With 3.5 million retirees and another 4 million 50 or 60-somethings set to join them over the next 10 years, it’s imperative for governments to ensure all these older Australians have a roof over their heads and an income robust enough to cover food, energy, household expenses and decent health care. Yet this is not the case for many retirees. And it’s surprising, given that we are talking about what will be nearly 25 per cent of Australia’s population by 2025, that this issue isn’t higher on policy agendas.
So Budget 2017 presents an opportunity for a visionary government to lay the foundations for effective economic policy that will ensure that retirees can better support themselves with legislation that works for all, not just a few.
Having recently surveyed the 250,000 strong YourLifeChoices database, receiving 6194 responses to 35 questions, we learned a lot about the six different retirement tribes and how they are managing their retirement affordability. Of most concern was the absolute importance of housing affordability and the tough life many couple and single renters lead, with 30 per cent of their income gone in rent before other essentials can be considered. Managing the changing rules of retirement income was the greatest challenge faced by our respondents, closely followed by covering health costs.
So taking into account the key findings from the YourLifeChoices 2017 Retirement Affordability Survey, here are the five no-brainer changes Treasurer Scott Morrison must make to ensure that retirement affordability is achievable for all Australians, regardless of their postcode. Unsurprisingly, these policy initiatives relate to housing affordability, health care costs, superannuation rules, and household expenses. Each is based on concerns expressed by our retirement community, that is, the people who know most about retirement and how it works.
Five Budget 2017 no-brainers:
- Make health care more affordable. These basic changes will benefit all Australians, and not just those in retirement. Until now our Medicare system has ensured most Australians receive high quality medical care, regardless of their financial situation. But it seems this is under threat, with Medicare suffering death by 1000 cuts. The Treasurer should leave Medicare alone, except to ensure that critical health tests, including MRIs, are claimable and refuse health insurer requests to increase premiums by more than CPI. And it’s not just making health care more affordable. Rather than focus on the Budget deficit and the cost of funding health, there needs to be a more equitable and sustainable model for our public health service.
- Stop changing rules on superannuation and the Age Pension. You heard right – just stop. We are told that the responsibility of our retirement income now rests with us, and that we need to be lifters, not leaners. So if our current government wants older Australians to put money into super to achieve this goal, it needs to stop with all the rule changes. Yes, super entitlements have unfairly advantaged the well-off, but what we desperately need is a comprehensive retirement income review, which considers the different imperatives of tax, welfare, super and the myriad of other concessions and rules, followed by one-off grandfathered adjustments. Then we need the legislation that the Labor Party previously proposed, but never brought into law, and that is for NO further changes to super guaranteed for five years. Which means the rest of us can just get on with the business of working and scrimping and saving, with a degree of security as to where the goal posts sit today and tomorrow.
- Help out renting retirees. While we are on the topic of retirement income, the base rate of the Age Pension remains too low, particularly for those who are renting. This 15 per cent of the retiree population is now going without medical care and food in order to cover rising housing costs. Rental assistance for retirees needs to be increased to ensure these people live with a reasonable measure of dignity. The current rate at which Rent Assistance is paid is far from reasonable given the annual increases, often greater than CPI, imposed by landlords. More affordable government-funded rental accommodation, i.e. social housing, is also required and this needs to be addressed urgently.
- Allow access to home equity without losing the Age Pension. Retiree homeowners must be allowed to use the equity in their homes to supplement their income. This one really is a no-brainer. So many older Australians are asset-rich but beyond cash-poor. Yet the Age Pension entitlement rules mean that any sale of a family home will probably increase their assessable assets to the point that they lose their main source of income. So they hang on grimly to the family home and scramble to make ends meet on a weekly basis. The answer is clear. Why not allow such retiree homeowners to downsize and commit the extra cash to a retirement annuity, which cannot be used for other purposes, but ensures that their pension entitlements are preserved? The happy by-product of this policy will be to free up housing stock for younger people keen to secure a larger family home. Win–win guaranteed.
- Bring on a Royal Commission into banks. It’s been talked about for years and it’s the one thing that would increase confidence and trust in Australia’s financial system. Yet despite ongoing evidence of banks behaving extremely badly, we cannot seem to find a government willing to shine a light on the much reported banking misdeeds in order to bring criminals to trial and clean up such poor culture and criminal practices. Governments simply cannot ask ordinary Australians to put their faith and retirement savings in a financial system that has been found wanting again and again and again. It’s like lancing a boil – just do it.
What do you think? Are these the policies you want to see in Budget 2017? If not, tell us what you hope Treasurer Morrison should be doing.