Obviously, Packer is highly unlikely to be interested in qualifying for the pension. But there are a lot of people with homes worth $10 million, $5 million or $1 million who are very keen. According to an analysis by the Australian National University, more than 255,000 live on taxpayer-funded pensions while owning homes worth more than $1 million. Almost 30,000 of them live in homes worth more than $2 million.

The cost of paying pensions to people in houses worth at least $1 million is more than $6.3 billion a year, of a total cost to taxpayers of about $50 billion for all age pensions. This enormous cost of pensions is a major reason it is so difficult to return the budget to surplus. Moreover, quite a lot of those taxpayers are actually a lot less wealthy than those receiving a pension, particularly the ones with multimillion-dollar houses.

The country cannot afford to be generous to those in need if it is being generous to those who are not in need.

I am a firm believer in the effect of incentives on behaviour. Fairly obviously, the incentive to qualify for the age pension, including both the income, health benefits and various discounts, is enormously strong. The Baby Boomer generation, of which I am a member, has responded to this by learning how to take advantage of it, at massive cost to other generations. They have become, quite literally, a parasitic generation.

Clearly, the incentives need to change so the age pension returns to its original purpose. This should occur gradually and reassuringly, so that those affected have time to adjust to the fact that they are not poor and can look after themselves, but it absolutely must occur. The country cannot afford to be generous to those in need if it is being generous to those who are not in need.

The Baby Boomers will of course trot out their objections: I’ve paid taxes all my life; the government promised everyone a pension in 1945; you are forcing me out of my house; it’s not my fault my house is worth so much; why should my profligate neighbour get a pension and not me; and, this is stealing my kids’ inheritance. The assistance of younger generations may be needed to point out why they are wrong.

As to what pension eligibility ought to be, there are several options. One is to include an imputed return on house values in the income test. That would require the government to place a value on dwellings, but the median value of houses, units and townhouses by town or suburb is easy enough to work out.


Another might be to relax the eligibility criteria but treat pensions as taxable income, creating an incentive to generate additional cash including through the release of equity in the family home.

There are other options too but, irrespective of how it is achieved, something must be done. It is simply immoral for taxpayers who don’t even own a house to be funding the pensions of those who could be living in a $60 million house. Incentives that promote parasitism cannot be defended.