Groups representing older Australians are up in arms over a proposal to put an asset test on the family home, arguing it is unfair.

Key points: The ACCI proposes including family home in assets test

The ACCI proposes including family home in assets test Groups representing older Australians say it is "massively unfair"

Groups representing older Australians say it is "massively unfair" The Grattan Institute says including the family home in the pension assets test would be fairer for all Australians

The Australian Chamber of Commerce and Industry (ACCI) this morning said the family home should be included in the assets test for the aged pension.

But Paul Versteege from the Combined Pensioners and Superannuants Association said the proposal was "massively unfair".

"We're not quite sure why basically the most vulnerable Australians should be responsible for budget repair," he said.

"There are many other things that could be used to fix the budget.

"Basically people have worked all their lives to own their own home and to ask them at the point where they cease to work to basically start eating into their home equity is terribly unfair."



Mr Versteege said the overwhelming majority of aged pensioners were not investors and the value of their home was not their fault.

"They haven't driven up the price of housing, they have simply bought a house to live in," he said.

"And now because there is a budget problem all of a sudden they're asked to basically hock their house to pay for groceries."

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Ian Yates, from the peak body for older Australians, COTA Australia, said the proposal was not as simple as it sounds.

"What you do with the value of the home in terms of the age pension, for example, will affect things like capacity to pay for aged care later in life when frequently the home is used to buy into residential aged care," he said.

"When you actually look at the households who have high asset value in their home and get the age pension, the savings are not as large as people would think they are because many high value, high wealth households are not eligible for the age pension."



Including family home fairer to all

The ACCI released its pre-budget submission today, urging the Federal Government to implement spending cuts that would cause "short-term pain" for long-term budget sustainability.

The submission said retirees with assets, including the primary residence above the threshold, should instead be given interest-free pension loans against the value of the assets.

Brendan Coates from the Grattan Institute agreed that including the family home in the pension assets test would be fairer for all Australians.

"Ten years ago the average household aged over 65 got net transfers from government — that's cash benefits plus the value of government services, less income and GST and other taxes paid — of about just over $20,000 a year, and that jumped up to more than $30,000 a year in 2019, which is the last day that we have available," he said.

"And that's really because there's been increases in pensions, increases in superannuation tax breaks that mean seniors are paying less tax than they used to, and other increases in services, particularly on health and aged care, and that's had a really big impact on the budget position.

"The reality is that older Australians weren't paying enough in tax when they were younger to then cover the value of the entitlements they're now drawing from the budget, particularly when you add in the demographic pressures.

"There are just simply more older Australians, more Baby Boomers, the generation, than there were previously."