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Issue #1674      February 25, 2015

Editorial

The age pension, the family home and “fairness”

The corporate media is full of figures, forecasts and mock outrage about payments being made to supposedly undeserving recipients of the age pension. It is claimed multi-millionaires are walking out of Centrelink offices with part pensions and people with expensive homes on the esplanade are living it up on full pensions. Meanwhile, taxpayers struggle to make ends meet. With the economy going to hell and the federal budget deficit forecast to reach $40 billion, retired Australians have become the latest of the Abbott government’s “enemies within”.

People with actual experience of dealing with Centrelink are right to be suspicious of the statistical gymnastics and claims about the ease of obtaining pensions and benefits. And the “discussion” being launched by the likes of Social Security minister Scott Morrison should raise concerns for the security of the modest assets most Australians have, until recent times, managed to accumulate over a working lifetime.

John Daley of the Grattan Institute spoke to ABC News about how it could work:

“To say ‘if you want to keep getting the pension, but you’ve got a lot of assets, well that’s OK, keep getting the pension’,” he said.

“But the Commonwealth should be able to recover the cost of that pension from your estate when you die.

“Essentially, it just becomes a debt that’s held against the house.

“The only implication of that is the pensioner’s in exactly the same position they are today; the only thing that changes is that their children will inherit less.”

That’s one idea. Your pension and, according to other “experts”, health costs could come out of the sale of the family home when you die. The next generation, already mostly written off in terms of home ownership, would get little or no boost from the sale of their parents’ home. This is already happening as more and more Australians are forced to sell up to meet the cost of care and nursing home accommodation. Private “reverse mortgage” schemes are set to proliferate as the elderly pawn the home they are living in to keep their head above water.

Other alternatives are being canvassed. The family home could be included in the assets test for eligibility for the age pension. This is politically difficult at the moment but has been put firmly on the agenda. Policies could be put in place to induce retirees to “downsize” their owner-occupied dwelling and live off part of the proceeds of their former residence. The point where other income reduces or blocks eligibility to a part pension could be toughened. That sounds too much like an immediate reduction of the pension, a violation of a pre-election promise from Abbott but it’s there on the longer term wish list.

The government has already attempted to lift the retirement age to 70 and peg increases in the pension to the (currently low) Consumer Price Index rather than average weekly earnings. The talk about the family home and other attacks on the age pension arises from the Productivity Commission report into aged care and Treasury’s upcoming Intergenerational Report. Disturbing visions of a society that doesn’t prepare for the longevity of its population are designed to create pressure for at least one unfair, previously unthinkable change. It appears that the benefits of stupendous increases in productivity over recent decades will have to be added to corporate profits, not the welfare of elderly Australians.

The neo-liberals in charge of social security policy are not happy with the whole concept of the age pension. They want individuals to bear former social costs through “self-provisioning” – superannuation and investment income. Simon Cowan, research fellow at the Centre for Independent Studies reflects the prevailing official attitude. “There’s a feeling that if I’ve paid taxes all my life I deserve a pension.” he told the Australian Financial Review. “But taxes aren’t a contribution to a future pension, that’s what superannuation is for. Current taxpayers pay pensions for people who are unable to support themselves.” And the same attitude carries through for education, health care and other services previously expected from the “welfare state”. Bit by bit, “debate” by “debate”, we are being pushed towards corporate dictatorship.

Next article – Tasmanian Devil roadkill fatalities

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