Boomers could be asked to sell their home under proposed death tax

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The royal commission into aged care has certainly brought out the heavy hitters this week.

Earlier this week we reported on former prime minister Paul Keating’s suggestion of a HECS-style system to provide for home care funding.

Now former treasurer Peter Costello has proposed an expansion of the Pension Loans Scheme, which could result in baby boomers being forced to sell their homes in order to pay for aged care, effectively a death tax on those who need to use aged care services.

Mr Costello explained that his government was behind the push to introduce what is now known as the refundable accommodation deposit into the aged care system after realising that private money would be needed to fund the sector in the future.

He told the commission that the growth in the sector required more people to pay their own way and that the Pension Loans Scheme could be expanded to meet this purpose.

“Those people that (sic) do use residential care and do have assets should be asked to make a contribution and guaranteed a return of (sic) their death,” Mr Costello said.

“I think people should do it knowingly and in advance and there should be products that allow them to do that during their lifetime.

“If you come around and try to take their assets after they’ve died, I think you can expect to run into a lot of opposition there.”

In his appearance before the commission, Mr Costello also slammed the complexity of the forms required before entering aged care, explaining that even he had trouble understanding them.

He said that many people might consider them too hard and just abandon them in the current situation.

“I have attempted to fill in these income and assets tests,” Mr Costello said. “You all ought to do them. The royal commissioners ought to do them. I think there are over 100 questions and 27 pages and, you know, I think I’m reasonably financially literate. I had a lot of trouble filling it in.

“I don’t know how a person going into a nursing home would ever be able to fill it in. Obviously, they’ve got to get someone to do it for them because of the complexity.”

He also said the public servants who assessed the forms also had to deal with the complexity on their end and would undoubtedly have trouble reading and understanding the forms.

“Broad rules that people can understand, and are therefore enforceable, are sometimes much better than high levels of equity which neither the filler in of the form or the reader of the form can actually make an informed decision about,” Mr Costello suggested.

“We’re talking about people who might be 80 or 90 years of age. How do they do this? I mean, my suspicion is a lot of them just don’t.”

Former Treasury secretary Dr Ken Henry echoed Mr Costello’s thoughts in his evidence to the aged care inquiry.

“My principal source of discomfort is that the system overall is horribly complex, and it contains a very high level of uncertainty for people,” Dr Henry explained.

“People who are elderly, people who are vulnerable, people who are suffering emotional and psychological stress, many, of course, unfortunately are mentally impaired to some extent, too many have little or inadequate family support and they confront the aged care system knowing nothing about it, knowing that they have no real option but to throw themselves into the system because it’s quite simply impossible for them to continue to look after themselves. And they’re bewildered.

“This system is unsustainable. It’s underfunded, it’s under-resourced and it will not be tolerated. In particular, it will not be tolerated by the baby boomers themselves when they find themselves in this system.”

What do you think about expanding the Pension Loans Scheme to pay for aged care? Is this too close to a death tax for your liking? What would it mean for older Australians who don’t own their home?

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Written by Ben


Total Comments: 134
  1. 2

    When you consider what the government contributes to childcare and family tax benefits and private health subsidy, then I think the baby boomers have a fair case for saying leave our houses alone. The majority of boomers got no childcare rebate, their child endowment was laughable and they managed to pay for their own private health insurance. Now they get blamed for the economic state our country is in at the moment!

    • 1

      Well said Dizzy.

    • 0

      Plus one from here too Dizzy.
      But I dont mind offering my home up to help me IF I had to resort to an aged care facility.
      But not until after I am dead. THEN my estate could pay as much as it needed to care for me when I was living. That way no Government can first announce a Government run system, then privatise it so the sharks get my estate before I have finished with it!
      So, yes, I think Paul Keating’s idea deserves merit. It doesn’t make anyone any money off MY home, only uses the estate to pay for my care while I was alive. Any left over goes to my estate thence to my kids. Any shortfall is for the Government to worry about.

    • 2

      I remember back in the 70’s, as a single mother with 2 small children, that childcare was not regarded as a cost of going to work, but a domestic matter, and could not be claimed as a taxable deduction on your tax return. Child endowment was a pittance.

    • 1

      Well said , and you could count the days off until the party that brought it in was wiped off the face of the voting board. FOREVER!

    • 1

      Well said DIZZY. exactly. Leave us alone. I don’t have a house and pay rent $700 a fortnight.

    • 1

      Well said Dizzy. And don’t forget we paid taxes and an extra tax to support us in our retirement and politicians on a guaranteed pension and with very generous perks frittered it away. Now they want us to pay! Maybe take it off the politicians first and flatten the government to only two levels.
      These are the same politicians who raided the Australian pension system to fund there own, who privatized aged care and made a bunch of investors very wealthy by robbing the aged as a way of reducing government costs. They sold off government assets such as power, water, roads to companies who make profits, sold off airports and ports just so they could balance the books short term.
      So once they have taken the older Australian’s homes and put them into aged care, the current model shows it is easy to eliminated them through badly controlled care services. What next? Destroy NDIS, destroy the remaining public health, destroy Veterans, eliminate Centrelink, remove all social services and then go off to the wealth havens they have created. None of them are worth the money we pay them.
      Maybe we all give all our money and assets away and leave nothing for the government but the embarrassment of being heartless incompetents. But based on current form, it wouldn’t worry them, they’d just blame us for the decisions they made which created the current mess.

    • 0

      On the Ball – about the way I figure it.

    • 1

      I agree with Dizzy, it sickens me that so many are being paid to have children by the Government. Stop overpopulation that’s what causes pandemics.

      I remember the Liberals lied that Labor was going to introduce the death tax during the most recent election.

      Trust Costello to come up with this scheme. The great budget handlers have made a mess of the economy because they are incapable of longer-term thinking.

      Selling off public assets to other countries, our land, and prestige farms too. Australia is full of its own natural resources that a left for other nations to plunder and exploit at the nations’ expense because we don’t have enterprising Governments just corporate puppets.

    • 0

      @The Thinker – hate to tell you viruses cause pandemics, overpopulation does not.

  2. 2

    There goes the children’s inherentance.

  3. 0

    In most countries there is an inheritance tax payable, going thru that at the moment with Mum’s estate in Europe. The bank takes forever to sort everything out, the bank was named the executor of the estate. There is quite a bit of tax payable, assets are all taxed differently. Needy heirs are treated differently, too, like minors or school going youngsters etc. I can easily accept these rulings because over there the principal property was acquired like any asset, namely: all establishment fees, stamp duty, mortgage interest rates, insurance, council rates, evtl body corp, renovations and repairs were tax deductible all the way.
    In Australia your own home is a different asset as there are no deduction for anything and no freebies apart from a slight deduction in council rates for the pensioner.
    In Australia such an asset should be treated totally differently from other assets like shares or investment property where one could claim a deduction for purchase and maintenance.
    I still maintain properties over a certain amount should be included in the asset (like $3 million houses). Something will have to give as we all get older.

  4. 1

    Such a death tax would be a guaranteed ‘death wish for any government. Perhaps it is time to review the medicare levy to help fund what is a necessity. As for selling one’s home to raise your risk of getting COVID, and getting to each such delicacies as savs or party pies for breakfast, lunch and dinner…

  5. 2

    As far as my wife and I are concerned the idea of going into a nursing home to die is anathema – why would anyone voluntarily enter a so called “home” where the costs are high, the care is often minimal to outright neglect, individual rights are non existent, the food is apalling and owners and shareholders are in it for profit? The answer, we think, is to expand and fully fund home care so that older people can remain at home , be provided with appropriate palliative care when the time comes and die with dignity. Get the private sector out of aged care! Stop the profit motive. Sure, people with means should contribute to their care but often the family home houses more than one person – should he or she be forced out to pay for the care of the one who needs it most? The problem lies with the legislators – they are wealthy enough to never require nursing home care and have no empathy for those who do.

  6. 1

    Nonsense, the death business has become the new rackett for ripping people off . Especially the funeral insurance game, invented by Carlo Gambino.

  7. 1

    Good on you Dizzy, another pat on the back here, you’re 150% correct. I also had another thought, you may think I’m totally insane, this comes from way out there in left field, but what if your children actually looked after you. A very strange suggestions I know, however it seems to work in Spain, Italy, Greece, France, etc. Perhaps it’s just a foggy dream, I really don’t know. Cheers Jacka.

    • 1

      That seems to have some merit Jacka

    • 1

      Most Australians are not from the Mediterranean where multi families in the same dwelling are more common; most could simply not hack it. I come from a place like that – both my grandparents died in their 80s at home. A district nurse, paid by the community, came in once a week to see they were comfortable. Today the requirement of old people is much more sophisticated. Would not recommend going to that model either, although it works well as long as the oldies are “still with it”.

    • 0

      “as long as the oldies are “still with it”” is a pretty determining factor as to the options. Ageing at home can be a challenge for many seniors.

    • 0

      Farside Ageing at home can work out even if the person has dementia and is disabled with home care. There are many pensioners that aren’t home owners and would be happy to assist for free rent. They could shop, cook, clean, and do the gardening in return.

    • 0

      all good ideas thinker and definitely not denying it can work (e.g. as it has for my dad and mother-in-law) but it can still be a challenge, even without dementia and disability to consider. My dad is still living with my brother however the mother-in-law went into nursing home after surviving the last rites in hospital, again, almost two years ago.

      I actually met a couple of old gents about three years who were living together in an arrangement like you describe. One was in the waiting room with varying periods of cogency while his housemate essentially ran the home, organised nursing and domestic assistance and provided companionship in exchange for room and board. Essentially they lived as a couple under one roof. The owner recently died however made arrangements in his will for the housemate to have lifetime occupancy before the house goes into his family estate.

    • 0

      Many elderly people would rather die than have to live with their children. My grandmother would never have moved in with a son or daughter. My aunt and my mother both insisted on going into nursing homes, despite their offspring and grandchildren trying every which way to persuade them to move in with one of their children or grandchildren. They didn’t want to be a burden, and they didn’t want to have to live by the house rules in someone else’s home after being free to do their own thing for decades. Neither wanted to suffer the indignity of having their child or grandchild clean up after an accident, or having to shower them. Both were relatively happy in aged care, though thankfully they were only in care for a short time.

      My mother would never have wanted a stranger living in her home under any conditions, let alone caring for her when she was unable to manage personal care. She had been fiercely independent for a very long time. It would have killed her to have to let a stranger, or even one of her own family, take over the management of her home and attending to her personal care needs. As she saw it, nurses were trained and paid to do a job and she was happy to let them do what they dedicated themselves to doing once she was too old to fend for herself, but she was determined to retain her independence for as long as possible.

      Our culture is different from that of countries like Greece, Italy and Spain. You can’t just transfer a lifestyle to a country that has an entirely different culture.

  8. 0

    What’s wrong with having an actual inheritance tax? Most other countries have something similar and we used to have one until Joh Belke stopped the one in Queensland to attract all the oldies up there.

  9. 1

    It’s underfunded because the Federal Govt chooses to underfund it. Taxing us with a death tax while Govt reduces company tax on large companies that don’t pay much tax anyway is a joke. Always draining the vulnerable while propping up the fat cats. Tax the Corporates, particularly Mining properly and invest the money and there will be plenty for Aged care. And Peter Costello should not even have a voice – his not even a politician anymore but definitely a self-serving businessman who makes taxpayer revenue his business. In 2013 Mr Costello recommended to the Newman Govt to privatise state assets, including electricity and healthcare. No surprise we are now in 2020 and he is pushing for more as a Neo-liberalist that supports getting private hands on as much taxpayer revenue as possible under whatever manner they can. This is the man that heads up our Futures Fund which was originally started with $60 billion and the goal of meeting the retirement benefits of public servants and Defence personnel by 2020. Valued at A$168 billion with public servant liabilities of $233 billion. Peter Costello, Channel 9 chairman and cushy job holder to fund raise for the Liberal Party has NO place in telling us to pay Death Tax. He should be removed from the Futures Fund Board out of self-interest! And anything that comes out of his mouth should be put through the filter “Draining more money from the Taxpayers Revenue Stream”

    • 0

      I agree Katie. No one ever says what the Govt will do with the difference between unfunded super liabilities and the balance in the Futures Fund

    • 1

      Well said about Costello. He has no place in ripping us off further. All those who get a mere deeming rates pension look how they have been quietly underlying, for want of a harsher word, by deeming that it is possible to get more interest than it is possible. Actually I call it fraud and like that robot debt thing they should repay it.

    • 1

      Totally agree Katie. These crooks raided the public pension reserves once before to fund the politicians and public servants’ retirement benefits. These crooks sell our assets and mismanage the country at every step and just get wealthier, looking after the fat cats who don’t contribute, but pillage the nation.

    • 0

      I agree wholeheartedly with you, Katie.

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