Evict Nana from her home

Paul Howes has an interesting argument in the AFR this morning:

The age pension is the single most expensive item in the federal budget at $36 billion a year, 9 per cent of all public expenditure.

And while it is asset-tested, that test does not apply to the principal residence. Instead, only a standard small amount is shaved off if you own your own home.

In effect that means some $18 billion – 4.5 per cent of the total budget – is being handed out each year to people who are worth over half a million dollars.

This is unsustainable and it is unfair. Welfare should only go to those who need it.

Then there is this:

For younger working Australians the deal’s even more insulting: We need to tax you to pay people who, thanks to home ownership, have the kind of wealth you may never attain, largely because you can’t afford a house. Oh, and even if you manage to snag one, and miraculously enjoy similar appreciation, you won’t get the same pension deal.

Nothing like a bit of age-warfare – those damn old people are breathing our air!

Its quite fascinating watching people who crap on and on and on about fairness and equality advocating policies where the elderly and possibly infirm are evicted from their homes to make way for people who appear incapable of the hard work, thrift, and sacrifice necessary for home ownership.

Here is the thing – having bureaucrats and unionists making choices for the elderly as to what they want to do with their own assets is a particularly odious form of social engineering.

Rather than play the envy game, Howes should be advocating policies that promote greater housing market liquidity. Reduced stamp duty, for example, or propose policies that develop a market for reverse mortgages and the like.

This entry was posted in Budget, Economics and economy, Hypocrisy of progressives. Bookmark the permalink.

433 Responses to Evict Nana from her home

  1. Bruce

    No body’s forcing anyone says BoN,well that’s except the Doctors and other Medical Personnel who will staff those services he proposes setting up so that the oldies won’t have to drive (if they still own a car or will that also be confiscated?) down the Pacific Hwy to access the services that don’t exist “up the Pacific Hwy”. I’ll be interested to learn just how it’s suggested the relocation of Doctors etc will be achieved given that generous financial incentives have so far failed to attract such Professionals to the sticks.

  2. Gab

    In effect that means some $18 billion – 4.5 per cent of the total budget – is being handed out each year to people who are worth over half a million dollars.

    Has anyone checked to see if this is factually correct?

    All I could find is this:

    n 2012‑13 it is estimated that $29.0 billion (or about 36 per cent) of the Department’s appropriations will support people living in regional Australia. Of the Department’s estimated expenditure to support regional Australia, 98 per cent is comprised of income support and family assistance payments such as the Aged Pension, Disability Support Pension, Family Tax Benefit and Paid Parental Leave.

  3. feelthebern

    The whole tax system, welfare system, health system needs to be overhauled.
    But as Mitt Romney said “people want stuff”.
    So that will never happen.
    We are already past the event horizon where those who “get stuff” from the government, out number those who actually pay for it.
    As much as I didn’t like Romney, 3 million registered Republicans didn’t turn out to vote for him as they kinda wanted that Obama-fraud’s sugar money.
    Idiots.

  4. Pedro

    “It’s possibly been said upthread, but this is a clear dogwhistle by Howes to the 20 and 30 somethings. Who demographically are gaining on the Boomers in numbers , probably exceeded.”

    I’m not sure why his motives matter. You can have a good idea for the wrong reasons. Feel free to say:
    Howes is a fuckwit, taxes should be lower and the assets test exemption for the family home should be adjusted so that it only applies up to a certain value, maybe some relationship to median prices in the locality.

  5. H B Bear

    Sinc – would you say that Australia has the balance between income or “flow” taxes and wealth/asset taxes about right then?

  6. Grigory M

    Howes is a fuckwit.

    Let’s celebrate nothing about him

    There you go, Pedro. Fixed it for you.

  7. feelthebern

    If you are arguing on the pure economic logic, this stands.

    On the political substance this is a great distraction which is red meat to the ALP base.

    Token, I agree.

    Has anyone checked to see if this is factually correct?
    Gab, I went looking, but I couldn’t find anything to corroborate it.

  8. Jessie

    Gab at 3.34
    Linky?

    Hilarious comment on Magnificent takedown Gab. So true

  9. Helen

    If you are taxing people on the money they have earned with which leftovers they have bought/built their house and now you want to tax them on some guesstimate value of the same home (because actual sale is the only true value) then you are double taxing them. You are comparing the value of the whole today in isolation without considering the starting value plus inflation. The difference in the two can be the only new tax that would not be double taxation.

    And since the whole valuation system is fucked, with transfer of assets to the crown through the use of depreciation, once again home owner is shafted.

  10. Pedro

    Taxes on wealth should be zero. But means testing for wealth is not a tax.

  11. Dan

    Howes appears to be starting from the incorrect assumption that land supply for housing is scarce. It isn’t.

  12. tgs

    If you are taxing people on the money they have earned with which leftovers they have bought/built their house and now you want to tax them on some guesstimate value of the same home (because actual sale is the only true value) then you are double taxing them.

    In what universe is not being given a government handout a tax???

  13. feelthebern

    As stated up thread by tgs:
    How is it that so many people are so bad at reading comprehension?

    Its as bad as a Q&A audience is at listening.

  14. Pedro

    Helen, it’s not tax. I don’t tax you by not giving you money. All I do is calculated your eligibility for a pension. It’s hardly unreasonable to assume you could downsize your home and invest the surplus to reduce your burden on the taxpayer. If you bought shares instead of a home then that is how your pension would be assessed, and you would have bought those shares with the same after tax income and had the same inflation effects. Sheesh

  15. Jessie

    Just started reading

    Token at 11.11 (second comment p1)
    +

    As if he has the cognitive ability . Seriously.

    He went from the usual ALP university club to the AWU. What experience does he have beyond inane populist tub thumping, bullying small businesses and burying scandals?

    wasn’t there some talk by state or local govt to help oldies stay in their homes (on big blocks) and assist them to subdivide. Govt services could persist at the same time I s’pose along with increase rates/suburb
    A drug induced version of granny flats

  16. A Lurker

    I lurked my way about halfway through the thread and reached my limit.

    I know I’m going to come across all soft and sentimental – but step away from the hard finances of this issue and look, really look at what the family home represents to an oldie.

    The family home is all about tangible memories – of running your hand across a wall and remembering how your now grown-up son drew upon it with crayons when he was a little mite. It’s about walking in the backyard and remembering which shrubs and trees you and your husband/wife planted together. It’s that special spot under the tree where the long deceased family dog is buried. It’s the bedroom where as a young married couple you first got to know each other in an intimate way. It’s the kitchen where family meals were cooked, Christmas banquets were prepared, and where husbands and wives clung to each other when hearing bad news, or rejoiced over good news.

    I don’t care if those houses were modest cottages that now have become million-dollar investments due to their inner-inner city location – they still are homes, and when you get to the age where one’s own parents and grandparents are long dust, when you have buried a spouse, or children, or both, then for many, memories are all they have to sustain them – and people like Howes (and a few here) want oldies to choose between the pension, or living in a home filled with memories. Sure, push them out of the family home, put them in a little unit in a retirement centre and then watch them drift downhill as they are deprived of every meaningful thing except four walls about them, a roof over their head, and a plate of mashed-up something that barely resembles food.

    Let our oldies keep their dignity – I’d much rather rip every welfare dollar away from the lazy unproductive ‘youff’ than touch a single cent of the pension, or make life that much harder for our elderly.

  17. Hubert East

    Hockey had it right today. We end the age of entitlement today. People must be personally responsible for themselves as far as they can be.

    OK then, Bruce of Newcastle! But that is a bit over the top to say I have to piss off somewhere else because well more than half the population is rorting on general welfare, the health system and trade union grafters.
    Its about time most of these rorts, (including the A Bloody C), are consigned to the tip. Then Hockey has made his point.

  18. Gab

    Total Social security and welfare represents 35% of the total budget or $376.3 billion

    $36.7 billion is for income support to seniors

    Howes said $18 billion – 4.5 per cent of the total budget – is being handed out each year to people who are worth over half a million dollars.

    http://www.budget.gov.au/2012-13/content/bp1/html/bp1_bst6-01.htm

  19. Gab

    the objective being to deprive asset rich but income poor individuals of their property for the “greater good”.

    Socialism 101.

  20. Grigory M

    In what universe is not being given a government handout a tax???

    In the universe that I referred to above, where the “handout” is actually a pre-paid entitlement for those who may need it. Perhaps it might be likened to an income protection insurance contract.

  21. Sinclair Davidson

    Can I just point out that the age pension is means tested – its just not means tested the way some people would like.

  22. Bruce of Newcastle

    I’ll be interested to learn just how it’s suggested the relocation of Doctors etc will be achieved given that generous financial incentives have so far failed to attract such Professionals to the sticks.

    You wouldn’t move to Ballina for a half mill salary Bruce?

    Currently there is about 1 doctor per 500 people. The average weekly earnings of a doctor is $2,862.30 per week. (linky) Half a mill per year would be quite attractive. If that doctor saw 500 pensioners who are now self funded that saves the country $29463.50 x 250 = $7.3 million per year plus change. I think that would be a good investment by the government. Roughly 1470% ROI.

    OK add few more services. But the saving would be immense and would actually pay for itself through increased capital gains as the investment amounts went into ASX top 20 dividend shares, raising their prices.

    Pension costs are huge. If you can find a decent way to reduce them by leveraging off capital city house prices then the country is served well. And the pensioners. Who wouldn’t want $50 grand investment income a year instead of less than $30k?

  23. kae

    By the way, my mother will be 79 this year and is a widow.

    Cali

    I’m watching mine being spent – and loving every minute of it.

    Me too. We’ve even bought her a couple of Going SKIing stickers for her car.

  24. Grigory M

    Can I just point out that the age pension is means tested – its just not means tested the way some people would like.

    Yes, Sinc. The age pension is means tested in two ways – an assets test, and an income test. As I understand it, the test that results in the lower entitlement determines the amount of pension paid.

  25. Rabz

    Interesting division in the views of contributors to this thread.

    There seem to be two main groups, the:

    - “no welfare for rich ol’ property owners” group

    - “they’ve paid taxes all their lives, you commie thugs” group

    Not to mention the proponents of the view that Piggy Howes wants to turf poor ol’ pensioners out of their homes and then hand the vacant abodes over to unionists, gen Y hipsters, dole bludgers and ruffugees (BIRM).

    As I tried to point out in my lengthy comment above, the issues are far more complex.

    Screechy slogans and reactive emoting will not make these issues disappear.

  26. I’m watching mine being spent – and loving every minute of it. There is nothing more repulsive that a ‘loving’ child who begrudges their parents little luxuries with an eye on the money. Mum and Dad, in their mid 80′s have made more new friends in the past 2 months than they made in 40 years of leafy Sydney suburbia. And of course, as a couple, they are their own little nation state. It would be different for a widow or widower.

    The thing I object to most is the ‘one size fits all’ mentality of governments. A move like the one I described could be the death of some elderly people.

    Calli, that’s how I feel too.

    It’s not MY money, it’s my parents’ money. They worked hard, and now they can either enjoy it any way they like or spend the lot on plastic surgery. I am not counting on inheriting anything, because it’s too tempting to spend now and then get antsy later when you expect your ‘dividend’.

    But even with this in mind, I’d be happy to see the family home sold and used to pay for the expense of their medical care, after they die.

    I think we do have to have this discussion. Our demographic has changed a lot, we’ve got a struggling housing market with insane prices due to shortages in our capital cities, and an aged care system that’s just getting more and more expensive.

    I am NOT in favour of euthanasia, and in fact I think that this kind of ‘locked up’ capital of the large family home actually tempts children to consider speeding their parents on their way when they have a long illness.

  27. lotocoti

    So the lesson, Nana, is never buy, always rent and blow every spare cent on scratchies.

  28. As I tried to point out in my lengthy comment above, the issues are far more complex.

    On ya, Rabz.

  29. feelthebern

    Twostix is making sense on the other thread.
    I’ll leave him to post here if he wants to.

  30. H B Bear

    Can I just point out that the age pension is means tested – its just not means tested the way some people would like.

    An assets test that omits the single largest asset most people are ever likely to own is unlikely to be much use.

  31. Pedro

    “In the universe that I referred to above, where the “handout” is actually a pre-paid entitlement for those who may need it. Perhaps it might be likened to an income protection insurance contract.”

    Err, no it isn’t. The taxes you pay now are funding current govt expenditure. Some people like to think of welfare as a social contract and the pension being the intergenerational element and Henry E writes about income smoothing across the lifetime. What can’t be denied is that current tax payers have a much worse deal than our nanas.

  32. Infidel Tiger

    So the lesson, Nana, is never buy, always rent and blow every spare cent on scratchies.

    That’s about right.

    2 families who both earned the same income all their lives: One squandered it on rent boys, dogs and Chinese food (he was a union official). The other scrimps and saves and pays off the family home.

    The first is entitled to the pension, the second isn’t.

  33. And Another Thing

    We don’t have to have any discussion. If, for some reason, elderly folk are not supered up, their home is still their home. They have paid taxes all their lives and probably have been limited in being able to save by adverse circumstances. They are entitled to live in their home, which they have paid for. They are entitled to the pension, or the part of it they get under current arrangements. That’s all there is to it.

  34. Token

    The first is entitled to the pension, the second isn’t.

    Don’t forget how they ensure they get all the other handouts across their lifetime while they get angry at the scrimp & save types for being rich 1% tossers.

  35. Pedro

    Sure IT, the undeserving poor are the suckiest part of welfare. Sadly, there is no way to sort out deservingness so we just have to suck it up. But for sure we should not tax savings (including on first earn and investment) until drawn down.

  36. Grigory M

    current tax payers have a much worse deal than our nanas

    In what way/s?

  37. twostix

    He went from the usual ALP university club to the AWU. What experience does he have beyond inane populist tub thumping, bullying small businesses and burying scandals?

    Did anyone mention that in 1996 Paul Howes travelled to Cuba to live for six months as a Castro supporter?

    1996.
    Nineteen ninety six.
    Fidel Castro.
    Supporter.
    Paul Howes.

    How is this lunatic allowed anywhere near the public?

  38. Pedro

    “We don’t have to have any discussion. If, for some reason, elderly folk are not supered up, their home is still their home. They have paid taxes all their lives and probably have been limited in being able to save by adverse circumstances. They are entitled to live in their home, which they have paid for. They are entitled to the pension, or the part of it they get under current arrangements. That’s all there is to it.”

    There’s your socialist Gab.

  39. feelthebern

    They are entitled to the pension, or the part of it they get under current arrangements.

    So do we maintain the status quo with everything ?
    No welfare reform?
    No tax reform?

  40. H B Bear

    That’s all there is to it.

    OK then. Glad that’s sorted. Thanks everyone.

  41. Grigory M

    How is this lunatic allowed anywhere near the public?

    And why is anyone paying attention to anything he writes?

    In the Financial Review, FFS.

  42. feelthebern

    That’s all there is to it.

    Tax reform.
    Nope, there’s a structure currently in place.
    Ah, ok. I’ll keep an eye out for the memo.

  43. Gab

    So the lesson, Nana, is never buy, always rent and blow every spare cent on scratchies.

    Yes, this brain fart from Howes certainly sends out a strong message to freeload off the government all your life becuase not even the family home is safe. Cradle to the grave socialism becuase “it’s fair”. Communes are making a comeback!

    Imagine going over to Nana’s place, valued at $500,000 current market, she’s in her 80s and receives no income other than the pension, and telling her she will loose her only income if she doesn’t sell her house to move to a smaller, cheaper house.

    She does as she has been forced to do, sells the place buys a smaller place worth say $250,000 and after costs and taxes is left with $200,000. She’s miserable but now she has enough money to live on for about four or five years. In the meantime, the new place she bought is valued at $400,000 but the assests means test has been lowered to property valued at $400,000. So she will still not receive the pension and has to again sell her place for a smaller place.

    How is this even fair to someone who has paid taxes all her working life ?

  44. Mike of Marion

    If the Government needs the money to pay pensions, bring the Trade Unions under the Company law, takeaway their current Tax exemption and Consolidated Revenue wouuld be better off.

  45. Bruce

    That half-a-mil salary that BoN proposes to attract Doctors to Ballina certainly hasn’t been sufficient in plenty of other towns even when topped up with a house built to the Doctors spec. (cost no object) ,a fully maintained prestige vehicle and other pickings . But what’s the point of attracting Doctors to Ballina if dispossessed pensioners can’t afford to buy a house there? See how the theory works when you go just a little way inland where housing might be affordable, wild horses couldn’t drag medical professionals into those places anyway it seems that half-a-mil is no longer the magic number.There was a report a couple of weeks ago about Doctors (GP’s) in Sydney earning over $600K by providing house call services without moving to the sticks.

  46. Gab

    And why is anyone paying attention to anything he writes?

    Because it is most likely to be adopted by the Abbott government as the whole idea is the brainwave of the productivity commission, not Paul Howes.

  47. Fisky

    It must be remembered that Paul Howes went on a study tour of Cuba when he was in his mid-teens. He pretends to be a “right wing unionist” but the mask slips every so often.

  48. Yes, this brain fart from Howes certainly sends out a strong message to freeload off the government all your life becuase not even the family home is safe. Cradle to the grave socialism becuase “it’s fair”. Communes are making a comeback!

    The family home is still going to be safe. Howes is just saying that if you’re worth a million dollars, you probably shouldn’t receive welfare.

    It’s amazing how many “fiscally conservative” people ITT disagree.

  49. Infidel Tiger

    That half-a-mil salary that BoN proposes to attract Doctors to Ballina certainly hasn’t been sufficient in plenty of other towns even when topped up with a house built to the Doctors spec. (cost no object) ,a fully maintained prestige vehicle and other pickings .

    Once the NBN is finished we won’t even need country doctors. They’ll be able to check your prostate and give you a pap smear from their office in North Sydney. Just make sure you aren’t on chat roulette when you do it…

  50. As I tried to point out in my lengthy comment above, the issues are far more complex.

    Not the issue as to why Piggy is dog-whistling while pointing to squirrels (sorry for going the whole hog on animal metaphors). Tax equity is too profound for Howes, but unfortunately not envy.

  51. Gab

    The family home is still going to be safe. Howes is just saying that if you’re worth a million dollars, you probably shouldn’t receive welfare

    No, he’s saying if the family home is worth half-a-million or more, you won’t get the pension. Pension being the only income for those sitting in a home worth $500,000. So then they are forced to either starve in that home or sell it and live elsewhere. That’s the choice.

  52. Bruce of Newcastle

    They are entitled to live in their home, which they have paid for. They are entitled to the pension, or the part of it they get under current arrangements. That’s all there is to it.”

    Forgot about something there. When they gracefully exit this mortal coil there is a $1 million dollar house just sitting there, afterwards.

    Who owns it? The government who paid a million in pensions or the heirs who did squat? Or do you introduce massive death duties, which are about the most unjustly progressive tax imaginable?

    Reverse mortgage is one answer. A terrible one, since it hangs over their head like a smelly Sword of Damocles every single day. I know my own parents who are in mid 70′s, they would hate that. And fear it.

    Better a positive answer. A nice move to the country and secured income. All paperwork done for you.

  53. Pedro

    “How is this even fair to someone who has paid taxes all her working life ?”

    I don’t understand why people keep making this claim. Clearly you don’t think the taxes you pay now entitle you to unlimited loot from the govt in your dotage (at least I hope you don’t). So the debate is about line-drawing and the amount of taxes you paid are irrelevant to the position of the line.

  54. feelthebern

    She does as she has been forced to do, sells the place buys a smaller place worth say $250,000 and after costs and taxes is left with $200,000.

    Gab, I’m not trying to pick a fight. But:
    1) no CGT on her selling property;
    2) 2% comm on selling property ($10k);
    3) stamp duty on the $250k new property ($7240).

    This topic has you really shooting from the hip.
    Its just a discussion on welfare reform.
    Relax.

  55. Gab

    You need to settle down, Bern. I’m presenting a different viewpoint to you so naturally you get upset.

  56. Bruce

    There’s all those mainland detention centres that Mr.Morrison’s be shutting down now going to waste.Perhaps Piggy,when he regains power, can make a start by confiscating properties and shipping a few thousand pensioners off to the centres for a sort of a trial run and if it proves successful ( profitable that is) there’s no reason why the scheme couldn’t be expanded to accommodate the lot of them.

  57. Gab

    I don’t understand why people keep making this claim. Clearly you don’t think the taxes you pay now entitle you to unlimited loot from the govt in your dotage (at least I hope you don’t).

    Please relax and don’t get hysterical but I’d hardly describe the pension as “unlimited loot”.

  58. Fisky

    The thing is – where the fuck are they going to find a place worth less than 500K and still have enough left for their retirement? They’ll have to move to the backwoods of Tassie, or possibly in Arnhem Land to find a place in that price range. Paul Howes demonstrates once again, you can take the boy out of Havana, but you can’t take Havana out of the boy.

  59. Pedro

    “No, he’s saying if the family home is worth half-a-million or more, you won’t get the pension. Pension being the only income for those sitting in a home worth $500,000. So then they are forced to either starve in that home or sell it and live elsewhere. That’s the choice.”

    You obviously did not read the article because he actually said:
    “Instead of forcing home sales, the commission proposed a government-backed Australian Aged Care Home Credit scheme, which older Australians could flexibly draw against for their care co-contribution and other aged care accommodation costs up to a specified limit. For older Australians wishing to sell their home, which in many cases may have outlived its utility, the commission proposed no longer punishing them for the decision. Instead they could keep their entitlements by investing the proceeds in an Australian Age Pensioners Savings Account.”

  60. tgs

    The family home is still going to be safe. Howes is just saying that if you’re worth a million dollars, you probably shouldn’t receive welfare.

    It’s amazing how many “fiscally conservative” people ITT disagree.

    It really is amazing.

  61. Gab

    When they gracefully exit this mortal coil there is a $1 million dollar house just sitting there,

    Is it? Or was it sold off to pay for medical expenses and a place in a nice, clean private aged-care facility to care for Nana when she had the stroke and the heart-attack?

  62. .

    Gab – so other than he set the limit too low, how is he wrong?

    What obviously makes Howes insincere is that many “working families” are in circa 500k homes on the APS tit, and earn childcare exemptions at income levels, both of which their forebears never dreamed of.

  63. gabrianga

    And, YOBBO, if you worked for 45/50 years paying taxes and managed to end up in a $1 dollar home in say Darwin or the Westies you don’t qualify for a pension?

    I for one don’t need your “expertise” to interpret what Howes is saying as this song has been in Labor’s Top Ten for many years.

  64. Pedro

    “Please relax and don’t get hysterical but I’d hardly describe the pension as “unlimited loot”.”

    I think I can pretty confidently say that I’ve been about the least hysterical person on this thread.

  65. Gab

    You obviously did not read the article because he actually said:
    “Instead of forcing home sales, the commission proposed a government-backed Australian Aged Care Home Credit scheme, which older Australians could flexibly draw against for their care co-contribution and other aged care accommodation costs up to a specified limit. For older Australians wishing to sell their home, which in many cases may have outlived its utility, the commission proposed no longer punishing them for the decision. Instead they could keep their entitlements by investing the proceeds in an Australian Age Pensioners Savings Account.”

    Well, yes I did read it and I posted the same passage above.

    Regardless of the pretty words and no declaration of how much interest will be charged for the line of credit, why should people who own their $500,000 home and no other assets or income be forced into this situation in their old age?

  66. feelthebern

    Gab, just pointing out factual errors you are posting.
    Like the $50k leakage in costs/taxes etc that you say you lose when you sell a $500k home & by a $250k one.
    If you really think that happens:
    1) get new real estate agent;
    2) get new accountant.

  67. So then they are forced to either starve in that home or sell it and live elsewhere. That’s the choice.

    Really, those are the only 2 choices?

    What about renting out the rooms in your million dollar home to Uni students or young people?

  68. tgs

    It appears to be a common technique to claim that someone you’re having a disagreement with is getting upset or emotional about the issue. It infers that they aren’t being as rational as the person making the claim. It’s often resorted to when the person making the claim doesn’t have much of an argument to back up their statements.

  69. Pedro

    “Or do you introduce massive death duties, which are about the most unjustly progressive tax imaginable?”

    Wow, it’s better to pay progressive taxes when alive than when dead? Who new.

    Sheesh, Bolt whinges about tribalism and group think on the left. It’s just as bad on the right! Reason, don’t react!

  70. Fisky

    Look, it’s a waste of time going into the fine print. This is Piggy Howes we’re talking about. He is a card-carrying Castroite who wants old people to live in East German style 20 m2 apartments. No doubt about it.

  71. Gab

    By the way, exactly how does Paul Howes know that half the pensioner population own their own homes valued at $500,000 or more?

  72. Bruce of Newcastle

    There was a report a couple of weeks ago about Doctors (GP’s) in Sydney earning over $600K by providing house call services without moving to the sticks.

    When I was about to enter uni I could’ve gotten a teachers’ scholarship. It was attractive, since it would pay living allowance even though I’d have to work as a teacher for 5 years. I chose no, worked my way through uni and was poor.

    Set aside 100 places per year in each state for people not quite at TER level for medicine (which is stupidly high), make them pass a touchy-feely exam (since many TER qualified medicine students are maniacs) and employ them on $500,000 a year for 10 years. I think you would fill the quota pretty quickly.

    These days governments seem incapable of working out innovative non-ideological answers which save money.

  73. .

    Pedro

    No one likes death duties.

    We’re better off paying proportional taxes at a non-usurious rate when we consume…

  74. Gab

    What about renting out the rooms in your million dollar home to Uni students or young people?

    What becuase that’s for the good of all?

    What about living peacefully in your own $500,000 home when you’re old?

  75. Pedro

    “why should people who own their $500,000 home and no other assets or income be forced into this situation in their old age?”
    So what is the number Gab? $1mil? $750k? $1bil? Or is that the choice $500k or nothing? We can’t get past the detail to look at the big picture and suggest, like I did, some relationship to median prices in their locality?

  76. Fisky

    dogs and Chinese food

    But I repeat myself!

  77. Pedro

    Mark, I don’t like them either, but it’s obviously silly to say taxing you when dead is worse than taxing you when alive.

  78. Fisky

    By the way, exactly how does Paul Howes know that half the pensioner population own their own homes valued at $500,000 or more?

    Because they are class enemies that didn’t vote Labor in sufficient numbers. That’s how he knows. He wants to punish everyone who voted Abbott to put a stop to union corruption.

  79. Gab

    So what is the number Gab? $1mil? $750k? $1bil? Or is that the choice $500k or nothing?

    If you had read the article you would know I was quoting Paul Howes who said $500,000. And I have also added the “or more” in.

    People who own homes worth $1billion and no other assets are unlikely to be able to afford living in the home are they now, Pedro. Upkeep, maintenance, insurance will hardly be covered by the pension, so yeah, they’ll sell and downscale – of their own free will not becuase the government forced them into it.

  80. Fisky

    So what is the number Gab?

    $500K is not rich. It is barely above average. Totally ludicrous to be penalising people at this level.

  81. brc

    I have a big problem with changing the rules after the game. People saved in housing rather than sup’n because it was tax exempt and not (heavily) means tested. Once they’ve retired, it’s a little late to say “OMG, you’re fucking rich and we hate people like you so the rules changed.” Same with SMSFs. Don’t encourage saving for 40 years, and then say “Here’s a great big new tax.”

    This is the thing. For the people involved, most have just stayed in a home that they like, where they are conmofortable. It’s other people who want to buy it off them that set the value. Thought experiment. Old digger has a VC. Market price for the VC in millions. Should his pension be clipped because be has a flail e asset? What about the guy who knew Picasso, maybe they went to school together. Picasso gives him a painting for a birthday present 50 years ago. Painting is a prized possession, but guy has no other assets. Should his pension be clipped? Old guy bought a GTHO Falcon in the 1970s,’cause he liked them, maybe he worked for Ford. Car is now worth $800k. Do we clip his pension?

    What we are talking about is people who followed the script, who knew they’d get a pension, who had no idea hipsters would want their old family home one day. Through actions not of their own, they have had a value appreciation windfall on something they don’t want to sell (and which therefore has no market price). People want to reduce the pension to those people because others covet what they have? They were not speculating when they bought these things. You can’t change the contract on them now.
    Well, I want no part of that.

  82. Bruce

    BoN,do you think you’d ever get that past the greatest closed shop in this country,the AMA? You need to see the barriers they’ve managed to erect in the way of even highly qualified overseas Doctors being given registration.Qualifications from the best Universities in Europe and Asia don’t mean a thing.

  83. Bruce of Newcastle

    a $1 million dollar house just sitting there,

    Is it? Or was it sold off to pay for medical expenses and a place in a nice, clean private aged-care facility to care for Nana when she had the stroke and the heart-attack?

    So, Gab, you are saying the family home is off limits for pension qualification but not off limits for nursing home entrance fees? Or ongoing medical costs. What happens when one partner enters an nursing home and the other does not? Do you get a mortgage on the home to pay the fee, thereby committing the person living there to financial torture? That is what a reverse mortgage is, and mortgaging a house to allow your partner to enter a good nursing home is very close to that – since you have no income but your pension.

    Now if a Sydney couple chose to move with assistance to a country location, and invested the differential, it would be equitable to draw from the investments to pay for the nursing home. What was left could be topped up with part pension if required, with the usual means test arrangement. No financial suffering. The new family home in the country would be untouchable as a condition of the move.

  84. feelthebern

    You can’t change the contract on them now.

    I am not relying on the government to provide for me when I am old.
    If you outsource that risk so the government to dictate terms, you are really doing yourself a disservice
    And it isn’t a contract.
    Its a hope or a want.

  85. Louis Hissink

    Pedro,

    Have to say your argument is spot on.

    I remember years ago some public servants, and others from the private sector, with massive superannuation payouts blowing it all on overseas trips, caravans and cars, etc, running out of money and then going onto the old age pension; that annoyed me greatly. Their logic? Because they paid taxes all their lives, they expected to get some those back as a pension.

    Don’t give up!

  86. Demosthenes

    The existence of assets is evidence but not conclusive and the tax and welfare system can never be sufficiently clever to deal with that sort of merit argument.

    That’s quite thought-provoking, Pedro.

  87. kae

    GM

    There goes Movember. What if they prefer Pal?

    Goodness, I had the very same thought, “Don’t most pensioners prefer Pal?”

  88. Gab

    Bruce, in both those cases the choice was up to the homeowner(s) to decide how to handle the situation using the equity in the home they own and not forced on them by the government.

  89. Fisky

    I can’t believe we are allowing ourselves to be trolled by a supporter of Fidel Castro. He’s just looking for ways to distract people from union corruption. We must never, ever respond to issues that Labor supporters raise, except to troll back.

  90. Pedro

    “If you had read the article you would know I was quoting Paul Howes who said $500,000. And I have also added the “or more” in.”

    And if you’d read my question you’d have noticed the point I was making. Namely, that there is a broader issue to discuss than the exact proposition Howes put, and it wasn’t an exact proposition. Sinclair’s post questioned the basic idea and not the specific number. He thinks it’s an attack on granny and I think that the home exemption can’t rationally be supported and that a sensible rule should be included.

    brc, rules get changed all the time.

  91. gabrianga

    Such a revolting piece of faeces our man Pedro,

    “Everyone knows fish is good for the brain. Helps ward of dementia”

    By the way I think it was “Whiskas” not “Whiskers” Pedro meant in another of his “comedic comments” but why be accurate when you can be “cute”

  92. Grigory M

    current tax payers have a much worse deal than our nanas

    In what way/s?

    Pedro, could you answer my question, please?

  93. Pedro

    Louis, I remember relatives stupidly putting money in those interest free accounts rather than lose their pensions. And you should have seen them explode when the means testing was introduced. All of them Country Party voters to boot.

  94. Infidel Tiger

    I remember years ago some public servants, and others from the private sector, with massive superannuation payouts blowing it all on overseas trips, caravans and cars, etc, running out of money and then going onto the old age pension; that annoyed me greatly. Their logic? Because they paid taxes all their lives, they expected to get some those back as a pension.

    Under the corpulent communist’s scheme they can still go on the pension. There’s no penalty for being a useless turd.

  95. Pedro

    Grigory, somebody already did. But if you look at the money now spent on pensions (and healthcare) compared to 40 years ago as a percent of GDP you’ll see it. This is old news and you should be embarrassed to have to ask.

  96. Makka

    “Howes is a fuckwit,”

    That’s just being naive. Howes is not a fuckwit, he is playing the system with cunning and guile. Underestimate this slimeball at your risk. He has the PM job in his sights. Just remember Hawkie and TLS are from Union pedigrees just like Howes. This is a well worn path. This is another step along the path for Howes.Inter-generational envy is a growing issue he is tapping into.

  97. .

    This thing is a bloody distraction but if the LDP or L/NP come up with a good way of tackling all of this, Howes can pat himself on the back for locking the ALP out of Federal Cabinet for a decade.

  98. Pedro

    gabrianga, maybe I’m not funny, but at least I’m not stupid.

  99. Gab

    And if you’d read my question you’d have noticed the point I was making. Namely, that there is a broader issue to discuss than the exact proposition Howes put, and it wasn’t an exact proposition.

    Perhaps you didn’t read the rest of my answer then on the silly $1billion number you stated.

    People who own homes valued at over say $1.5million are hardly likely to stay in them if their only income is the pension. They couldn’t afford it, they would sell,and downscale, live off any proceeds until such time as they were allowed to apply for the pension. The difference being, they are reacting and choosing based on market forces and not based on a threat from the government.

  100. Bruce of Newcastle

    BoN,do you think you’d ever get that past the greatest closed shop in this country,the AMA?

    Easy, when you raise this idea also casually mention there’s a rumour you’ve heard. About a review into doctor accreditation might be about to take place with view of introducing a certification system to be run by the Dept of Health.

    The AMA would fall over themselves to agree to a limit scholarship and indentured salary arrangement.

    We’ve all watched Yes Minister. Amazing what you can do if you with a little innovation.

  101. .

    Fisk

    Howes will never be Prime Minister.

    I imagine some content from therealcuba.com would scare the electorate off him.

  102. dismissive

    This site (not one I have ever read before) has quite a good breakdown of the Australian Aged pension. Without reading and understanding the history much of what is in this thread may well be described as uninformed.

    1946
    Prime Minister Chifley agreed and established The National Welfare fund as at 1/1/1946. A “Trust” Fund with the Parliament as “Trustee.”
    The Compulsory Contributions (levy) commenced as at 1st January 1946.
    It was shown separately on the personal Tax Assessments for 1946, 1947, 1948, 1949 and 1950 and the compulsory levy was properly paid straight into the Special “Trust” fund and Welfare claims were paid out of the fund.

    The balance in the fund in 1950 was almost 100 million pounds.

  103. tgs

    The difference being, they are reacting and choosing based on market forces and not based on a threat from the government.

    Not being eligible for a government hand out is not a threat.

    Not being eligible for a government hand out is not a tax.

    Jesus.

  104. Louis Hissink

    Interesting to remember that Joh Bjelke Peterson apparently never opted for the parliamentary pension etc – lived his retirement self funded.

  105. Fisky

    That’s just being naive. Howes is not a fuckwit, he is playing the system with cunning and guile. Underestimate this slimeball at your risk. He has the PM job in his sights. Just remember Hawkie and TLS are from Union pedigrees just like Howes. This is a well worn path. This is another step along the path for Howes.Inter-generational envy is a growing issue he is tapping into.

    That’s right. He is covering his bases, pretending to be a “thoughtful” leader and intellectual, occasionally running against his own side, but always on maneuvres. He was the biggest supporter of union stooge Gillard, and even bet his house on her still being PM at the 2013 election (btw – did anyone hold him to that?) Never trust these people. Ever.

  106. MemoryVault

    Those who refuse to learn from history are doomed to repeat it.

    The Age Pension, Widows Pension, Invalid Pension (as originally defined), and Orphan’s Pension, are NOT “welfare” payments. They are the result of a compulsory National Superannuation Scheme set up in the early 1900′s. Up until 1971 the annual PAYG Income Tax Return was even headed “Income Tax and Compulsory Superannuation Return for Financial Year . . . .”. The levy was 9%.

    The monies collected were then paid to State Housing Commissions in each state, and used to finance the purchase of land and build houses. Most pre-1970′s metropolitan suburbs were developed this way. Interest from the loans was used to pay the above pensions and was very successful.

    In the late sixties the politicians of the day decided to spend the accumulated funds on pork-barreling “infrastructure”, on the basis that Australia was a young and growing country, and there would always be a growing base of new taxpayers to fund the pensions from general revenue.
    However, the underlying legislation was never rescinded and to this day 9% of everything you pay to the taxman on your income is STILL due to that original scheme.

    Now you pay that 9% AND 9% into a compulsory “private” super fund, and because you refuse to learn from history and have swallowed the bull that these pensions are welfare, you are about to get screwed all over again.

    Those of you much under sixty, without a self-managed fund, who think you are ever going to see any of your private super, except as an asset and means tested “welfare payment”, are living in la-la land.

  107. blogstrop

    We are really having an argument based on hugely escalated house prices. That in turn has been examined, here and elsewhere, and it is largely due to government taxes and regulations, tardy freeing up of land for development – there’s stacks of land in Sydney’s Northwest and Southwest.
    You can have a pretty ordinary home in the western half of Sydney, and you’d be all the way to somewhere beyond Blacktown before it’ll be worth less than $500,000.

    To turn around and pretend that these are rich people is ludicrous. Sell and get somewhere cheaper? Even if you free up most of that capital you’re probably only swapping one problem for another. A super fund of $450,000 will yield about $18,000 p.a. in a bank account these days. Too late to park it in super ($50k limit per annum), and even if you could, that would get socked 15% ($67500), so your earning off the diminished amount of $382,500 would be around $22,950 p.a. which won’t cover decent aged care and leave you anything at all.

  108. C.L.

    To turn around and pretend that these are rich people is ludicrous.

    No no. We have a hitherto unknown army of Paul Howes disciples here who want these people evicted so that Labor/Greens hipsters can move in ASAP.

  109. Gab

    What we are talking about is people who followed the script, who knew they’d get a pension, who had no idea hipsters would want their old family home one day. Through actions not of their own, they have had a value appreciation windfall on something they don’t want to sell (and which therefore has no market price). People want to reduce the pension to those people because others covet what they have? They were not speculating when they bought these things. You can’t change the contract on them now.

    Agreed. In fact if this productivity commission idea being espoused by Howes is so wonderful, let Howes declare a start date or I can suggest one: the primary home will be subject to assets test for the pension beginning in the year 2030. That’s fari and plenty of notice for the generation after the baby boomers to prepare themselves.

  110. blogstrop

    Correction: not a super fund of $450,000, but an amount of $450,000 will yield $18k p.a. etc

  111. 2dogs

    A compromise proposal:

    1. Assess the value of the home, but do not actually reduce the amount of the pension.
    2. Instead, the amount paid by the pension is debited to a reverse mortgage on the home, only collectible on death.

  112. Grigory M

    By the way I think it was “Whiskas” not “Whiskers”

    Good get, gabrianga. Hence my above reference to Movember. :)

  113. Bruce of Newcastle

    Bruce, in both those cases the choice was up to the homeowner(s) to decide how to handle the situation using the equity in the home they own and not forced on them by the government.

    Yeah, Gab, the choice to have a unpayable reverse mortgage interest bill rising and rising every day. I know my mum, that sort of thing would have a terrible effect on her mental state.

    Think about what you are imposing on your parents. What is worse, daily financial worry or a once off assisted net costless move to the country?

    If they chose not to take them move, well people can choose to torture themselves if they want.

    TANSTAAFL.

  114. Grigory M

    Grigory, somebody already did.

    Can’t say I saw it, Pedro. Since it was your statement I hoped you would verify it, but maybe it was just a throwaway line.

  115. feelthebern

    We have a hitherto unknown army of Paul Howes disciples here who want these people evicted so that Labor/Greens hipsters can move in ASAP.

    FFS.
    Just because one reckons someone (or a couple) with a $2million house shouldn’t get the full pension, doesn’t make one a Paul Howes disciple.

  116. Gab

    Do retirees living overseas and owning their home at the equivalent Australian value of $500,000 or more get an Australian pension? If so, why?

  117. Louis Hissink

    For those interested, there’s a new reverse mortgage system just put in place late last year, about which I know DS.

  118. Gab

    with a $2million house shouldn’t get the full pension,

    LOL as if.

  119. Steve of Glasshouse

    As always, another Howes’ thought bubble has been flayed; underminded even, but it will probably cause some angst amongst retirees. Onya Paulie..

  120. Token

    Do retirees living overseas and owning their home at the equivalent Australian value of $500,000 or more get an Australian pension? If so, why?

    As I noted above, you close one gap in the system and another opens.

  121. Token

    Just because one reckons someone (or a couple) with a $2million house shouldn’t get the full pension, doesn’t make one a Paul Howes disciple.

    Good to see you are working small to big and have the 304 or so people who fit into the bracket in your sights.

  122. Grigory M

    Easy, when you raise this idea also casually mention there’s a rumour you’ve heard. About a review into doctor accreditation might be about to take place with view of introducing a certification system to be run by the Dept of Health.

    The AMA would fall over themselves to agree to a limit scholarship and indentured salary arrangement.

    Yeah, sure, BoN. That’s quite a sense of humour you have there. The Depts of Health, both State and Commonwealth, as well as the hospitals and other health services are well and truly owned by the doctors and the AMA. What you suggest will simply be laughed at.

  123. MemoryVault

    Dismissive,

    Thanks for the link.
    I’ve been relying on my memory of the rantings of my grandfather pre- 1970, when I was still a teenager. Nice to get the actual facts.

    Pity apparently none of the self-proclaimed “Wise Ones” who inhabit this blog bothered to read it.

    May God grant me the time to live long enough to see them all screwed over (again) by Joe Hockey and his “Infrastructure Bonds”.

  124. Demosthenes

    We are really having an argument based on hugely escalated house prices.

    I agree. Is this really wealth, or just a manipulated exchange value? When your house is worth a million, that’s kind of meaningless when every other house is proportionally inflated.

  125. Bruce of Newcastle

    What you suggest will simply be laughed at.

    Let them laugh when the legislation is passed. Remember the pilots’ strike? Hawke was a bastard but so were the pilots. I wept no tears when I was flying in the little radar plane between Melb and Hobart.

  126. Gab

    Pity apparently none of the self-proclaimed “Wise Ones” who inhabit this blog bothered to read it.

    That’s why starting this primary home assets test in 2030 is such a good compromise instead of springing it on people now, in their late 60s and older.

  127. Perpetual Motion

    What happens if the gummint valuer says my house is worth $1M, but the best offer is only $900,000?
    Do I still have to sell it?
    Do I lose the pension if I don’t?
    Can I pay for a second opinion from a private valuer?
    If so, how do they stop me from bribing the private valuer?

    I see a vast bureaucracy hoovering up whatever piddling savings might arise from this thought bubble.
    Leave the poor old bastards alone.

    And whoever it was that suggested death duties…I’d like to have a word with you outside.

  128. dismissive

    Remember, you can’t have inheritance taxes without gift taxes.

    (Note that those on the pension have formal gift limits as well. Going over these limits damages your pension.)

  129. feelthebern

    Good to see you are working small to big and have the 304 or so people who fit into the bracket in your sights.

    You really think the number is that small?
    You’d believe the forward estimates that forecast that stopping franking credit double dipping will only save $20mill per year.
    Don’t under estimate how every accountant & financial planner in the country is structuring clients affairs to take advantage of these strategies.

  130. Infidel Tiger

    The pension should be phased out. Sure the pet food industry will be hard hit, but anyone under 50 who isn’t going to retire with a caravan full of superannuation cash probably won’t enjoy retirement anyway and should be euthanized or made to rely on family and private charity.

  131. brc

    Lots of old people sold off their family homes and moved to a cheap seaside house, far away from the jobs and money of the cities. Maybe they did this to save the difference, or even to pay out the last of heir mortgages. But times and fashion change, and people decided a sea change was in order. Retirees find themselves surrounded by mansions and cafes in their formerly quiet spot. But thy still enjoy their retirement home, still enjoy their fishing.

    But because a few people decide they like poking at the sea and have a couple of million bucks to spend, the value of their homes goes up. 15 years ago they were cash-poor, but now their neighbors have turned them into paper millionaires. It is indefensible to tell them their income is to be docked through the actions of other people, and the only way out is to sell and move somewhere else, paying a big wad to estate agents and governments on the way. That is a terrible use of state power.

    As for Howes being embarrassed by his pro-Castro days….sounds like someone didn’t pay attention to the elevation of former communist Julia Gillard. These days Castro is seen as an eccentric who made sure American tourists didn’t ruin his people. By the timetable ABC is through with it, he’ll be posing in rusty old Dodges in Havana and collection Gen Y votes by the bucket.

  132. Grey Old Dufus

    feelthebern

    So do we maintain the status quo with everything ?
    No welfare reform?
    No tax reform?

    No but we start on the bludgers and do not target the old and vulnerable.

    Gab

    How is this even fair to someone who has paid taxes all her working life ?

    Exactly.

    Fisky

    I can’t believe we are allowing ourselves to be trolled by a supporter of Fidel Castro. He’s just looking for ways to distract people from union corruption.

    And this point, made by Bruce earlier, is what this is all about.

  133. Derp

    Piggy Howes has some nerve to talk houses.
    The shill bet his house on the carbon tax, then welched out.

  134. Grigory M

    BoN – the Pilot’s strike is not even a good analogy. The Health System is a totally different animal. The doctors and the hospitals/health services will win easily – they are exceedingly expert at manipulating public opinion (patient care, people will die, etc). The bill/s for the legislation would not even be introduced.

  135. Pedro

    “with a $2million house shouldn’t get the full pension LOL as if.”

    I don’t know about $2mil, but about 10 years ago some pensioner in Palm Beach was whinging about the loss of his rates exemption for his beach front house he’d had since forever.

  136. wreckage

    So… what? We sell the pensioner’s house off by force? Is that actually going to benefit anyone? It will simply mean that people sign the house over and move into a rental before applying for the pension. And with all pensioners on rent, we can expect to have to pay them more. Alternatively, folks will simply avoid finalizing their mortgage, and we get yet another reward for high debt, leading to yet more financial instability.

  137. wreckage

    GrigoryM, if you want to reform health you have to play one part off against the other. That’s why increasing recognition for nurse practitioners, etc., is a great idea.

  138. Bruce of Newcastle

    Grigory – I went to dentist last week, was worked on by a nice guy from the subcontinent. The GP I go to is a nice guy from the subcontinent. Once I had to go to a different GP when my GP’s surgery burnt down, he was excellent and also from the subcontinent.

    The AMA can go colonoscopize themselves. The subcontinent has plenty more fine doctors and dentists where they came from.

    Which I might add I where some of the Aussie pilots found themselves after reality smacked them between the eyes. I don’t like unionistas and professional bodies like the AMA are as bad as any.

    Closed shops, in my opinion, are asking for a visit from an unfriendly bulldozer.

  139. LordAzrael

    Maybe another solution would be to use the purchase price indexed for inflation rather than market price given that it is primarily an enjoyment-in-use asset rather than an investment ?

  140. Grigory M

    wreckage, BoN – I’d be happy to have a discussion with you about the Health System, doctors, and possible reforms, but on another thread. I don’t want us to derail this thread. Cheers.

  141. ugh

    “What about renting out the rooms in your million dollar home to Uni students or young people?”

    Well Yobbo because the last thing on earth an 80 year old pensioner wants to do in their twilight years is fill their home with uni students that want to party all the time and get home at all hours. Your average uni student wants is to live under the roof of an 80 year old constantly telling them to be quiet about as much as they want to see Kim Beazley in Abbott’s speedos.

    Congrats on finding a genuine lose-lose situation for everyone involved…

  142. H B Bear

    Don’t under estimate how every accountant & financial planner in the country is structuring clients affairs to take advantage of these strategies.

    I’d venture a significant part of their business is doing just that. Increasingly Keating’s great superannuation reform is looking at failing its primary purpose – getting people off the aged pension by providing for their own retirement. Brian Toohey bangs on about this in the AFR and I am increasingly coming around to his way of thinking.

    Superannuation has created a vast ticket-clipping finance industry, some exceedingly well paid fund managers who may not create any value at all and some comfortable trustee positions for the union bruvvers.

  143. Fisky

    Speaking of Howes and Houses –

    http://www.smh.com.au/national/union-boss-bets-house-on-gillard-20110619-1g9ob.html

    “Labor is doing it tough at the moment in the polls but we are having big fights,” Mr Howes told Sky News, referring to the carbon tax.

    The polls were not undermining Ms Gillard’s performance in the top job, he said.

    “I’m 100 per cent positive, I’ll bet my house on it, that Julia Gillard will lead Labor to the next election,” he said.

  144. brc

    Maybe another solution would be to use the purchase price indexed for inflation rather than market price given that it is primarily an enjoyment-in-use asset rather than an investment ?

    Better. But in reality should only apply from 2030 onwards.

    If we can’t confiscate solar panels from people looting treasury for above-market price power, we can’t force old people to sell their homes.

    Or we could just, you know, remove all the taxes and charges and whacked onto people who want to build new homes. And fire a couple more thousand public servants to pay for it. That way Howes and his ilk wouldn’t be searching for ways to force old people out.

  145. Infidel Tiger

    I’d venture a significant part of their business is doing just that. Increasingly Keating’s great superannuation reform is looking at failing its primary purpose – getting people off the aged pension by providing for their own retirement. Brian Toohey bangs on about this in the AFR and I am increasingly coming around to his way of thinking.

    The pension must be phased out completely by 2035. After that date anyone collecting it is a degenerate.

    And considering only 3, possibly 4 Australians actually do what could be considered manual labour, the DSP must also be ended tomorrow.

  146. Pedro

    “Well Yobbo because the last thing on earth an 80 year old pensioner wants to do in their twilight years is fill their home with uni students”

    Who cares how many Nazis grandad shot in the war or how hard granny worked or how much she hates partying students. The question is whether a particular form of investment should get a special exemption no matter what, or whether, above a sensible allowance, granny might not be expected to cash out some of her assets before she asks for some of mine.

  147. Adrien

    Its quite fascinating watching people who crap on and on and on about fairness and equality advocating policies where the elderly and possibly infirm are evicted from their homes to make way for people who appear incapable of the hard work, thrift, and sacrifice necessary for home ownership.

    I do suppose it is. Hypocrisy’s always fascinating to watch on the other side of the House. On this side, however, it’s just as compulsory. :)

    Is there any actual initiative moving in this direction? I would think it very difficult particularly for the current government. They would be alienating the elderly and the well-to-do who are some of their best mates. Howes is correct about one thing: this is unsustainable. But that demographic trend was well established when I was a student. I do wonder however at the petty greed involved in collecting an old age pension if one is wealthy.

    It’s also a little unfair to tag younger generations as lacking economic virtues. It was, after all, easier to become a home owner once uponatime than it is now. And considering the slackness of older generations apparent when I started work I kinda take exception to the generalization.

  148. Sinclair Davidson

    It was, after all, easier to become a home owner once uponatime than it is now.

    So I keep hearing – but people get very vague when I ask how they know this to be true.

  149. Infidel Tiger

    So I keep hearing – but people get very vague when I ask how they know this to be true.

    Because in the olden times overseas holidays, European cars, designer clothes, eating out twice a week, going to wine bars 3 times a week and $150 hair cuts hadn’t been invented. It was a golden age of beans on toast and 2 bedroom fibro shacks with outdoor commodes.

  150. JC

    The family home is still going to be safe. Howes is just saying that if you’re worth a million dollars, you probably shouldn’t receive welfare.

    It’s amazing how many “fiscally conservative” people ITT disagree.

    I think this argument related to CL’s example. I have a great deal of sympathy towards CL’s argument. People were made a promise by the government of the time that if you worked etc. taxes went towards a pension. Now I have no problem with changing things going forward, but the financial decisions that accumulated as a result of those previous signals need to be met. If a person retired with a certain undertaking by the government then that is the deal.

    And fuck Howes. That little socialist prick doesn’t understand what a promise/undertaking is.

  151. gabrianga

    No “maybes” Pedro .You are definitely not funny and you should get a second opinion on the “not stupid” bit

  152. Demosthenes

    So I keep hearing – but people get very vague when I ask how they know this to be true.

    Trend in price to income ratio?

  153. brc

    It was, after all, easier to become a home owner once uponatime than it is now.

    So I keep hearing – but people get very vague when I ask how they know this to be true.

    Concrete example. Couple purchased unwanted piece of land choked with Lantana. Family worked to clear the Lantana and burnt all the waste in situ. Father picked up building material where he could-often rejected by builders and sent back- and saved for the rest. House was built by Father and his friends on the weekends, and family pitched in. Nobody had a ticket, especially the kids operating power tools. House took multiple years to build. Eventually family moved in when watertight and finished the rest. House now worth >500k, despite never having being inspected by man with clipboard and safety vest.

    This scenario is today not possible. You might be able to scavenge building materials but you can’t scavenge dudes in high vis with clipboards.

    Ironically it is still possible to do this in France and Italy where actual communists are.

  154. H B Bear

    Has Sinc’s computer been hacked by mUnty?

  155. Demosthenes

    Ironically it is still possible to do this in France and Italy where actual communists are.

    Over-regulation breeds work-arounds, to bypass things like France’s notorious web of building codes, permits, delays, bonds, etc.

  156. Bruce of Newcastle

    It was, after all, easier to become a home owner once uponatime than it is now.

    No. Concrete example #2. Not me. A lady I know’s hubby got a job as a metallurgist in the Pilbara. She had worked in Newcastle in our office on chicken feed because they had mortgage. She was 1st class hons in reproductive biology. That doesn’t pay much in Newcastle, she did better with us as a contract lab tech. When the employer in WA found out she could spell and add up, they immediately offered her a job as a metallurgist too.

    I suspect their house in neighbouring suburb to mine got paid off quite rapidly.

    A lot of people do that, especially in WA, which is why Perth prices are mad.

    Its not that its harder now, its that people are softer, and don’t want to work their bums off. My dad worked his bum off for his first house, so did I. The kids now prefer to play WOW and go on Facebook.

  157. entropy

    A compromise proposal:

    1. Assess the value of the home, but do not actually reduce the amount of the pension.
    2. Instead, the amount paid by the pension is debited to a reverse mortgage on the home, only collectible on death.

    makes theoretical sense. In real life the no hoper son will be trying to knock off the old biddy who stubbornly refuses to die before there is no value left in the inheritance.

  158. Crossie

    If Howes had his way people who have a decent home wouldn’t get a pension when they retire. I would guess the result would be that they stay in work longer and thus deprive younger people of good jobs. So we simply move the problem around.

    The other thing is that the optics of this sort of thing are pretty bad, you want to take pensions away from old people and give the money to illegal immigrants who will make a lot of noise if you don’t, courtesy of “their” ABC. Yeah, go to an election with that policy.

  159. Basil

    Sinclair,
    I don’t think it’s entirely fair to frame this as a matter of envy.
    It is rather a matter of justice. We do want our social welfare payments and taxation system to be just, do we not? In that light, I think Howes has a point ( as strange as that may be!).

  160. MickRWC

    If these older Australians are asset rich and cash poor, why can’t there be a tax incentive to borrow from the mortgage to invest in super?

    It does for online with tax deductibility for costs incurred in generating a future income.

  161. kae

    Australian Age Pensioners Savings Account.

    and God help them if the ALP gets it’s stinky hands on that little goldmine.

  162. Oh come on

    When oldies move into an aged care facility, those who can afford it pay a (I think) $260 000 bond to the facility. They keep the interest and the principal dwindles at a fixed rate every year. When they move or die, the remainder is paid out. I don’t see why we couldn’t introduce a similar system going forward for those who claim the aged pension. Of course the government would not be paid up front – they would hold some kind of lien over the house.

    If I were king I’d introduce this policy tomorrow and make the boomers pay for their extravagance.

  163. Oh come on

    When I said ‘they keep the interest’, they = the facility

  164. Oh come on

    I’ll never forget when I worked in a bank serving an old Cottesloe dame who’d come in on pension day dripping with pearls to have her two passbooks updated. Never made a withdrawal, just wanted to see her deceased husband’s war pension go into one book and her own into the other. One passbook’s balance was $1.5 mil and the other was 500k.

    Sorry, but why are we paying this woman a cent when she has that kind of liquidity?

  165. H B Bear

    oco – remember the stink about Cottesloe war widows when Ripper proposed the Premium Property Tax as he scraped around trying to balance the WA budget when iron ore was $10 or $15 a tonne?

    Of course, it helped that many of their sons were QC’s living in Dalkeith and Peppy Grove after attending the local private schools, UWA and were heavy Liberal Party donors. Needless to say it never saw the light of day.

  166. Oh come on

    And as far as certain assets such as VC medals, Picassos and other keepsakes of sizeable value go, these can be inherited and kept, but the government still holds a lien over it…and if the beneficiary sells the asset, the government can lay claim to the appropriate portion of the proceeds of the sale. I don’t think this is unreasonable.

  167. Oh come on

    Whenever I see the title of this thread, I always read it as “Throw Mama From The Train” for some reason.

  168. Gab

    and if the beneficiary sells the asset, the government can lay claim to the appropriate portion of the proceeds of the sale. I don’t think this is unreasonable.

    Unbelievable. People’s possessions belong to the government? Just fucking unbelievable.

  169. Oh come on

    They don’t have to belong to the government. If you don’t want the government to lay claim to a proportion of your assets, don’t claim government benefits *going forward*. We need to shift from the idea that a pension is an entitlement that’s been paid for (when it’s mostly only been partially paid for). It should be seen as a liability that needs to be repaid.

  170. Oh come on

    Substantially reduce PAYE taxes for working people of a certain age willing to provide a lien to the government over their assets in return for access to an aged pension when they retire.

  171. Oh come on

    And, of course, substantially reduce PAYE taxes to those of a certain age who waive their right to the aged pension. These people should also be obligated to ringfence a fixed amount of their assets in AAA-rated investments (say $500,000) that cannot be targeted in bankruptcy proceedings. Point is that you should be able to trade your access to the pension for lower taxes, if that suits you. And if you make the decision to waive your right to the aged pension and subsequently go bankrupt, you mustn’t be able to demand that you’re poor now and any commitment you made in the past is now null and void. No, now you have to draw on your meagre $500,000 or whatever, because that’s all you’ve got.

    Let individuals decide what’s best for them.

  172. entropy

    Oh come on,
    That little old lady would be ineligible for a normal pension if she had that sort of cash. The war veterans pension? She has earned that one.

  173. Pedro, the reason the family home is exempt is because it represents a necessity – shelter. The reason people buy their home is because rents are unaffordable on a pension.

    Maybe Piggy’s future government can do a weekly stocktake of oldies’ pantries to see whether they have enough food for the fortnight to forgo part of their pension? After all, food can be considered assets, and savings post-tax must be punished to appease the envy of the imprudent.

  174. .

    “Its not that its harder now, its that people are softer, and don’t want to work their bums off. My dad worked his bum off for his first house, so did I. The kids now prefer to play WOW and go on Facebook.”

    Well, easier to do that on welfare when you require a ticket to pull beers, hold a stop sign or pick your bloody bum.

  175. .

    It i’s not necessary to own a home in an area popular with young professionals.

  176. tgs

    It was, after all, easier to become a home owner once uponatime than it is now.

    So I keep hearing – but people get very vague when I ask how they know this to be true.

    Well for starters by any measure the income-to-price ratio for Australian housing has significantly increased over the last 40 or so years.

    An RBA publication puts it at a little above 2 in the 70s to above 4 in recent time.

    A quick googling finds a number of other pieces of research which corroborate this finding.

    That is not to say it is impossible for the younger generations to own property but it is undeniable that it is more expensive relative to median incomes.

    If I didn’t know better I’d think you were being deliberately daft to double down on your original position.

  177. Oh come on

    That little old lady would be ineligible for a normal pension if she had that sort of cash. The war veterans pension? She has earned that one.

    Well, her late husband did. And, seriously? Even though she has $2 million in the bank? I don’t think so.

  178. shwaborn

    The taxes we pay are for the now, the government doesn’t save it so it may be given back to you as a pension. You can read a budget, you know what taxes for.
    Why should money be handed out to someone who evidently their own children won’t even help?
    There is god given decree that states what age a member of the human species may stop contributing to their life, or their families lives.
    If you cannot do enough in your entire life to sort you shit out for when the time comes that you may need it, then stiff.
    That is what families are for. Perhaps if people knew that their children will be the ones to look after them in the end parents will invest more into their children!
    God forbid if that scenario was ever forced.

  179. shwaborn

    There is *no* god given decree…
    (sorry)

  180. Grey Old Dufus

    The taxes we pay are for the now, the government doesn’t save it so it may be given back to you as a pension.

    If you read both threads, you will find that you are probably wrong and that part of taxes taken by government are to fund pension. There is historical evidence for this.

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