source: News Corp Australia

    “It is important to keep in mind that the issue is not people dying with ‘unused’ assets, or even retirees accumulating additional savings across retirement.

    The problem is taxpayers being asked to pay welfare to people who can support themselves” stated, Cowan.

    Well Mr Cowan, that is what we paid. We, the baby boomer generation of tax payers, paid for the welfare of the generation before us who were home owners, who were asset rich and cash poor, probably like your grandfather and grandmother and / or some of your other relatives. We didn’t begrudge them, but you begrudge our generation. We worked harder and sacrificed much more to pay off our asset wealth on a lower wage and high tax than yours. We contributed much more to the prosperity of the Australian commerce then your generation has, at a time when we had a better government economic management under Hawke, Keating and Howard, than under Rudd, Gillard, Abbott and now Turnbull.

    Our savings have been eroded by piddly bank interest rates and fees, by extremely high cost of food to feed ourselves, high cost of utility bills gas, electricity, phone, council rates, water rates, sewerage rates, high cost of home maintenance such a plumbing and electrical repairs, high cost of car repairs, car insurance, home insurance and health care.

    Do you have any idea how much it will cost retirees for Age Care? Do you?…and people like you begrudge us because we are hanging on to our home asset for that very purpose. We have no sustainable savings to earn a decent income from the banks. What we have in Super is there to supplement our Age Nursing Care.

    If we were cash rich we wouldn’t touch the pension with a ten foot pole! Besides, we wouldn’t even qualify for the pension.

    We looked after the previous generation, there were no complaints like your suggestions, why is our generation left to hang out dry? Why are we being degraded? Why are we being insulted? Why are we being assaulted?

    NO! We don’t want to sell up our homes until we reach Age Care.
    NO! We don’t want to be forced into reverse mortgages. We worked much too hard and sacrificed much of the luxuries of life in our past to pay off our mortgages.

    WE OBJECT TO YOUR PROPOSALS AND THE CURRENT GOVERNMENT’S BLATANT DISCRIMINATION AGAINST OUR GENERATION!

    HANDS OFF OUR HOMES!
    LiveItUp
    23rd Apr 2016
    8:58am
    I am yet to see any discrimination by the government against me and I am of this generation.

    I think the discrimination is more against our young people today paying full price for everything and working their hearts out just to make ends meet.

    Let's face it a pensioner today is just so much better off today with all their discounts and bulk billing for medical services.
    Farside
    23rd Apr 2016
    9:40am
    HS, you make a number of fair points however you did not address the underlying reason why Cowan is advocating a change.

    Yes, the boomers paid for the welfare of the war generation. Yes, the boomers worked hard, made social gains and purchased homes while paying high interest rates for the privilege and generating great economic activity in doing so.

    On the other hand the boomers largely helped themselves to the economic gains, unlike earlier generations, and created more intergenerational debt than any generation before them. The boomers massively benefited from the tax and super vandalism of the Howard era to squander the windfall to the national treasury from the resources boom. The boomers are the ones to enjoy lower workforce participation, more entry level jobs in manufacturing, free university education and the national infrastructure built for their benefit by the previous generations. The boomers are also the ones that failed to invest in national infrastructure for future generations. So you see there are swings and roundabouts. We cannot change the past but we can and must change course as to how we as a community can sustainably provide welfare support to those who need it while building a better future for grandchildren in rapidly changing global circumstances. And many boomers are taking far more from the system than they put into it.

    The fact remains there is a demographic timebomb fuelled by longer life expectancies and declining birth rates. The dependency ratio of workers per pensioner has fallen from 15 when pensions were introduced to about 6.5 in 1970, 4.4 in 2010 currently and is on track to around 3 by 2025 and a little over 2 in 2050. Is it reasonable we should expect our grandchildren to work more than two days a week just to provide for the retired? Simply this is neither fair nor sustainable and represents a significant challenge to all Australians, working and retired. The decision for boomers to make is whether to stick their heads in the sand and leave it to future generations to take the hit. Don't believe me, look at what has happened in Japan over the last two decades and then run your own numbers. While Cowan may not have the answers he is contributing to an important conversation that we should not ignore.
    LiveItUp
    23rd Apr 2016
    9:52am
    Agree Brian so hard decisions need to me made and the sooner the better.
    HarrysOpinion
    25th Apr 2016
    5:01pm
    Brian, "intergenerational debt" is something that Tony Abbott and Joe Hockey heralded. There is more to it than just simply pointing your finger at the baby boomers.

    Social security spending has decreased over the last 15 years from 38 to 35 per cent of GDP, while health spending has increased.

    Company tax revenues have fallen since 2007-08 – apart from a short recovery in 2009-10 – and currently stand at 4.1 per cent of GDP. Commonwealth government spending totalled nearly $418 billion in 2014-15, or 26 per cent of GDP – this translates to around $46,000 per household or $17,622 for every Australian resident.

    If you go back 40 years, everything you want to measure is going to be roughly 30 times bigger now than it was then

    Abbott government did not inherit the worst set of financial accounts in Australia's history.

    Large borrowings to finance Australia's participation in World War I and World War II and the impact of the Great Depression led to much higher deficits and levels of debt than any government has experienced since.

    In more recent times, Mr Howard inherited more gross and net debt and a higher budget deficit relative to GDP than Mr Abbott.

    'Intergenerational theft' a Coalition favourite that ignores the long-term benefits of spending. If the return on investments is actually higher than the rate at which the government borrowed, then future generations actually benefit from the debt.


    Thursday 19 February 2015
    Intergenerational theft” has become a bit of a go-to phrase with members of the government these past few weeks as it tries to convince voters of the need for budget cuts. But the sense that government debt steals from future generations is a simplistic notion that ignores the long-term benefits of government expenditure and instead cares more about selling the political line that debt and deficits are always bad.13.03 AEDT The Guardian

    The suggestion that debt is intergenerational theft implies that as government debt needs to be paid back at a later date through taxes, debt taken out now is effectively being paid by future generations who don’t receive any benefits.

    Claims of intergenerational theft and fairness falls down.

    If a government borrowed money purely to give to people who spent it on perishable consumption items at a time when the economy was already at near capacity, it would be a waste. It would just add to inflation, would have little if any lasting economic value and certainly future generations will be paying off that debt despite receiving no benefit.

    But, as the economist Noah Smith notes, if the debt is used to finance “productive assets” say “building or repairing infrastructure, researching new ideas [or] improving schools” and if the return on those investments is actually higher than the “rate at which the government borrowed”, then future generations actually benefit from the debt we are incurring now.

    The line from the government at the start of the GFC regarding the stimulus was “go hard, go early, go households”. In the 1980s and 1990s recessions, the reason was that the stimulus came too late and was not targeted properly enough to stop damage being inflicted.

    A look at the falls in the percentage of prime-age workers in employment (25-54 years) during the 1990s and early 1980s recession and the GFC shows the difference:

    Employment during the GFC declined at much the same rate as in the earlier two recessions, but it bottomed out and began to improve much sooner.

    Was this theft on future generations? Well not if the people who kept their jobs were parents whose children were able to maintain their standard living; not if they attend a school which has a new building due to the stimulus, not if their house is one of the million or so which obtained insulation and thus will have lower heating and cooling costs in the future.

    O’Dwyer is right to say that “at the family level, most parents look to build some wealth to leave to their children”. Without the GFC stimulus a heck of a lot more families would have been unable to do that – is that theft?
    LiveItUp
    23rd Apr 2016
    8:53am
    The house regardless of it's value needs to be included in the pensioner assets test ASAP. It is just so inequitable that someone worth a million or more can get the full pension whereas a person with a million in other assets gets nothing. It is just so unfair.
    HarrysOpinion
    25th Apr 2016
    4:40pm
    Bonny, you comment like a Communist!
    Farside
    25th Apr 2016
    4:44pm
    HS, what do you consider as Communist in Bonny's comment?

    23rd Apr 2016
    2:16pm
    Well what a surprise. Can't afford pensions, health, education... got to cut, cut, cut. Got to find more ways to deprive older Australians of their lifestyle and security. But now there's an election on, suddenly the Government can apparently afford tax cuts for middle income earning Australians. Vote buying, perhaps?
    Blossom
    23rd Apr 2016
    9:54pm
    It is not far for those who bought a cheap very basic home (no ensuite) 3 bedrooms for a family of 4 or 5 that is now worth approx 15 X what it orginally cost - in some cases more.
    People don't want to move to outer suburb or country areas where there is very little or no medical facilities for their basic needs. Even the healthiest of us need them for checkups and various treatment as we age. Some areas have poor or no public transport at all.
    It is very easy for the Govt. to increase the value of land to charge extra taxes and councils to charge extra rates. Whether you own or rent a property you pay for water which used to be paid by the Landlord if it was a rental property.
    We are not encouraged to save as hard as we can. No wonder people deliberately spend money almost as quickly as they earn it, and live in Govt. rental properties which is usually cheaper than private.
    A friend of mine was even told by Cenrelink she had to have access to a computer after she retired and went on a Aged Pension 15 months ago. Prior to that she didn't have one of her own, and very occasionally used her daughter's. They live a day's drive apart.
    ex PS
    24th Apr 2016
    8:13am
    Blossom,this very logical and reasonable assessment has been repeated on this site many times.
    Unfortunatley it seems almost impossibel to get through to the anti-home owners that just because a house has tripled or even quadroupled in value over say 40 years it does not automatically make the owners rich'
    Maybe the difference is that some people are house owners, some are home owners and some are neither and may be jealous of those who are have given up so much to buy a pice of real estate as a way of making retirement easier.
    Maybe we need another approach, if we really need to punish thase who have made an effort to look after themselves in retirement maybe we should asses the family home. But that is exactly what should be assessed, the home or house, the land it stands on should not be taken into account.
    Farside
    24th Apr 2016
    2:59pm
    It is false and mischievous to suggest there is a punishment motive in this topic. The whole point of Cowan's article was to find a mechanism to better the lives of folk like Blossom who want to stay in the home by changing the asset rich cash poor balance. Sure they may not feel rich but like it or not they are asset rich and it is by converting some of that asset equity to cash they are then able to live more comfortably. It does not require them to move and the loans will be settled upon their death. The government and councils do not set the market value of the land, and the land values in the old working class inner suburbs have boomed over the last forty years. It beggars belief that home owners who benefitted from the boom in values continue to profess being poor in full knowledge that their heirs will inherit a valuable property.
    MD
    24th Apr 2016
    3:36pm
    Oh no Brian, we want the best of both worlds, we both want our cake and keen to eat it (as well). Probably the same cake (comment) commonly attributed to Marie Antoinette.
    ex PS
    25th Apr 2016
    1:50pm
    The fact of the matter is, people who work hard and do without in order to have home security are going to be compelled to use the home they have paid for with their own money to pay for their pension.
    Those who for one reason or another have not purchased a property and used the funds that could have been used to buy a house to improve their standard of living for the short term get a full pension and rental subsidy.
    I do not begrudge these people the pension or the rent assistance, but feel that those people who have chosen to buy a house are, if not being punished, are definately being disadvantaged.
    This country is supposed to have a culture of free choice, I believe that the choice to use your house equity to have a better lifestyle it is up to you. But the government should keep their thieving hands off your property and leave the decision up to the individual.
    And, I have never seen the sense of the statement about wanting to have your cake and eat it too, of course you do, that's what cak e is for isn't it?
    Farside
    25th Apr 2016
    2:44pm
    ex PS, of course the decision to seek some form of equity release should be up to the individual. If the property owner does not want welfare handouts then all good, that is what self-funded retirement is all about. Government should stay out of people's way unless intervention is invited or needed to prevent harm to others. I am confident you would feel equally strongly that " people who work hard and do without in order to have ..." an investment portfolio should also be treated equitably as those who chose to invest their savings in a family home and "the government should keep their thieving hands off (their) ... property and leave the decision up to the individual."

    And as for cake situation, this may assist your understanding the nuance of the expression:– http://dictionary.cambridge.org/dictionary/english/have-your-cake-and-eat-it-too
    Bowsa
    25th Apr 2016
    8:57am
    Please explain how the reverse loan works ,in detail.I have friends who have such and have found that even if they sold their house ,to downsize or move into care say, they could not pay back the loan from the sale money. It ended in an eternal debt.So please explain all the info including the bad and the good.
    Farside
    25th Apr 2016
    12:27pm
    There are very significant problems with the current reverse mortgage products offered by the banks and finance companies. Essentially these chew through equity at an unreasonable rate and offer little by way of long term certainty to the mortgagees. This makes them unsuited for anything other than the short term. What is required is a product that works much like a HECS style loan secured for the amount borrowed against the property. This would enables retirees to release equity to cash for supplementing long term retirement.

    The characteristics of a loan would enable drawdown up to say the single pension annually, interest on the amount drawn down at RBA cash rate, repayable from the estate upon death. The loan should be reviewed regularly to monitor the remaining available equity.

    In the event there is no remaining equity then the retiree maintains occupancy until death or moving to a facility. The retiree then has access to pension like any other pensioner. There would clearly need to be some arrangement for renting the property to surviving partner and children who are resident in the property at the time of death/vacating at market rates.
    Rodent
    25th Apr 2016
    12:43pm
    Dear Bowsa

    You can obtain all the details about how the Centreink PLS operates directly from web site, or by a letter setting out your questions (which I did as Info source )

    Meanwhile on The Australia Institute website you will find this publication, which may help
    Title - Boosting Retirement Savings The Easy Way -Extending the PLS to all Retirees- Technical Brief- no 34 Dated Sept 2014
    Bowsa
    25th Apr 2016
    9:15am
    I would like some politicians to explain why they should be receiving the "perks" they do when they retire or are voted out.Not many people these days have a secure job ,have to wait until 65-70 before they can access super or retire under a pension.I do not begrudge the salaries and the paying of actual expenses to make it possible to do their work.
    I do not believe ex PMs should have lifetime travel passes .Expenses should only relate to necessary travel or entertaining ,definitely not party or Family or any private occasions.
    Politicians should be on similar laws to the average worker. There should not be any donations from companies of any kind. Your past record will be our guide to your future chances as ,you may know,we cannot trust every promise that is made and all parties certainly make a lot of those.But ,of course,who will stand up and move anything like this ?Not sure any politician would and would sure like to hear from them if they would.
    Farside
    25th Apr 2016
    10:33am
    I agree with the sentiments Browse, although a bit off topic. I particularly like the idea re political contributions, perhaps all contributions should be accompanied by a Medicare number as evidence of a real person. A point of correction however, all born before 1962 can now access super, and tax free from when they turn 60. I suspect few if any pollies are eligible for a pension however they should not not continue to receive perks after leaving office not available to others on similar levels of income. The only exception should be security. I think pollies should also be eliminated from appointment to government roles and consultancies for a period of five years after leaving politics. Whether any politician would, perhaps it is not so bleak, I did not like Latham but he was extremely successful at capping the pollies' perks and excesses. I think all it will take is for a few pollies to recognise there is sufficient support in the electorate and other pollies to recognise they risk being voted out for failing to support the early adopters. It could happen quicker than you think.