Transcript by The Hon Mark Butler MP

Transcript of Interview with ABC Radio Canberra

Program: Afternoons with Alex Sloan

Subjects discussed: Budget, pension asset test, seniors housing.

ALEX SLOAN: I was very interested that the budget’s housing centrepiece is a $112 million trial program to assist the elderly to downsize their homes without affecting pensions and this via a means test exemption of up to $200,000 for ten years.
It’s designed to remove the disincentive for seniors to relocate to more age appropriate housing but it is also aimed to open more suburbs for gentrification and redevelopment. We know that this is an issue here in Canberra so I’ll – I am joined now by Mark Butler, Minister for Housing and Homelessness. A very good afternoon to you.

MARK BUTLER: Hi, Alex. How are you?

ALEX SLOAN: I’m very well. How will this trial work?

MARK BUTLER: Well, we need to talk to a couple of key groups of stakeholders about the particulars. For example, we need to talk to the banking and finance sector about products they might be put in place because this is quite a new initiative, and obviously we need to talk to seniors groups as well.
Broadly speaking though, this initiative deals with a challenge that seniors groups have been talking to me about for a few years now as the Minister for Ageing and that is for people who might have been living in their home for decades where they raised their kids but now want to think about moving into more age appropriate housing.
They want to move into more compact houses which don’t have multiple bedrooms that used to be filled by their families, and big gardens that are too difficult to maintain. Currently, there are disincentives in place for this group to downsize, some of which are state based.

ALEX SLOAN: Yeah. The state stamp duty one is the big one that I hear.

MARK BUTLER: That is a huge disincentive. That has been the focus of a number of reports for state and territory governments, to think about exempting seniors from those sorts of charges. However, clearly a number of reports and groups have said to us the pension assets test is a big disincentive too.
For example, if you have a house worth $600,000 which is your old family home you’ve lived in for decades but is now too big for your needs. And you decide you would like to move into something more age appropriate. If you find alternative living arrangements worth $400,000, the net proceeds of $200,000 under current arrangements are means tested as part of the pensions asset test.
The advice we’ve received is that people are choosing not to do this for a range reasons, but including the possibility that the profit they might make from the big house sale when moving into the smaller house would hit their pension eligibility.
This is quite a contested area. There are other housing research groups that say they’re not sure people necessarily want to downsize. However, the advisory panel to Wayne Swan and to me on positive ageing said that people do want to do it and that we needed to look at changing the pension assets test.
So because this is still a bit of a contested area, we’re going down the path of a trial to get some hard evidence about whether this is going to change behaviours, open up a bit of housing that’s appropriate for younger families, and also allow older Australians who want to move into different housing to do that without regard to whether it’s going to impact on their pension or not.

ALEX SLOAN: So it’s a means test exemption of up to $200,000 for ten years. Because I suppose you could see a lot of people whose big family house could be worth a million dollars easily these days and they might look at the $500,000 apartment. So 300,000 from the sale in that, for example, would not be exempt.

MARK BUTLER: Well, that’s right. We’ve got to put some boundaries around this. Firstly because it’s a trial, we’ve got to have it specifically delineated so that we can assess over the period of time whether it is leading to behavioural change. We don’t want to just do it for its own sake. The whole purpose of this is to see whether this will allow older Australians to make the housing choices they want and also, in the process, free up a whole range of family appropriate housing that we know younger families are looking for.

ALEX SLOAN: Well, it’ll be very interesting and look, I’ll put it out to anyone listening if this is an attractive budget item for you to call in. But, Mark Butler, the one I hear a lot about is the stamp duty issue and that’s, as you say, is at the state and territory level.

MARK BUTLER: That’s right. We’ll be calling on state and territory governments to have a look at this as well because there are a range of things that people think about obviously when making these housing decisions. Pensions test, stamp duty, but also where they might live, where their home is currently established. For example, they are attached to their community, local shops, involved in community groups. So there’s no ‘one thing’ that will change these decisions.
We do want state and territory governments to think about this. The Productivity Commission that delivered us a report a couple of years ago on caring for older Australians raised these two issues. One, the question of the pensions test from our perspective as the Commonwealth, but also that state governments needed to think about the impact of stamp duty liabilities on these housing decisions for older Australians.

ALEX SLOAN: Minister, thank you so much for outlining that for me.

MARK BUTLER: Thanks, Alex.

ALEX SLOAN: That’s great. Thanks a lot.
That’s Mark Butler, the Federal Minister for Housing and Homelessness, and just talking about what is described as the budget’s housing centrepiece, which is a $112 million trial program to assist older people to downsize their homes without affecting their pensions via a means test exemption of up to $200,000 for ten years.