Economic Terrorism !

The suggestion from the Business Council of Australia ( BCA ) that the family home be included in the asset test for the age pension must strike terror into the heart of most Australians.  Owning their own home has been the prime ambition of most people from the very start of their working life and it became the crown jewel in their quest for security in old age.   Until now, it has been immune from all other assets accumulated over our lifetime in the machinations of the tax man.

Residents of Sydney would fare worst if the proposal became reality.  Even an average Sydney homes inclusion in the asset test would see many denied a full pension and residents of this city would be severely disadvantaged in comparison with those owning a home in a distant country town.   It would be a disincentive for many to even attempt to become a home owner if this asset became a pawn that worked against it's owners wish to have safe and secure retirement years.

The suggestion opens the door to all manner of " social engineering " theories.  By making it financially impossible for the elderly to continue to live in big cities, it would free-up housing for those of working age and relocate the retired to cheaper, government approved " villages ".    This could solve the dilemma of saving many small country towns with a diminishing population.   Forcing the aged to cheaper rural accommodation would make such towns economically viable.

It also creates an opportunity to impose " death duties " in a new guise.   Most home owners hope that at their end of life they will be able to bequeath the asset of the family home to their children, but the hidden agenda seems to be to make them sell and use the proceeds for their upkeep until it's value decreases to the extent that the pension will be granted.    Extraordinary power will be invested in the people who control the valuation of assets.

There seems a certain inevitability that the intrusions that have been applied to people's earnings and assets will eventually apply to the family home.    Income tax was a new innovation a few centuries ago, at the time described as a " temporary tax " to pay for a war.   In more recent times we have seen the imposition of Capital Gains tax, Fringe Benefits tax, and the government is even dipping into the money we set aside by way of Superannuation by way of tax.       That huge, ever increasing value of the family home must be a tempting target for a cash strapped treasury.

It will probably not happen in the near term.  The groundswell of indignation will see to that - but the writing is on the wall and the theory will dangle - just out of reach - until the day comes that sheer economic necessity drives a treasurer to risk political suicide - and go for the pot of gold !