National Seniors Australia
A proposal to include the family home in the Age Pension and aged care means test has ignited debate, with National Seniors Australia warning it could leave many older Australians significantly worse off.
The proposal, outlined in a new paper by Policy Institute Australia titled Home truths: The case for rebalancing toward better means testing, argues that homes worth more than $500,000 should no longer be largely exempt from pension and aged care asset tests.
Policy Institute claims the change could save the Federal Government around $21 billion a year by better targeting welfare, with the funds redirected into measures including larger JobSeeker and Rent Assistance payments, income tax relief and reducing the Federal Budget deficit.
The think tank also proposes a Retirement Contribution Scheme, allowing eligible retirees to access government-backed loans secured against their home, with repayment deferred until the property is sold or from their estate.
National Seniors Australia has strongly opposed the proposal.
Chief executive Chris Grice said including the family home in the means test would undermine the financial security of retirees who had spent decades paying off their homes.
“While the proposal is being framed as promoting intergenerational fairness, it would unfairly penalise Australians who have worked hard throughout their lives to secure their retirement,” Mr Grice said.
He noted Prime Minister Anthony Albanese and Treasurer Jim Chalmers had repeatedly stated that changes to the treatment of the family home were “off the table”, but warned governments could be tempted by the potential budget savings.
The debate comes as Australia’s soaring property values mean many retirees are “asset rich but cash poor”, owning valuable homes while relying on the Age Pension to meet day-to-day living expenses.
Policy Institute director and former Productivity Commission chair Peter Harris has argued that including housing wealth in welfare means testing could help address long-term budget pressures.
A National Seniors poll is currently asking Australians whether the family home should remain exempt from pension means testing.
