Incentivising Pensioners to Downsize

29 September, 2022

This bill, the Social Services and Other Legislation Amendment (Incentivising Pensioners to Downsize) Bill 2022, greatly benefits those people who might like to downsize—mostly older Australians over 55, although that age has been introduced just in the last few months. When you're downsizing, you might be downsizing into a brand-new home, and it may take longer than 12 months to get the permits and have it built. This bill extends the time in which the proceeds from the former house may be set aside from all the other assets and considerations in regard to deeming and social security benefits and payments. This money in the home, in the principal private residence, would not affect social security benefits. But, as an amount of money in a bank, waiting to be spent, it would affect those entitlements. What the government is doing here is extending, from 12 months to 24 months, the time that money can be set aside before it is included in the process of computing a social security benefit. Also, only the lower below-threshold deeming rate will be applied to the asset-test-exempt principal home sale proceeds when calculating deemed income. So this applies not only to a person's social security benefit but also to their deemed income.

Your existing home may be a large home with a large garden. You may be older and it may be time to move out of that residence and offer it to a family. The great benefit here is that, as part of these arrangements, when you sell your existing home, you can actually take $300,000 of the money that has been accorded to you on the sale of the residence and put that directly into non-concessional super. That is a huge benefit, over and above downsizing and moving to a new premises. That measure was the 2017-18 budget. I actually know of people who have used that benefit from the sale of their home and moved $300,000 into their super, which is a great long-term benefit for them and, broadly, their family.

This bill is one of the many benefits governments have given people in relation to the family home and to benefiting themselves in later years. We in the previous government recognised that changes could be made, moving eligibility for this from 60 years of age down to 55 years of age. I hope those who are around that age don't see themselves as older people but rather see this as an opportunity. I'm sure governments would have sat down—and, Deputy Speaker Georganas, you'd know about this exactly because of your background—and said, 'How can we encourage people to open up the housing market?' You'd look at every aspect of the housing market and say, 'What can a federal government do to make some changes that may inspire people to do something they wouldn't otherwise do?'

Since the end of the Second World War, the ownership of a home was the basis of the family unit. The great dream was not to have the ute and the caravan and the boat out the back, or the holiday house down at Portsea—Portsea is not a good example; I'd better go for Lang Lang Beach or something like that. The great dream was to own your own home, to come from war-torn Europe to Australia with practically nothing in your pocket and say, 'A great achievement for us would be to own our own home.' It was taken for granted by many Australians for many years. We're faced with a totally different situation now.

So, over the last 10 or 15 years, governments have been saying: 'Housing affordability is an issue. How can we make a change to our policies that will encourage older Australians to either downsize or take the opportunity to open up their properties for younger Australians with families to buy?' That is outside of building social housing ourselves, which we do anyway. It is something that the market can do, because you're going to say, 'Here's an opportunity for us.' Your accountant may draw it to your attention. The government may draw it to your attention. You might be struggling a bit in your household. I am on a few acres, and that is becoming quite a bit of work for me. It was fine when I was 20 and created the garden. But now I'm just over 20—I'm 71—and these things play a part in how you are able to handle your household. Our baby boomers, people born just after the war, and those in the years following have created homes on beautiful blocks right across Australia—in Adelaide, Perth and Melbourne; in Wangaratta, Bendigo, Ballarat and all of our regional centres; in our beautiful Sydney and Brisbane and even up to Cairns. They are wonderful homes but not necessarily the appropriate homes now.

One of the biggest cohorts of people within the Australian community that are at risk of becoming homeless is actually women over the age of 55. That's an indictment of us. It's about the type of housing that they might need. You don't want somebody who is at risk of homelessness going into a place with four or five bedrooms and a garden. I think there's an opportunity for us to consider that very carefully. There was a report put out only very recently about the design of future housing for that cohort of women over 55 who need public accommodation.

Governments have taken responsibility for housing all along, state and federal governments—although the federal government actually gives money to the state governments to deliver the services. And I'm not of the view that state governments don't deliver on housing. I'm not of that view at all, because they do. State governments do deliver on housing. That has been their responsibility. Our responsibility has been to deliver in the area of Indigenous affairs, where we have direct involvement in supplying public housing.

So, when I consider this bill, I consider how it might have long-term benefits, and not only for the owners of a house. They have a financial benefit, in that they are being protected in two ways. Their asset does not come into the calculation of their social security arrangements. It doesn't come into their deeming arrangements, so they're protected there. But they're also offered, as I said before, the opportunity to move $300,000 from the house into their super, for their benefit in retirement. That is a terrific incentive for people to say, 'Yes, I can live in a smaller house. I can even move into one of those community housing developments for the over 55s.' There's a very good one at Phillip Island. There's a very good one at Pakenham that I know of. There's a very good one at Warrigal. There are a number of them, and they're very popular for people to go and live in. They're in between their house and permanent aged care. They are communal housing areas for people who have decided to downsize. They go into those more communal, gated communities—and people who are under 55 are taking the opportunity to move into that type of housing—because there are recreational facilities and they have people to talk to. They're not on their own, loneliness is diminished, and there are activities that they can do in that type of arrangement.

A number of people that I know have chosen that as the next step, especially women on their own who have a home as an asset and have lost their husband—or partner, as you call them these days. They choose that type of lifestyle. I haven't heard anybody complain about the places they've gone to. I did have one problem a few years ago, but that's passed now. But most of them actually enjoy that change of lifestyle. I say that, as you get older, you do take the opportunity for a different lifestyle—but including life. It's not a death sentence; it's life as we know it. There's a very good development that's just happened in the community of Pakenham. I live there, but it's no longer in my electorate. They are very highly sought after units within an over-55s development. And I think the happy hour on Friday is pretty well attended!

Having said that, this bill is a good bill. Both the former government and this government have supported this process. They understand the importance of it. It's a way of trying to open up the market, with the opportunity for people right across the country to offer their homes to the next generation of people.

Deputy Speaker Stevens, having regard to the time and the opportunity that you've given me to speak to this bill, I want to tell you that I wholeheartedly support the bill and I wholeheartedly support the process, knowing that housing has been the most important economic stabiliser for families across Australia since the Second World War, as well as for those who came here to this nation and had the opportunity to create wealth and to not only own their own home but help their children to own their own home as well.

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Russell Broadbent MP
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