Why means testing the family home for the pension is a bad idea

Beryce Nelson writes: Re “Home building is carrying the load, alone” (Friday).

One of the suggestions to arise from the Intergenerational Report was the proposal to means test the family home in assessing people for the age pension. Here are a few thoughts about that idea which is supposed to help significantly reduce the cost of aged pensions in Australia.

  1. It would cause a rush of houses onto the market creating a glut in the capital cities with falling prices as the consequence. It would accelerate as more near-retirees panicked and also decided to “downsize”  causing the price of housing in those cities to crash even further and placing intolerable stress on Australia’s banking and finance sector in the process. Anyone for a 1980s recession?
  2. The family home — most Aussie pensioners’ only real asset — is already spoken for. The aged care industry and Centrelink already use it as part of the assessment for the bonds and associated charges required for entry to supported aged care accommodation. The industry is already taking other large sums of money from clients on an annual basis a well. So, if the family home is already gone then the government and families will face even larger costs in propping up the aged care industry in the future. Anyone for a 1920s depression?
  3. Even more scary for Gen X and Gen Y homeowners would be the flow-on effect that would see them paying off mortgages of larger amounts than the re-sale value of the property they owned. Anyone for complete collapse of the Australian economy currently so dependant on housing values and ongoing consumerism to keep it propped up?
  4. Economically there is no logic to the idea and there is nothing to justify it morally. Despite the bleatings of leading politicians Australia is already one of the lowest contributors to the protection of its most vulnerable people at <5% of GDP as compared to our OECD allies.

Finally, why pick on the older citizens of this country, most of whom left school at age 14 and have worked and paid taxes for past 55-60 years? They are entitled to the pension and it should not be regarded as “welfare” — they have been the heavy lifters for a lifetime and do not deserve the stress governments are forcing them to endure at this time in their lives. More on the mental health impacts on another day.

On Fraser’s Renew Australia party

Brian Dwyer writes: Re. “Fraser’s progressive vision for a new political party” (Thursday). I am all for a new party. I am 67 years old and utterly sick and tired of the dills we have in government and opposition. If a party comes along that can demonstrate that it is interested and will do its best for the country as a whole and not sectional interests it will get my vote. I just hope it happens and that the people who promote it are truly interested in “community service” and not “self service”. I just want to see the following:

  • Fairness throughout society, proper and fair taxing of all businesses in Australia to ensure that overseas corporations pay their fair share, active promotion of a transition to a non-carbon future as fast as can reasonably be achieved
  • Universal health care
  • Affordable (to everyone) education at all levels
  • Protection of the country’s natural assets
  • Withdrawal from the UN
  • A very different relationship with the USA.
Small investors being punished

Peter Dempster writes: Re. “Gerry Harvey gets richer while small shareholders miss out” (Thursday). I am a small investor in the share market. During 2003 I purchased a small shareholding in Elders to the value of $10,000 =  6250 Shares. Recently with shareholder approval this was reduced to 625 shares as the company wanted to reduce its shareholder numbers. Then recently it was again reduced to 63 shares to increase shareholder wealth (shares went from two cents to to $2). I am now regarded as a small share holder and now being forced (encouraged) to sell my smallholding as it is too costly for the Company Share register or invest a further $500 to increase my holding to at least $500. I find this totally unacceptable as  I have not only lost over $9,000 in valve , my share holding has been reduced from 6250 to 63. How many other small investors are being forced to sell or reinvest further  money at the beck and call of these large companies?