National Seniors believes the government’s initiative is more about enabling contributions into superannuation than downsizing.
The government introduced the initiative to allow people aged 65 and over to sell the family home and roll up to $300,000 ($600,000 couples) into superannuation.
The policy is scheduled to come into effect from 1 July 2018.
These contributions will be exempt from the existing age test, work test and the $1.6 million balance test for making non-concessional contributions. This measure will apply to sales of a principal residence owned for the past 10 or more years and both members of a couple will be able to take advantage of this measure for the same home.
National Seniors Chief Advocate Ian Henschke said the initiative had not addressed the real barrier to downsizing.
“Concern about sale proceeds being used in the pension assets test remains a significant disincentive to downsize,” Ian said.
“Our rightsizing proposal would have allowed seniors to sell their home for something smaller and more suited to their needs, retain their pensions, and keep up to $250,000 to cover essential health and other costs.
“This policy, as it stands, will certainly benefit those retirees who have superannuation, but we can’t see it assisting those on part-pensions.
“Prominent commentators have agreed that changes to the assets test to exempt a portion of home sale proceeds would have more positive outcomes.”
Cost of Living
National Seniors welcomes the reinstatement of the Pensioner Concession Card for pensioners who lost it because of the Age Pension assets test change on 1 January 2017.
This will mean 92,000 older people will regain access to state and territory based-concessions on expenses such as rates and utilities. They will also have access to Commonwealth-subsidised hearing services.
Ian said the asset test change had hit many people hard since its introduction in January this year.
“We have been a vocal opponent of the severity of the Age Pension asset test change,” he said.
National Seniors had called on the Government to amend the asset test taper rate to a more reasonable level.
The Government will provide a one-off Energy Assistance Payment of $75 for single recipients and $125 per couple for those eligible for qualifying payments on 20 June 2017.
This will benefit older people on the Age Pension and some other income support recipients, but will not extend to Commonwealth Seniors Health Card holders.
“The one-off energy payment of $75 for singles or $125 for couples is cold comfort for those who have lost more than $5,000 a year because of the pension assets test change,” Ian said.
National Seniors is also pleased the Government has finally abandoned the unfair “zombie” measures left over from the 2014-15 and 2015-16 Budgets. Many of these would have impacted negatively on older Australians.
- Tightening of the Australian Working Life Residence requirements for pension portability to reduce the proportion of pension available when overseas longer than six weeks
- Changing Medicare safety net arrangements to reduce and align the safety net threshold and decrease the amount of out-of-pocket expenses covered by Medicare
- Increased co-payments and safety net thresholds under the Pharmaceutical Benefits Scheme.
The Government will establish the Medicare Guarantee Fund as a special account from 1 July 2017 to cover the costs of the Medicare Benefits Schedule (MBS) and the Pharmaceutical Benefits Scheme (PBS).
The Budget also restores indexation of the Medicare rebate at a cost of $1 billion over four years from 2017-18):
- Bulk-billing incentives for GPs will be indexed from 1 July 2017
- Standard consultations by GPs and specialist attendances will be indexed from 1 July 2018
- Specialist procedures and allied health services will be indexed from 1 July 2019.
Indexation for certain diagnostic imaging items on the MBS, including for computed tomography scans, mammography, fluoroscopy and interventional radiology, will be re-applied from 1 July 2020.
“Lifting the rebate freeze and establishing the Medicare Guarantee Fund is good news,” he said.
“Covering doctors’ fees and the cost of prescriptions is a constant worry for many older people and these initiatives will obviously help alleviate that.”
Pharmaceutical Benefits Scheme (PBS)
National Seniors welcomed initiatives to cut the cost of vital medicines.
New and amended listings on the PBS and the Repatriation PBS will be introduced for subsidised treatments for heart failure, idiopathic pulmonary fibrosis and schizophrenia. This will cost $1.2 billion over five years from 2016-17.
Reductions in the cost of providing medicines through the PBS will be achieved by building on existing price reductions.
Ian said the government had predicted the move would reduce the cost of medicines by $1.8 billion over five years.
"National Seniors' budget submission called on the government to substitute cheaper generic medicines and negotiate more favourable purchasing agreements with drug companies to increase access," he said.
"That's what's been delivered and this can only be good news for Australians who need regular medications.”
National Seniors has also welcomed the Budget’s announcement to retain ownership of Australian Hearing, which provides access to subsidised hearing services across the country.
“Our members have raised concerns about some private providers of hearing services,” Ian said.
“Many have told us they have been exploited by retailers and sales people driven by commissions, rather than public health considerations.”
Ian said the issue had been raised with the ongoing parliamentary inquiry into hearing services.
Funding for palliative care services for people receiving care in their home rather than in a hospital or hospice setting will be increased. Funding will be delivered through Primary Health Care Networks. Cost $8.3 million over three years from 2017-18.
National Seniors members strongly support the provision of palliative care so older people can die at home, if that’s their choice.
The Government will provide $80.0 million over four years from 2017-18 for psychosocial support services for people with mental illness who do not qualify for the National Disability Insurance Scheme.
The Budget also includes $9.1 million over four years from 2017-18 to improve access to psychological services through telehealth in regional, rural and remote Australia.
No major funding announcements relating to aged care were included in the Budget, with significant reform of the sector still ongoing.
The $3.1 million additional funding for the My Aged Care platform is positive, especially with the rollout of increasing choice in home care.
“However, we know from our members that the My Aged Care platform requires much improvement to be able to assist older people to access the care they need,” Ian said.
The Budget includes $1.9 million over two years from 1 July 2017 to establish and support an industry-led aged care workforce taskforce.
National Seniors supports the development of a comprehensive workforce strategy, but this needs to occur concurrently with changes to the funding model to ensure an appropriate mix of staff levels and skills for delivering quality care.
“The recent reports of abuse in aged care facilities highlights the significant challenges with inadequate staffing, funding and compliance,” Ian said.
The Budget also extends the Commonwealth Home Support Program and Regional Assessment Services funding arrangements.
Incentives to encourage private investment in new and existing affordable rental accommodation for low to moderate income households was a welcome Budget initiative.
Not all older Australians own their homes, with about 20 percent of people aged over 65 renting.
The Government will establish the National Housing Finance and Investment Corporation (NHFIC), which will operate as an affordable housing bond aggregator to provide cheaper and longer term finance for community housing. Cost $63.1 million over four years from 2017-18 (including $4.8 million in capital).
From 1 January 2018, the Government also will increase the capital gains tax discount from 50 per cent to 60 per cent, to resident individuals who elect to invest in qualifying affordable housing. Housing must be provided at below market rent for investors to qualify for a discount on capital gains tax.
The Budget includes a Career Transition Assistance Program delivered through Jobactive to support both mature age and inexperienced job seekers to increase their chances of finding employment.
National Seniors’ Budget submission called for an early intervention reskilling program for mature age workers.
“It’s good that the Budget recognises the need for career transition assistance, although we question how effective the delivery of this initiative will be via Jobactive,” Ian said
“We look forward to seeing more detail and the specific funding allocation for this initiative.
The Government will also create a consolidated JobSeeker Payment with stricter participation requirements for older people receiving income support.
From 20 September 2018, older recipients aged 55 to 59 will only be able to meet up to half of their participation requirements through volunteering.
“These stricter requirements are concerning given volunteering is often a pathway to paid employment for older people,” Ian said.
National Seniors is disappointed that there were no initiatives for mature age entrepreneurs.
It is unclear whether mature-age workers will benefit from the new $1.5 billion Commonwealth-State Skilling Australians Fund.
A key revenue measure in the Budget was the announcement of a new levy on major banks from July 2017, raising $6.2 billion over four years.
The Government has also announced a new Australian Financial Complaints Authority to deal with all financial disputes, including superannuation, and provide access to free, fast and binding dispute resolution.
“We hope that this new structure leads to enhanced consumer protections for older people,” Ian said.
The government has also tasked the Productivity Commission to begin a review on 1 July 2017 of the state of competition in the financial system with a view to improving consumer outcomes, and the productivity and international competitiveness of the financial system.
“National Seniors looks forward to contributing to the Productivity Commission’s inquiry into competition and concentration in banking,” Ian said.