Budget time is always a good test of our convictions about personal benefit versus public good, what’s fair and unfair and what we are personally prepared to take on the chin. So days away from the 2015 federal budget we are bracing up for the likely impact that budget measures – many of which we’re yet to know – will have on us, both personally and as a country.
Pensioners around the country will be pleased with yesterday’s news only days out from the 2015 federal budget, that the Government is dropping its unpopular proposed plan to change pension indexation, indexing it only to the Consumer Price Index (CPI). If the CPI had been used to index the aged pension since 2009, according to seniors lobby group, COTA, the pension would already be $30 per week or $1560 per year less.
But the new pension changes proposed will of course have winners and losers. Gone now are the generous eligibility allowances for receiving a part pension that were introduced by the Howard/Costello Government in 2007, with the result that 91,000 retired people who have liquid assets over $823,000 (that’s excluding the family home) will no longer receive any form of pension. On the upside, however, 170,000 people will now qualify for a full pension.
Speaking on ABC radio’s AM program yesterday morning, the Minister for Social Services, Scott Morrison, said the Government has been listening and consulting with stakeholders and senators and believes this second stab at reforming the pension system is much fairer, aimed at “helping those most in need.” In the pension system, that’s those with low or modest assets, he said.
The family home is still safe – for now – but as the dreaded ‘ageing population’ swells in numbers and a balanced budget, let alone a budget surplus, becomes an ever more distant prospect, my full expectation is that some form of sacrifice of the family home is inevitable.
Scott Morrison has more or less acknowledged this. Speaking at the National Press Club in late February, he said that finding “sensible, pragmatic ways” to unlock the capital that seniors have tied up in their homes could drive a very different quality of life for Australians as they age.
While he said the government had ruled out including the home in the pension assets test, he said Australians needed to have a conversation about “how we unlock the capital and provide the deep consumer markets that Mitch [Fifield] knows is needed to drive consumer-driven ageing services into the future.”
It doesn’t surprise me. Having written about ageing issues for 15 years, I have seen the subject arise (and usually get shot down) on numerous occasions. It got its best gulp of oxygen from the Productivity Commission inquiry, Caring for Older Australians, which delivered its final report in August 2011.
The challenge of ‘Caring for Older Australians’ was more complex than this but, in large part, it was one of finding fair, equitable and sustainable ways to ensure older Australians can get the support and care they need in their later decades. Currently the cost to Government is about $14 billion per annum. With a swelling population over 70 years of age and increasing longevity, it was the Productivity Commission’s job, with input from a large and diverse group of ‘stakeholders’ to consider everything from system design, insurance products and taxation strategies to eligibility requirements, the role of technology and the role of informal care. Everything was ‘on the table’, as they like to say and finding ways to release some of the equity in the family home was there too.
The Productivity Commission recommended a well-considered, government-backed home equity release scheme that was moderately well-received but the then Labor Gillard Government, in its formal response to the report, did not include it.
But the issue of the family home isn’t going away. In fact it is becoming increasingly urgent as a consideration. While the Gillard Government chickened out with its Living Longer, Living Better policy, it was not because they didn’t think it was a good idea.
As a tail end baby-boomer, I have to say that I am more or less resigned to the prospect that I will quite possibly need to sell the family home, downsize and use some of the funds tied up there to support me in my non-working years, especially if I am lucky enough to live into my nineties.
There are so many variables and unknowns in life that it is hard for most of us to anticipate how much money we will actually need to live the way we want to live in our retirement years. Some things – like illness and injury – are impossible to predict while other things are difficult to predict with any accuracy. But I guess I am saying that I am resigned to being part of a generation that will be expected to contribute a lot more personally – and that might include using some of the equity I will be fortunate to have (I hope!) in my family home.
I want to live in a civilised country that looks after everyone – where everyone can live a good, secure life. That’s what best for the whole community. But where resources are limited and demand on the public purse is growing, it is important to me that the state prioritises available resources to ensure that those who are most disadvantaged receive the support and protection they need first. And that there is a strong safety net in place for those who become disadvantaged.
I think that making people who can afford to contribute, do so, is inevitably part of the future and – provided the bar is set at a fair level – I’m OK with that.
