Budget hits and misses, according to Noel Whittaker

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YourLifeChoices asked our favourite personal finance wizard Noel Whittaker for his views on how older Australians fared in the Budget.


The world has suffered the worst financial crisis in history, and everybody can be expected to share the pain. Huge deficits now, which are inevitable, will severely impact the ability of future governments to boost any kind of spending. Thankfully, our franking credits are still safe.

There weren’t a great number of initiatives for retirees, except for a $500 special bonus for people on the Age Pension. But a major plank of the Budget was to get business back to profitability, which, hopefully, should see dividends restored to retirees.

But having said that, the proposed amendments to the granny flat rules will be welcome. Under the existing regulation, the creation of a granny flat right could attract a large sum in capital gains tax. The government has promised that legislation will be passed to make the rules much fairer from 1 July 2021.

Just keep in mind that the legislation has to be passed to be effective.

The aged care segment is under huge pressure, and both government and older Australians have a preference for people to age at home. But this does require home care, and the waiting list for home care is about 60,000.

The Budget promised 23,000 extra places over four years, but only 2000 of these are level 4. The changes are welcome, but realistically, it’s just a drop in the ocean.

One initiative was aimed at large superannuation funds, but also has the potential to affect older Australians.

From 1 July 2021, the Australian Prudential Regulation Authority (APRA) will conduct benchmarking tests on the net investment performance of MySuper products to make it easier for members to compare the fees and performance of funds in the market.

That will create more competition, lower fees and lead to the demise of some funds that have been under-performing for decades.

Funds that fail two consecutive annual underperformance tests will not be permitted to accept new members until a further annual test shows they are no longer underperforming.

By 1 July 2022, the annual performance test will be extended to other superannuation products. As yet there is no detail, but one could expect that self-managed superannuation funds will fall under this umbrella. That would be a great outcome.

Many self-managed super funds often way underperform – because their trustees are not skilled at investing or because they haven’t got a clue about how to measure their own funds’ performance.

In terms of what was missed in the Budget, the most at risk in the community are people, mostly women, aged over 65 who do not own a home and who are forced to survive on the Age Pension while paying rent. Some of these end up on the street. Affordable housing would have been a welcome initiative to help some of these people reclaim their lives.

Do you agree with Noel’s analysis? What else was missing in the Budget?

Noel Whittaker is the author of Making Money Made Simple and several other books on personal finance. You can learn more at noelwhittaker.com.au

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Total Comments: 12
  1. 0

    Pensioners will be better off if all concessions commodities are increased to 50%
    Gas Power Rates Water etc

  2. 0

    Unfortunately the $1.60 a day for pensioners was a token, nothing more. Every one else got given recognition of increased costs, with the lowest one being $7.50 a day. Politicians got a $109 + per day increase! The wealthy got thousands of dollars in handouts, including the ability to claim losses they have already been given compensation for. Just watch; another round of record profits coming up.

    Increasing concessions often doesn’t help. Sadly any pensioner in an apartment gets none of the reduced energy costs because of the way the governments approved common metering for these medium density strata buildings. A resident can’t shop around as there is a single supplier to the building. This is also common with water charges.

    In most cases, the owners of these suppliers are foreign companies and don’t give a rat’s a___ about Australians. We’re a cash cow to be milked. The politicians who sold this infrastructure were treasonous.

    There are some deals on rates, but councils want more money to spend on those who are out and about, so giving pensioners who don’t use facilities a real break is not likely to happen.

    • 0

      Pensioners got a $1.60 day more than many jobless and retired. Not everyone else was given recognitions of increased costs. Feel better now?

    • 0

      Yes oz70, get rid of the foreign companies and have no goods available. Get rid of the high earners, who pay most of the tax and have no money for pensions nor investment to provide jobs. Good thinking.

  3. 0

    Typical of the LNP. Don’t bother saying you would rather see older people age in place unless you are prepared to fully fund it. No hand ups for those who just need a hand up to get themselves to a better and more acceptable level. And of course let’s not help older women who got caught between two systems – depending on marrying the right man and the new and better system of getting a good education and earning your own money. What a shame. More suicides on the horizon!

  4. 0

    Come on Noel Whittaker, seeing that you know better why don’t you take over the Federal Treasurers position. Lets see how you go.

  5. 0

    Criticizing is easy, but I’d hate to have to tackle the job. The government has been condemned for not giving more to the homeless and unemployed. I agree the disadvantaged should be getting more help, but as soon as you increase the payment to the unemployed and homeless, you find you have more unemployed and homeless because lower paid workers decide it’s not worth the effort. Already, many are choosing not to save much for retirement because of the resulting loss of pension and concessions which makes some SFRs worse off than if they were on a pension – until they blow their savings benefiting the Treasury rather than enjoying any personal benefit.

    The government needs to find a way to guarantee a decent living standard to all without providing any incentive to rely on welfare. The only method I can conceive is a universal basic income – NOT means tested – aligned with a solid PROGRESSIVE tax system. Sadly, neither party is ever going to consider that option. ‘Progressive’ is now a dirty word. Both parties want to flatten the tax rates. And when it comes to welfare, both are committed to means tests that discourage battlers from striving, punish savers, and keep the disadvantaged down.

    • 0

      the government does not want everyone to enjoy a decent living standard, if it did then it would build more things and fund more services that people want to ensure a decent living standard. Unsurprisingly the government wants to be reelected and so places its priorities elsewhere.

  6. 0

    Broadly agree with Noel. The big item missing is public housing and public transport infrastucture. I don’t agree with pushing first home buyers with big cash incentives, it only increases house prices. Public housing would allow for a much more mobile workforce and not lock people into a location once they build a new home.

    • 0

      Public housing proved to be very costly, Franky; tenants generally do not look after the places because they have no skin in the game and the Govt has to continuously repair things and trying to get rid of unruly people. Lived for 10 years near those now infamous towers in Melbourne. Affordable housing might be a different matter because people buy them and then also maintain them.

  7. 0

    As a largely self-funded retiree, I accept that low interest rates have reduced income and that the Federal Budget this week has not provided any significant assistance. But please by definition, self-funded retirees do have very significant capital assets that can be drawn on to supplement income. That is what it is there for! Yes there may ultimately be a reduced inheritance to pass on, but there are many more people today that need government support far more than self-funded retirees.

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