February 18, 2016

Horse 2076 - Put The Boot Into Pensioners And Steal Their House - A Message From The ACCI

A key part of the ACCI submission is to review the aged pension and to force retirees who own homes to transform the pension into a loan that would be repaid when the home is sold.
"It seems irrational really for a family home not to be counted when you look at pensioners' capacity to fund themselves," Ms Carnell argued.
"For people in multi-million dollar homes that really are keeping those homes for the purpose of I suppose giving them to their children when they die."
- Peter Ryan, ABC News, 15th Feb 2016

The Business Council of Australia, which has vowed to push for “transformational tax reform”, is yet to release its pre-budget submission.
ACCI’s chief executive, Kate Carnell, said budget repair had to be accompanied by broad economic reforms, including changes to workplace relations, infrastructure, trade and education. On savings, she pointed to welfare and social security, which account for a big share of government spending.
Changes to the Age Pension could encourage “innovative financ­ing solutions that guarantee that pensioners can remain in their homes and still save billions of dollars from spending”, she said.
This year, $44 billion will be spent on the Age Pension. The chamber wants the government to consider converting pension payments to elderly homeowners into a loan that is repaid when the property is sold.
- Annabel Hepworth, The Australian, 15th Feb 2016.

The Government should consider transforming pension payments to owner-occupiers into a loan that is recoverable against their property when it is sold, potentially with a residual value that would allow pensioners to access equity for other purposes, such as aged care. While retirees should be able to maintain a minimum residual value, at present very little of the equity in owner-occupied housing is being drawn down for other purposes.
- Kate Carnell AO, Media Release, ACCI, 14th Feb 2016

Let me just reiterate this. The Australian Chamber of Commerce and Industry, who styles itself as the largest and most representative business association, actively wants take the very homes that elderly people live in away from them, to fund their retirement.
As a member of the Order of Australia, Kate Carnell has made a mockery of what that honour entails. If this hideous proposal is ever enacted, it will be one of the highest degrees of disservice to Australia and humanity at large.

It also flies dead in the face of the ACCI's own statement which says that:
Our policies aim to ensure Australia has an environment for doing business that encourages free enterprise, investment & entrepreneurship, & for businesses to be acknowledged & supported as the creators of wealth, jobs & living standards.
I for one fail to see how stealing the equity from the elderly creates any wealth and all or improves living standards. If anything, it destroys their wealth and may even destroy the potential living standards of their children.

If a government suggested this as policy, I guarantee that it would find itself on the end of one of the biggest voter backlashes ever seen in this country and deservedly so. This proposal which would force the elderly to borrow against the equity in their own homes is both repugnant and dare I say it evil, for a variety of reasons.

Firstly, the sorts of people who would actually need to borrow against the equity in their home are exactly the sort of people who can least afford to do so. The superannuation which from the outset creams investment revenues from the poorest of people is already one giant steaming pile; which is designed to entrench the inequalities which existed during people's working lifetime and perpetuate it into retirement. Superannuation more or less confines people in single income families to poverty and it disadvantages women in particular, whose earning capacity is severely limited during the early years of their children's lives, should they choose to be a mother. Yes, I do admit that stay at home dads do exist but they are som few in number as to be statistically irrelevant.
The most likely customers of such a scheme which would force people to draw against the house that they live in, are widows whose superannuation hasn't stretched far enough. Perhaps I haven't made this clear enough. This plan by the ACCI, has as its primary consequence, the devouring of widow's houses.
The next effect would be that any estate which would have existed is immediately dispersed. Under such a setup, unless the family remortgages the house, then the prime asset of an estate is not available for the next generation. I can imagine a situation where children who more than likely would have grown up at the lower end of the socioeconomic spectrum and may have seen inheriting their parent's house as their only way onto the property ladder, suddenly finding that through operation of the law that they lose in the worst possible way. By operation of the law, they would get nothing.

Secondly, the underlying tone from the ACCI is that their members shouldn't have to bear the costs of the Age Pension. Already the tap of wages has been progressively turned off over the last thirty years, so firms already reap the rewards of that. Then there's the ridiculous situation where companies are able to avoid tax altogether by shifting income to tax havens.
I totally get it. Companies do not like to pay tax and as a result the don't like the expenses which the government has to carry to warrant imposing that tax in the first place. Well guess what? As a citizen of a nation, I think that its perfectly reasonable that the nation should solve collective action problems together. If firms don't want to pay tax, then by inference they couldn't care less about their corporate citizenship. Quite frankly, I think that you should be forced to live where your money is. If you a firm which doesn't want to pay tax here, then you should leave. Go away. If you can't be bothered to pay tax in Australia, you shouldn't be allowed to make profits here.

Organizations like the ACCI, free perfectly at liberty make statements like this because their words neither carry the weight of law, nor the responsibility of government. This doesn't mean that their words have zero consequences though because they are enmeshed with the political parties which determine and enact policy. Lobby groups whose raison d'etre is to push governments to act in certain ways, usually end up having more input into the shaping of laws than the voting public; which seems to make a mockery of the concept of democracy to me.

The people who lose out most from this are people who never had much to begin with. People with lots of money in Superannuation Funds, who have been paying tax at only 15% and 0% on concessional contributions, wouldn't even have to bother.
Realistically, the people who actually would be forced to do this are poorer people who have outlived their super, because they weren't paid particularly large wages during their lifetimes. If the equity in their house runs out, then what? Are they thrown into the street?

Once upon a time, we were more than capable of paying pensions as a nation. After two world wars, we thought it our duty to pay the widows of tens of thousands of service people and that was when GDP was far less than what it is now. That duty to provide support, if you believe what the ACCI says, no longer exists.

Beware of the practioners of the law. They like to walk around in fine clothes and demand to be greeted with respect in the marketplaces and have the most important seats in town meetings and the places of honor at banquets. They devour widows’ houses and for a show make pious speeches.

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