Asset Exempt Housing !

  It is inevitable that the Federal Government will eventually want to claw back the billions it has spent  keeping the economy alive while the Covid pandemic coursed through Australia.   Perhaps the most protected item preserved from the tax collector's reach is the family home.  It would only be the supreme optomist who believes that icon can stay isolated forever.

The price of housing has been on an ever upwards trend.  We are simply not building enough new homes to meet the growing demand and the median price in New South Wales is edging closer to a million dollars.  Owning the house we live in has been a part of the Australian  psyche since the first fleet dropped anchor in Botany Bay. 

The value of that home is not taken into account when a " means test " determines eligibility for the aged pension, and because of that benefit many aged people continue to live in big homes that are far outside their needs.  They are trapped in the need to retain ownership because in many cases a sale would inflate their assets and seriously reduce their aged pension,.

We are starting to see elderly people best described as " asset rich, but cash poor ".  They live in a home worth more than a million, but rely on the pension for their living expenses and to maintain the outgoings on that house,.  This stops them from down sizing, or selling and moving into a more suitable aged care community.

As a form of compensation for family home protection, the government allows people who rent to have higher asset values when eligibility for the pension is assessed.  It has been suggested that those people who own valuable homes draw down on that asset to fund a better standard of living by such methods as a " reverse mortgage ".

That is not a popular option.  Most wish to keep a high asset base because they may need very expensive medical treatment as they age and they want to leave an estate for their children when they die. Interest rates are presently very low, but that can change and send that " reverse mortgage " spinning out of control.

 Statistics reveal that the average median value of a  means test exempt pensioner's home is $560,000.  When the government comes looking for ways to reduce its deficit that would be the logical starting point for the exemption to cease  People with assets running way above that level would be expected to contribute to their upkeep in tandem with the pension.

There  is no reason to think that the price escalation of housing stock is not going to continue this upward trend and as a consequence the future will see some pensioners living in  properties off the price scale.

That concession served its purpose when pensions were a means of basic sustenance but they have gravitated to  a higher standard of living.  To be functional,  a more even asset standard needs to apply.