Means test could save budget

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A report released on Monday by the Centre for Independent Studies may encourage the Federal Government to push forward with plans to include the family home in the pension assets test.

The calculations in the report suggest that asset-testing the family home and encouraging retirees to borrow against that home in order to get a pension, could result in $14.5 billion slashed from the pension bill and a $6000 increase to the pension. These changes would also see non-home owners with assets no longer receiving a lower pension than home owners with assets tied up in their house.

The Centre for Independent Studies is a think tank that is pro free-enterprise and, one of the report’s authors, Matthew Taylor, believes that these changes to the pension assets test “could be popular if it’s explained carefully”. He also says that “It would need a cultural change, and the government would have to build a case, but it would make the pension sustainable.”

In an attempt to have retirees fund their own pensions, the plan would see the government creates stricter rules surrounding reverse mortgages. Retirees would be encouraged to borrow up to 80 per cent of the value of their home, which would be accessed as regular pension payments. This mortgage would have set fees, but most importantly, come with a government guarantee that the home owner would not be forced out of their home.

These significant changes would see 70 per cent of those receiving the full Age Pension moved onto the part Age Pension and 24 per cent of singles and 32 per cent of couples moved off the part Age Pension.

These changes would allow increases in the full Age Pension rates to match the Association of Superannuation Funds of Australia’s (ASFA) yearly budget standards for living a modest lifestyle of $23,469 per year for singles and $33,766 for couples.

Read more at www.theage.com.au

Opinion: Is means testing the family home fair?

With another Federal Budget blowout expected next month, it comes as no surprise that the Government is looking to make cuts wherever possible. It’s difficult to argue with the logic behind the report released by The Centre for Independent Studies into means-testing the family home. But is it fair?

I certainly agree with many points in the report, especially the part where it hopes to even the playing field. Under the current system, a home-owner with the same number of assets tied up in their house as a non-home owner with assets, may receive a higher pension.

The question you really need to ask yourself when deciding on this matter, is whether the pension is simply a safety net to fund those without the necessary assets and resources, or is it an entitlement every Australian deserves for paying taxes all their life and contributing to what the country is today?

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Written by Drew

Starting out as a week of work experience in 2005 while studying his Bachelor of Business at Swinburne University, Drew has never left his post and has been with the company ever since, working on the websites digital needs. Drew has a passion for all things technology which is only rivalled for his love of all things sport (watching, not playing).
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236 Comments

Total Comments: 236
  1. 0
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    Old Joe Hockey cant help himself attacking the seniors now its about our homes ……and if he gets his way there be no more inheritance for the kids……..Joe Hockey and our PM should stand down as the worse two politicians in Australia history……….You never hear them say their cutting on thousands of their wages?? they be mad if they did.

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      Sorry to correct you Tia-Maria but there have been 3 worse politicians in Australia and all were once PMs. Remember Rudd, Gillard and Rudd again…..they’re the 3 and the country is still trying to recover from those financially draining and embarrassing years.

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      Very true Golfer

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      I think it is a great idea especially if people can get stamp duty exemptions to downsize. All MPs should seriously consider this proposal as the pension should only be simply a safety net to fund those without the necessary assets and resources.

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      Golfer, Rob and Bonny. all spoken words coming from a Liberal voters………Joe Hockey this idiot needs to take a step back and leave the pensioners alone………we are the hard workers of yesterday and we earn our rights to do with our homes the way we feel fit………..He can go after the DOLE BLUDGERS of Australia who have never contribute to any taxes and in a big kick up the Ass.

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      Unfortunately I am not a Liberal voter but someone who knows that the pension as we know it is unsustainable and is going to change probably sooner rather than later. What I don’t understand is why people who will be better off financially in their retirement are so concerned about their house being treated like any other asset. Most people’s kids will already be well established and don’t need to be given anything when their parents die. So what is the problem here?

    • 0
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      I notice that Frank the paid troll and his other avatars are busy above politicizing this issue. This disreputable government has no morals.

    • 0
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      I can understand you being upset about this possible change mick.

    • 0
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      All I noticed was how Quick they Attacked !! 🙂 One after the other ! Are they Linked ? 🙂 🙂

    • 0
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      There are two possible explanations.
      1. It is a conspiracy.
      or
      2. There are many others (apart from myself) who can not only think for themselves but can deliver clear and concise logical import.
      BWAHAAAA!!!! 🙂

    • 0
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      I’m not a paid troll just someone who feels that the old age pension is being paid to many people who don’t need it.

    • 0
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      You are right, Bonny – but you seem to direct your arguments at those who are well below the point where they are rorting the system.

      Perhaps that’s why they are calling you a troll… though, to be fair, it may only be a question of 23 million people separated by a common language……

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      Most of the people here would benefit from this proposal but for some reason just can’t see it.

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      Provided the ‘floor’ for considering it an asset was reasonable and indexed. Too high and the fat cats get away with it again – too low and you kill off the people who deserve a fair go.

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      You are alone Frank….apart from your posts under different names.
      We all want a fair system but robbing your children of their inheritance is not the way. And let’s face it the rich will have their outs. They always do. So average Australians will be ‘harvested’……just what this government has been trying to do since being elected. So let’s not kid ourselves that this monster has changed its spot. It hasn’t. Just tried the next on.

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      Bonny, could it be they simply don’t want their pension to increase or they are the rorters? I was watching “The Wolf of Wall Street” recently and as the story goes he opened Swiss Bank Accounts in his Auntie’s name. Could it be that in Australia we could have a wolf of Centrelink with property in Japan and Canada for example?

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      That’s not as silly as you may think Frank. About 40 years ago when Centrelink as it is now known was first computerised one of the programmers couldn’t make his program balance the books due to rounding errors and the accountants were annoyed about it. So he came up with a brilliant idea and added up all these fractions of cents and sent a cheque each pay run to his grandmother. It was only when his grandmother thought she had been overpaid and the honest lady queried it that it all came to light. Moral of the story is tell your grandmother everything.

    • 0
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      Who would have thought? Very interesting Bonny. I think it may be time for a new computer system and it’s good to see Bill Shorten supporting Tony Abbott on this.

    • 0
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      TREBOR
      I agree that those living in “Family Investment Mansions” should not get the pension!
      I suggest the “Floor” for this exercise (for starters) to be as follows:
      1 Limit depends on the suburb (Geographical area) of property
      2 Before the “Limit” is reviewed, honest/realistic evaluation MUST be completed
      3 Adequate Transition time” provided when needed – to possibly downscale
      4 Change/amend to “Basic Rules” MUST be via Referendum only !!!

    • 0
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      Mick, you might at least address the issue that is up for discussion rather than waste everyone’s time with your vendetta and attacks on posters you do not agree with. Play the ball and not use the troll’s tactic of playing the man.

    • 0
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      The only people “wasting time” are those promoting either side of politics. Frank and his avatars who keep running the paid adds. Perhaps you could help end this too.

    • 0
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      wally is right mick. There are enough Labor supporters here without you adding your bit. A friend asked a question the other day. How expensive is it to own a car in Japan with their Shaken Law?

  2. 0
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    Hands off the family home –I never worked my arse off to be free of debt to get into debt again and I want to be able to leave something to my Son who has health problems.

    These pollies should have a look at their own lurks and perks, they could save a bundle there but no they like to attack the less well off, well my message to them is bugga off!

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      There is no logical reason why the taxpayer should have to fund your sons inheritance by paying you the pension Plan B.

      I think it is entirely fair to expect us oldies to use our accumulated wealth to support ourselves in our old age. However having said that I am entirely sick of funding the spendthrift or bludger who has not made the effort to provide for themselves when they could have. If asked in this way to continue to support bludgers into my old age I would most definitely would rebel, & take action to circumvent it.

      If such a scheme were to be introduced, giving us no advantage in having ” worked my arse off to be free of debt” as you say, I would have sold my home & have had a year or two living it up just before retirement.

      If such a system, unfair to the thrifty were to exist I would most definitely have secreted quite a bit of wealth, bank notes or gold for example, in a tin carefully hidden before retirement.

      We are going to have to do something to reduce the debt bequeathed to us by Rudd/Gillard, but this is not it.

    • 0
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      Has been, well what can I say????…first your a Liberal voter to start with ( so stop blaming the Labour ???(take a wack at the Liberal party for what they like to do to us retirees) We have worked our butts off paid taxes all our lives and we did it tough……….this government can leave us a lone…..our homes should be left to our children as their inheritance……after all no government gave us big hands outs in our time.(except for the pensions and its only peanuts for politicians take)
      Start picking on Dole bludgers for a change.

    • 0
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      Hasbeen, I also worked and paid my taxes, so told I was able to get the pension–I also looked after some sick family members –plus my Husband who passed away –so saved the bloody Government even MORE money so you and your Liberal ideas can go and do what I wish this Government would do.

    • 0
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      PlanB spot on……………..Has been well what can I say?????

    • 0
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      I will say it again – a Pension is a fully paid for and fully pre-taxed Right taken from increasingly high levies on income tax to provide for ‘social security’. As part of Income Tax on full earnings, it is, unlike super, fully taxed and thus has every right to NOT be taxed if and when a pensioner has other income (as it now is).

      The ONLY provisos for pension are – oddly enough – what someone said here – to provide for those without the resources etc.

      So – what is the argument, Hasbeen? You may start by leaving out references to ‘bludgers’ – you have no right to call anyone that and no idea what their situation has been in life.

      I’ll tell you in advance – you have no argument. Pension is a paid for Right and if Plan B fits the rules – he has every entitlement to it.

      What we are arguing here is potential changes to the rules.

      How will YOU fare if you are told your home is now included fully in your assets deeming? Better off or worse?

    • 0
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      Spot on the Money Plan B…..within reason.

    • 0
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      TREBOR
      Concur in every detail.

  3. 0
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    This is just complete nonsense.
    Our homes are that. Leave them alone you greedy bastards. and the pension is a right. Not a net.
    We live in a community to which we have added much through hard work, taxes, volunteering, so suck it up government and look to your own before attacking us and stealing from the vunerable.
    All this will do is cause massive un-stability in the community and the problems we have will get worse…wanna see how the rich get richer and the poor get poorer, and we end up with gated communities with security guards and high crime rates? This is how it happens.
    The saying is that that the rights of the worker to fair pay, hospital and education never took off because the powers at be got the poor population to believe that they are temporaraily embarassed millionaires. I think Hockey and abbot are attempting the same trick. get rid of them.

    • 0
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      Education is right, but the pension is support those that need support as most of us did yesteryear. Since superannuation became the norm, the issue is quite different. The pension is a right for those who need it only, not those who want it.

    • 0
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      Paulodapotter. Technically anyone who is not of pension age and receiving a Government payment is an employee of the “State”. So having said this the State should deduct the mandatory amount from the support payment and place it in a superannuation fund of the “employees” choice. This would be a better solution.

  4. 0
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    This is absolutely absurd. My parents bought a basic 3 bedroom home which was built by the Housing Trust of SA as it was known as then in 1952 for a few thousand pounds (I can’t remember the amount). In 2012 I sold for $567,000.00…….In 2014 it was sold for $625,000.00 It had definitely had no renovations done at all during that time. All they had done in that time was clean it and cut the lawns. No renovations at all, not even painting, and most of the garden had been let die. Most of the plants were drought tolerant that they had died too.

  5. 0
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    Paying off a family home can be a financially difficult task over many, many years, with all sorts of sacrifices. Who would even bother buying a home if the end result would mean all the blood, sweat and tears wouldn’t end up staying in the family? May as well rent or apply for government funded accommodation. The reason a home-owner benefits from pension is that the home-owner had the foresight to fund his own accommodation in retirement. What about all the people who never worked and never will? They get low rental government accommodation, a full pension and all benefits. Hands off the family home! Or kill off our incentive to provide our own roofs over our heads for life, and while penalising people for going without to pay for their home, foster a new culture of public housing dependency. What’s all the fuss about anyway? In 20+ years everyone will be funding their own pensions due to life-long superannuation contributions.

  6. 0
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    Who is going to work out the worth of your home. Will it be someone who says a home in your postcode sold for $1.5 million, therefore your home is worth that?

    Can’t see the next generation saving for homes if this is the case. Better off selling and renting and getting the rent allowance.

    • 0
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      Pensioners who have investments properties already have houses assessed for the pension which is no different to one’s own house.

    • 0
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      Bonny, any changes should also stop rent assistance and those living in Government housing should pay a “market” price. Why should the homeowner keep subsidising, those that lacked the skills or will to do the same, but instead frittered their money away.

    • 0
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      How do you think those that now fail the assets test that live in modest homes feel about those on the full pension in million dollar plus homes?

      Rent assistance is paid to people in nursing homes so it has little to do with rent.

      The pension should only be a safety net not a right. If you have assets they should be used for your expenses in old age.

    • 0
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      Bonny, most definitely not.

    • 0
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      Again with the generalisation….. it is becoming boring to hear people with no idea carry on as if everyone with a pension did nothing in life to earn better.

      Investment properties are a business and should be treated as such – it is not the same as the family home and should not be treated as such. Not hard that!

    • 0
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      Bonny – you have a point about the way in which the ‘family home’ is defined, and there may be an argument for an upward limit on the value of the family home before deeming is set in place. The problem there is that the bottom line is too low at the moment for those living in major cities, whose property values will soon out-strip that deeming point and thus will cut out people with not much at all.

      Can anyone seriously say that a pensioner living in Sydney’s Eastern Suburbs should be deemed to have too high a value property after paying it off for forty years as a HOME – not an investment?

      Are they going to pack up and go live in Bourke to qualify for the pension?

      People in nursing homes are paying rent to stay there – no argument over rental assistance.

  7. 0
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    Some of us have worked hard, paid our taxes, lived frugally, taken few holidays, raised decent law abiding children (also all gainfully employed and paying their taxes)… We struggled through 18% interest rates in the late 80’s hanging on to our modest homes as best we could. We hoped that having our own little property meant that we could live (frugally, we’re used to it) on the aged pension and eventually then use this property to finance our last years in a decent retirement/care facility….. Who else is going to pay for our twilight years in a nursing home? Maybe our, oh so caring, PM and his entourage will decide that we should be euthanised since we will just be a further drain on the country’s resources…. They should take a good hard look at their salaries and all the perks that go with the job – if anybody can afford to take a cut it is them!

    • 0
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      Your home already needs to be sold to move into a nursing home and the nursing then takes a big chunk of it to fund your care.

    • 0
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      Bonny, your saying now our homes are sold and the nursing homes takes a chunk of it…….well well well …….look who is calling the kettle black?? your right ……..as this policy came in many years ago 25 plus and this saved the government heaps…..BUT in the other breath your saying different……….most of us only have moderate home…….but some have big homes caravan and overseas holidays trips when retired their the lucky………..we did not work hard to own a tiny home for any politicians thinks its theirs in the taking

    • 0
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      Your home is of no use why you die so why not use it to live well in retirement.

    • 0
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      Bonny, I have the right to dispose of my assets as I wish and leave it to my family when I die. It is better that way then they won’t end up like you perhaps!

    • 0
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      End up like me? It’s not a good idea to make assumptions about people.

    • 0
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      The real issue Nieman away is when does a person havery sufficient assets to look after themselves. We currently have a system where some people should not be getting a pension but are. These are people who have used a broken system set up with flaws so that it could be manipulated. It is.

  8. 0
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    Tia Maria, don’t get sucked in by YLC leaning to the left. The report is by the Centre for Independent Studies as one of many scenarios to ‘balance the budget.’
    If the findings of the report were adopted, this would satisfy all of those in ‘struggle street’ plus those with a hand-out mentality. People who have studied and worked hard to accumulate supposed wealth would end up supporting/subsidising those who had not done the same in their lives. These people should be penalised for being idiots for working so hard. Let’s opt for a country of mediocrity. Budget could be easily ‘fixed’ if the Aust. Tax Office collected the $18 billion of outstanding tax debts. This is a treasury issue, not a government issue.

    • 0
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      Hi Tezza,

      We didn’t state a for or against in this discussion, we simply put up the news and then left it open for opinion. I am actually against the suggested means test changes if that gives you an indication, but the report did make some interesting points about house vs assets and how they are tested, i’m certainly no left leaner – voted for the coalition at all but one state/fed election that I was able to vote in!

      Cheers,
      Drew

  9. 0
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    Here we go again, the pollies should take a look at their little nest eggs and all the perks, they are all two faced liars, that’s why they are pollies…..

  10. 0
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    I agree with all the comments and voice my concern about including my home for pension eligibility. Be warned Lbour or Liberal there would be major revolt if they include family homes for pension eligibility

    • 0
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      My oath, Hard luck Joe, there will be trouble if they include the home, time for a revolution I would think!

    • 0
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      PlanB
      Finally!

    • 0
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      Agree our pension system needs a revolution as it’s not sustainable in it’s present form.

    • 0
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      When the cost of subsidising super exceeds the cost of pensions in the budget, and a lot of that is going to people who would never have a need for a pension – something is very wrong in the state of Denmark….

      On top of that, a properly run super system would cut down the need for pension given enough time and enough employment to settle into place. You can’t put away super without a job… not hard.

      It is not the pension system that needs a revolution – it is the current super system with all its faults and the dismal employment situation.

      At this point

    • 0
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      There is nothing wrong with the current super system. It will in time replace much of the age pension paid today and that’s a good thing. If you don’t give people incentives they will not invest in super as it has too many rules and regulations. Money will be invested elsewhere instead in trusts and companies owned by no one but controlled the rich.

    • 0
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      I disagree – the current super system needs a solid ceiling that will give ONLY tax havening to those who will need it to get more than a pension in retirement – not for those with huge discretionary funds to put into it tom evade tax. People with that sort of money are quite capable of making their own way without subsidy from government and will never claim a pension anyway. Super tax subsidies are not there to create extra disposable income for them, so they can buy another investment property or have a nice cruise down the Danube – the subsidy is supposed to encourage investment to cater for retirement and repalce pension.

      I’ve said elsewhere that the super system – properly handled and not a massive burden on the Budget from subsidies to those with no need for them – will eventually catch up with pension and largely replace it, but it still needs time, and this silly short-sighted government is quite deliberately undermining that process.

      HOWEVER – we are dealing with the here and now, which means we are in the middle point where there are still pensions out there and still will be for a long time, and the super system has not yet caught up.

      That being the undeniable case – where does anyone get off criticising those on pensions and trying to make their lives unbearable?

      Leave the pensioners alone, rectify the WRONGS in the current super picture, and tax corporations properly, and remove subsidies for big business.

      What IS this focus of this fool of a government on pensioners?

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