President of the NSW Young Liberals Harry Stutchbury has sparked an internal brawl within his party after writing in The Sydney Morning Herald that the Government should scrap the primary dwelling exemption from the Age Pension assets test.
Mr Stutchbury said the Liberals were “terrified of taking serious steps to tackle housing affordability”, having been burnt by their attempt to curb superannuation excesses before the last election.
“The Coalition treads on eggshells around the pensions of retirees sitting on homes worth millions of dollars across Sydney and Melbourne’s blue chip electorates,” Mr Stutchbury wrote.
“Imagine two Australians, who over the course of their lifetimes earn the same income, and save the same amount of money. However, one of them invests in the share market instead of buying a home. The one bold enough to invest in productive capital in the share market will be ineligible for the aged-pension and significantly worse off as a result.
“This creates an incentive for Australians close to retirement to sit on large family homes instead of downsizing. This reduces the volume of housing available in the market, pushing up prices.”
In response, NSW Counter Terrorism Minister David Elliott blasted Mr Stutchbury on Facebook, suggesting Liberal voters in western Sydney would use the opinion piece to light their barbecues.
“A middle class eastern suburbs private school boy is hardly qualified to pass judgement on something he’s never faced,” Mr Elliott wrote. “Haven’t we already had our quota of policy brain farts?”
Federal Assistant Home Affairs Minister Alex Hawke dismissed Mr Stutchbury’s contributions as lazy and wrong.
“It definitely was intellectually lazy and inaccurately posited that older people exercising their absolute right to stay in their own home as long as they want are somehow hurting young people from getting ahead,” Mr Hawke wrote.
The new year is not off to a great start. The Government clearly has pensioners in its sights this season.
It started when the Federal Treasury report announced figures explaining how much of an average worker’s pay went towards funding the Age Pension.
Now we have the NSW president of the Young Liberals suggesting scrapping the primary residence exemption from the assets test.
This is not a new target for conservatives. Last year, the Australian Chamber of Commerce and Industry (ACCI) urged the Federal Government to consider that should the primary residence be valued over $450,000, those retiring at 65 would not be eligible for a full or part Age Pension for five years.
The Liberal Party-linked Menzies Research Centre also called for including the home in the assets test for the pension prior to last year’s Federal Budget.
While there is some merit in including the homes of the particularly wealthy in the assets test (possibly homes worth more than $2.5 million), it needs to be carefully thought through, otherwise many older Australians could suffer undue hardship in retirement.
Matt Grudnoff, a senior economist from The Australia Institute, provides a much better solution in the YourLifeChoices Retirement Affordability Index™.
Mr Grudnoff proposes a Universal Age Pension paid to anyone over the age of 67, regardless of their income or assets, while simultaneously abolishing superannuation tax concessions to provide the funding.
His model would also allow the single pension base rate to rise from $814 per fortnight to $1063 per fortnight, while also seeing the Government pocket an extra $15 billion per year.
What do you think? Should the family home remain fully exempt from Age Pension assets testing? Or should homes above a certain amount be, at least partly, included?