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Council on the Ageing (Australia)

Social security and social support for older Australians

 

Submission to

Federal Budget 2002-03

to

Department of Family and Community Services

Council on the Ageing (Australia)
Level 2, 3 Bowen Crescent
Melbourne Victoria 3004
Phone: 03 9820 2655 Fax: 03 9820 9886,
Email: cota@cota.org.au

December 2001

 

CONTENTS

Summary of recommendations
Introduction: The Budget Context
Adequacy, living standards and the Age Pension
More flexibility in the pension bonus scheme
An Earnings Credit Scheme for Age Pensioners
Adequacy, living standards and other social security payments
Meshing Newstart Allowance with retirement incomes policy
Deferrring abolition of Mature Age Allowance
Support for the National Information Centre on Retirement Investments (NICRI)
Taking forward Welfare Reform
Public housing the best solution for the most disadvantaged older people
Assistance for older people in private rental accommodation
Assistance for owner occupiers through home equity conversion and other schemes

Summary of recommendations

1. Introduction: The Budget Context

2. Adequacy, living standards and the Age Pension

2.1 An ongoing increase of $300 indexed or 3 per cent in the incomes of full pensioners. This builds on the initiative in the last Federal Budget of a one-off $300 payment. This pension increase or supplement needs to apply to all age pensioners and other people 50 and over who are reliant on social security incomes.

3. More flexibility in the pension bonus scheme

3.1 The Pension Bonus Scheme be revised to provide stronger incentives for people to remain in employment for between one and four years. It should also allow older people who have already received an Age Pension to take advantage of the scheme if they have opportunities to return to work.

4. An Earnings Credit Scheme for Age Pensioners

4.1 Establishment of an Earnings Credit Scheme commensurate with the Working Credit Scheme for working age people on social security payments.

5. Adequacy, living standards and other social security payments

5.1 An ongoing increase of $300 indexed or 3 per cent in the incomes of full pensioners and allowees. This builds on the initiative in the last Federal Budget of a one-off $300 payment. This pension increase or supplement needs to apply to all people 50 and over who are reliant on social security incomes.

6. Meshing Newstart Allowance with retirement incomes policy

6.1 The social security assets test for mature age people should be revised to more realistically reflect lifecycle factors affecting savings and to be cognisant of the retirement savings requirements of older Australians. This may lead to the development a graduated age-related assets test.

6.2 Newstart Allowance for older unemployed people should be increased or replaced with another payment that more realistically reflects the duration of unemployment they are likely to experience: the current level of a pension payment would be appropriate. This new payment should be introduced for people 50 and over – or even 45, the age at which age discrimination begins to manifest itself. The income test for this payment should also be lifted to the same income test as for a pension income.

7. Deferrring abolition of Mature Age Allowance

7.1 Defer abolition of Mature Age Allowance until there is an improvement in employment rates for people 60 and over.

8. Support for the National Information Centre on Retirement Investments (NICRI)

8.1 An immediate increase of $200,000 per annum to the funding of the National Information Centre on Retirement Investments to ensure that the service is available to all older Australians considering their investment options in both pre-retirement and retirement years. Additional funding is also needed to meet the demand for information about banking services.

9. Taking forward Welfare Reform

9.1 COTA believes that effective return to work strategies for mature age people should include specialises services covering:

Referral to appropriate services and training: good information and referral services urgently need to be developed specifically to meet the needs of all workers and potential workers aged 45 and over.

Careers advice: a national system of career centres that specialise in advising older people about potential careers and jobs that take account of their past experience, their current preferences, and their capacity for further education and training.

Assistance with job search: all older workers need an employment service that focusses on marketing them to employers.

Information technology training: courses need to be developed which build on the existing skills and experience of mature age people and their learning styles to ensure that they are able to compete for jobs in the new economy.

Transition to retirement programs: older workers need to be well advised about their income needs and lifestyle expectations in retirement and to be assisted to move away from full time paid employment as and when they wish.

Education about the labour market of the 21st century: many older workers need help to come to terms with the changes in Australia's workforce and how they might best tap into new and emerging job opportunities.

The introduction of age discrimination legislation to be accompanied by a campaign of positive reinforcement about the benefits of employing mature age people.

10. Public housing the best solution for the most disadvantaged older people

10.1 The Commonwealth Government re-establish a public housing policy and through the Budget allocate funds to the Commonwealth-State Housing Agreements for the purpose of increasing public housing stock and upgrading existing stock.

11. Assistance for older people in private rental accommodation

11.1 Older people on the full Age Pension in private rental accommodation be able to access good quality public and community housing.

12. Assistance for owner occupiers through home equity conversion and other schemes

12.1 Support older people to make use of Home Equity Conversion programs to help them remain in their own homes and to improve their quality of life.

12.2 Fund housing relocation services which address the barriers to relocation for older people who wish to move. Costs involved include removal costs, rental bond, stamp duty, conveyancing, transaction costs, connection fees and financial advice.

12.3 Improve home modification and maintenance schemes to assist older people to remain independent.

1. Introduction: The Budget Context

The election of the Coalition to a third term of Government provides an opportunity to follow through on policy reform in important areas that have already been commenced and to instigate new areas of reform.

Australia's population is rapidly ageing and the appropriate policy responses need to be instigated. The Prime Minister has indicated that ageing issues generally and ageing workforce issues in particular are priority areas of Government activity.

COTA believes it is important that the Government follow through on Welfare Reform and the National Strategy for an Ageing Australia. These processes have engaged a large amount of community resources to date. Both processes have considerable potential for delivering good policy outcomes for older Australians and the community at large. It is essential that new Ministers continue the processes commenced by previous Ministers in Health and Ageing with Ministers of Family and Community Services and Employment and Workplace Relations.

In addition to Welfare Reform and the National Strategy for an Ageing Australia, the Government needs to instigate a new review process around retirement incomes that encompasses the Age Pension, superannuation and pre-retirement incomes policy.

These policy processes provide a framework for the Government to tackle the most important issues facing older Australians in both the 50-64 age group and the 65 and over age group.

For those in the 50-64 group key issues include:

For people aged 65 and over, the key issues include:

The Government has indicated that the 2002-2003 Budget will be very constrained in terms of spending measures with cuts sought across portfolio areas. Nevertheless, as this submission notes there are very important areas of need that must be addressed even if this takes the Budget into deficit.

COTA is most concerned that the Government does not seek to bolster the Budget surplus through cuts to social and health programs. Given the waste of some of the tax expenditure measures in 2001 such as the reduction in fuel excise, the Government should fund any Budget shortfall through revenue measures or be prepared to take the Budget into deficit.

Major new areas of expenditure such as the commitment to the war on terrorism and the "Pacific solution" for asylum seekers could be paid for by a special tax or levy such as applied to pay for the commitments in East Timor or the gun buy-back scheme in 1996-97.

2. Adequacy, living standards and the Age Pension

Older people on full pensions and allowances continue to struggle to make ends meet. The GST has been a major cause but increased user pays, removal of some medications from the Pharmaceutical Benefits Scheme and pressures on services such as dental care have all played a part.

Eighteen months since the introduction of the GST, older people are reporting to COTA that they are feeling that costs for many products and services have substantially increased and that their incomes are inadequate. They have noted the considerable increases in prices in the areas of:

The economic status of older people in relation to the rest of the community is one of considerable interest.

At COTA's congress on 13 November 2001, Professor Ann Harding presented a NATSEM paper, Trends in the Assets and Incomes of Older Australians, which pointed to the long term increase in the wealth of older Australians between 1986 and 1998. However, the study showed both the unequal distribution in wealth amongst older people and the inequitable growth in wealth amongst income groups, in both cases favoring the most wealthy 25 per cent over the decade. The middle 50 per cent lost ground, although the lowest 25 per cent gained ground, all be it from a very low base.

Perhaps more disturbing however, are the findings of the NATSEM/Smith Family study (2001), Financial Disadvantage 1990-2000: The persistence of poverty in the decade of growth. This shows that there has been a persistent rise in poverty amongst older Australians between 1990 and 2000. In 1990, people 65 and over had a poverty rate of only 7.2 per cent of the cohort rising to 11.2 per cent in 2000. In addition, the proportion of 50-64 year olds in poverty rose from 10.6 per cent to 11.5 per cent. The report notes "This increasing poverty rate, the ageing population and early retirement are resulting in the over 50s making up an increasing share of the poor." The report also acknowledges that after-housing poverty rates have not changed for the aged over the decade.

COTA's concerns about older people relate to the incidence of before-housing poverty amongst many older Australians. This means that many older Australians are being tipped into poverty by factors other than housing.

While our primary concern remains with those who do not own their own homes, we are very conscious that a large number of older people as home owners are living in straitened circumstances unable to manage basic living costs and not managing the needed upkeep, renovations and gardening required to maintain a home.

COTA believes the Government needs to address the issues raised by these recent studies.

Most certainly, the studies show that there is no justification for additional support for higher income groups amongst the older population. Non-pensioner retiree groups have been the targets of significant public resources in recent years through initiatives such as the extension of the Commonwealth Seniors Health Card to people on incomes of $50,000 (singles) and $80,000 (couples) which will eventually afford this group with the full suite of both Commonwealth and State Government concessions. With an ageing population, this measure will prove very expensive over the long term and is not justifiable on either efficiency or equity grounds.

The Government must find the resources to assist older people on the lowest incomes and with the least assets.

Recommendation 2.1

An ongoing increase of $300 indexed or 3 per cent in the incomes of full pensioners. This builds on the initiative in the last Federal Budget of a one-off $300 payment. This pension increase or supplement needs to apply to all age pensioners and other people 50 and over who are reliant on social security incomes.

3. More flexibility in the pension bonus scheme

In the 1997-98 Budget, the Government initiated a scheme in the Social Security portfolio aimed at increasing the labour force participation of older people eligible for the Age Pension.

The program aims to:

The program is targetted to people of Age Pension eligibility age who are in employment. By remaining in the workforce, they attract a bonus payment accumulating at 9.4 per cent of the Age Pension per year so that at the end of 5 years a bonus of 47 per cent of the maximum amount payable pension would be given. The scheme is thus designed to maintain workforce participation for the full five years.

COTA endorses and encourages efforts to help older people to remain at work as long as possible but we are concerned about the low rate of take up of this particular scheme which we wish to see addressed in the next Budget.

Indeed many older people increasingly are wishing to work but are concerned about the disincentives in the social security system to do so.

COTA argues that there is insufficient reason to exclude people who may have opportunities to return to work after they have had a spell on an Age Pension. We believe they are contributing to the main aims of the program as much as people who have the good fortune to be in a job that they continue after pension eligibility age.

COTA is of the view that "retirement" is a rather arbitrary state of affairs for many older people often conditional on the state of the labour market rather than their own desires. The age pension eligibility age for women is only 62 and many at that age are still marginally attached to the labour market and may wish to work for a number of years if a suitable job becomes available.

A person should be able to qualify for the scheme at any point after the age they qualify for the Age Pension - it is not clear why there needs to be any restriction on age of participation as long as the person is in the workforce and earning sufficient income so that they are better off than being on the pension and thereby meeting the main aims of the program.

COTA believes that there should be greater incentives for people to stay in the workforce for one to four years. Many more people could benefit from the program if there were higher incentives for continuing for these shorter periods. We believe that there would be commensurate savings and tax revenue for the Government as well.

Older people who are part of our organisation say that the pension bonus scheme should offer more to people staying on in employment for shorter periods. Under present arrangements, a single person working for an additional three years gets roughly one third the bonus of the person working five years although the person is saving the Government around $20,000 on the Age Pension and is paying tax.

COTA is concerned that the program in its present form does not meet the needs of older people or sufficiently take account of their labour market circumstances. We think that some of the underlying formulas for the program are unfair and cause confusion amongst older people.

We believe that there is scope for the Pension Bonus Scheme but that it should be broadly targetted to give older people sufficient incentives to stay on in employment for as much time as they can manage - as little as one year or as much as five years and at any point that they can manage to gain employment when they may have already commenced receiving an Age Pension.

Recommendation 3.1

The Pension Bonus Scheme be revised to provide stronger incentives for people to remain in employment for between one and four years. It should also allow older people who have already received an Age Pension to take advantage of the scheme if they have opportunities to return to work.

4. An earnings credit scheme for Age Pensioners

Many older people have reported to COTA that there are significant disincentives for them to take up short term job opportunities that may arise. The Pension Bonus Scheme is more likely to assist those with opportunities for longer term employment opportunities of one year or more.

People on the age pension have opportunities for short term work such as for 6 weeks here and there over the year. They report they would like to take these jobs to help their income but feel constrained because of the strict social security income test.

COTA believes that there needs to be an earnings credit scheme for age pensioners commensurate with the Working Credit Scheme to be introduced with Welfare Reform for working age people from September 2002.

COTA believes that the divisions between working age people and people of pension age will in the future become increasingly indistinct and that policy responses should be flexible and keep up with people's desires and motivations in relation to paid employment.

Recommendation 4.1

Establishment of an earnings credit scheme commensurate with the Working Credit Scheme for working age people on social security payments.

5. Adequacy, living standards and other social security payments

There are many people in the pre-retirement years who are living in very similar circumstances to age pensioners. These people are on other pensions and allowances and struggling to make ends meet. These groups were very disappointed to miss out on the $300 one-off payment paid to age pensioners in the 2001 Budget.

COTA understands that the Welfare Reform process is designed to address a number of issues for mature age people of working age. However realistically, changes to the rate of reliance on social security in the age group will be very slow to achieve especially for those people who are already long term beneficiaries in the social security system. Many people in the age group may not have the possibilities of a return to work. Issues around adequacy of income support and adequate compensation for the GST need to be urgently addressed.

Recommendation 5.1

An ongoing increase of $300 indexed or 3 per cent in the incomes of full pensioners and allowees. This builds on the initiative in the last Federal Budget of a one-off $300 payment. This pension increase or supplement needs to apply to all people 50 and over who are reliant on social security incomes.

6. Meshing Newstart Allowance with retirement incomes policy

There have been significant shifts in government policy which are seeking to place greater emphasis on individual responsibility for income and care needs in old age. However, loss of a job followed by long term unemployment disrupts the accumulation process and places pressure on existing assets.

There are significant numbers of unemployed mature age people who are not eligible for any income support due to the social security assets test. Newstart Allowance is not payable to people with financial assets over the following amounts (September 2001).

Assets test for home owners

Family situation  
Single $141 000
Partnered (combined) $200 500

Assets test for non-homeowners

Family situation  
Single $242 000
Partnered (combined) $301 500

In the context of an asset base which would provide a reasonable level of independence from government income support in retirement, these assets limits are set at quite low levels. In addition there is no tapering of eligibility for Newstart Allowance, such that one dollar over the threshold, disqualifies an individual from any assistance at all.

The reasons for the strict assets test are well understood by COTA. The assets test has assisted in keeping outlays for unemployment payments in check and has ensured that assistance is targetted to those most in need. Short term income support has been and continues to be its primary purpose. Nevertheless, there are important questions about short term goals in social security financing versus long term goals for Australia's retirement incomes system. There is also an important question about the lifecycle context of the income support system.

Is the application of the same assets test to a 55 year old unemployed person as is applied to a 25 year old unemployed person consistent with the aim of Australia's retirement incomes policy to encourage self-provision?

COTA proposes that there is an inherent inconsistency in applying the same assets test for people in their fifties as is applied to younger people given that people naturally accumulate financial assets for retirement and old age as they age. Retrenchment payouts are often the single largest amount of money that people receive throughout a lifetime. This money may be the last savings an older person is able to make

The problem for many mature age people is that once an asset base has been depleted opportunities for building it up again are severely limited by lack of employment or new income generating opportunities. These issues are not faced to the same extent by younger people. Therefore it is not reasonable to apply the same rules to older people and younger people.

Protection of the assets for retirement and old age should be a primary goal of a retirement incomes policy. In addition to protection of existing assets, most people in their fifties wish to add to the asset base for retirement purposes. For many people, the fifties may be the first opportunity they have to save once children are off their hands and the house is paid off. The cost of raising and educating a family is very high. In addition the later age of marriage and child rearing may significantly delay the saving process.

Recommendation 6.1

The social security assets test for mature age people should be revised to more realistically reflect lifecycle factors affecting savings and to be cognisant of the retirement savings requirements of older Australians. This may lead to the development a graduated age-related assets test.

In the event that a mature age unemployed person qualifies for Newstart Allowance under the assets test, the following issues emerge:

The average duration of unemployment for people in their fifties calls into question whether or not Newstart Allowance at its current rate is the appropriate payment for this group. If poverty alleviation is a serious goal of the social security system, then the adequacy of Newstart as the primary means of support for unemployed people in their fifties experiencing long term unemployment must be questioned.

Recommendation 6.2

Newstart Allowance for older unemployed people should be increased or replaced with another payment that more realistically reflects the duration of unemployment they are likely to experience: the current level of a pension payment would be appropriate. This new payment should be introduced for people 50 and over – or even 45, the age at which age discrimination begins to manifest itself. The income test for this payment should also be lifted to the same income test as for a pension income.

7. Deferrring abolition of Mature Age Allowance

COTA believes that the Government's decision as part of Welfare Reform to abolish Mature Age Allowance from July 2003 (ie no new entrants) is premature. Joblessness amongst the over 60s is very high and until such a time there is a substantial improvement in employment opportunities for this group, a Mature Age Allowance which dovetails into the Age Pension will be needed.

Abolition of the payment will result in unnecessary stress and hardship. It is likely to result in more individuals in the age group taking up disability payments.

Recommendation 7.1

Defer abolition of Mature Age Allowance until there is an improvement in employment rates for people 60 and over.

8. Support for the National Information Centre on Retirement Investments (NICRI)

As a member of NICRI's advisory committee, COTA is aware of the valuable service that NICRI provides in assisting older people with modest means to invest wisely and safely.

The recent evaluation of NICRI's free-call service showed the value of the service to users particularly because of its independence and the professionalism of its staff.

With an ageing population and increasingly complex investment environment, older people need considerable assistance in understanding their options, the advantages and disadvantages of those options and the potential risks involved. In addition, mature age people now and in the future have more wealth to invest than they did in the past evidenced by the growth in part-pensioners in relation to full pensioners. Superannuation is also a growing area where information is needed particularly by people in the pre-retirement years.

NICRI is the only organisation in Australia that provides a totally impartial information service in relation to retirement investments. The service should be viewed by the Government as an important mechanism for protecting older people from poor investment choices which may result in loss of income and increased dependency on Government income support. Fairly or unfairly, governments are often blamed if older people lose their assets due to poor investment choices.

However, COTA believes that currently NICRI needs increased funding to expand its service. It is particularly hampered by lack of funds to meet the needs in rural and regional Australia.

In addition, there is a growing need for NICRI to develop its services in relation to banks which continues to remain the most important investment vehicle for most older Australians.

With additional resources, NICRI would be able to extend the reach of its service to ensure that more older people have the information they need to invest wisely.

Recommendation 8.1

An immediate increase of $200,000 per annum to the funding of the National Information Centre on Retirement Investments to ensure that the service is available to all older Australians considering their investment options in both pre-retirement and retirement years. Additional funding is also needed to meet the demand for information about banking services.

9. Taking forward Welfare Reform

According to the Department of Family and Community Services 1999 submission to the House of Representatives Standing Committee on Employment, Education and Workplace Relations, there are around 33 per cent in the 50-64 age group receiving a social security income and 46 per cent do not have paid employment.

COTA has had long standing concerns about the impact of the high rates of social security dependence in the age group on their security and well-being in older ages.

To some extent the Welfare Reform process is addressing the needs of this group but the commitments in the 2001 Budget on mature age employment issues were quite modest. Targeted resources amounted to only $146 million over 4 years to be spent in the main ($100 million) on Centrelink services leaving only a small amount of $45 million for employment, education and training services – a mere $11 million per year.

Mature age people will also benefit from a number of the other measures flowing from Welfare Reform including the Working Credit scheme, greater access to Intensive Assistance and voluntary Centrelink interviews.

The 2001 commitment falls far short of the policy and program framework of the report Participation Support for a More Equitable Society, the final report of the Reference Group on Welfare Reform.

In particular COTA is looking to the Government to fully fund the following recommendation of the final report of the Reference Group on Welfare Reform.

A5: Expand the range of assistance for mature age people who have become or are at risk of long term joblessness. Assistance measures might include financial counselling, personal counselling, access to Job Network services and assistance for return to work needs.

COTA believes that the 2001 Budget initiatives have only partially met the requirements of this recommendation and much more needs to be done.

There needs to be a targeting of services not only to those who are already long term jobless but also those at risk. This may include a large number of people who are either on benefits and allowances other than Newstart but also those not receiving any social security payment.

Mature age people not in the labour market need access to a wide range of counselling services including financial and personal as recommended by the Reference Group. In COTA's experience many mature age people do not receive the assistance they need because of a range of factors:

The Personal Support Programme is narrowly targeted to people with very high level of personal problems and very unstable lives such as alcohol or drug dependence or homelessness.

The needs of mature age people are quite different. Their needs are for specific counselling in a number of areas including:

This sort of counselling is at quite a different level from that being offered currently under the Personal Support Programme. We would expect that most mature age people requiring assistance have relatively stable lives but whose major problems from their late 40s into their 60s arise from their negative labour market experience and poor job opportunities. Specific counselling needs to be offered.

In addition, the recommendation A5 covers better access to Job Network services and assistance for return to work needs.

COTA believes that the access of mature age people to the Job Network still needs to be increased. We believe that the most effective way of improving access is to provide targeted services to this group.

A number of Job Network services have already developed good strategies for working with mature age people effectively. It has been disappointing to COTA that the Job Network operates as a series of self-contained entities that are reluctant to share information with each other about best practice.

There should be specialised services developed based on the best practice strategies of those Job Network providers already assisting mature age people. These providers should receive additional funding to provide services to a wide range of mature age people including people on payments other than Newstart Allowance.

Recommendation 9.1

COTA believes that effective return to work strategies under Welfare Reform should include specialised services:

Referral to appropriate services and training: good information and referral services urgently need to be developed specifically to meet the needs of all workers and potential workers aged 45 and over.

Careers advice: a national system of career centres that specialise in advising older people about potential careers and jobs that take account of their past experience, their current preferences, and their capacity for further education and training.

Assistance with job search: all older workers need an employment service that focusses on marketing them to employers.

Information technology training: courses need to be developed which build on the existing skills and experience of mature age people and their learning styles to ensure that they are able to compete for jobs in the new economy.

Transition to retirement programs: older workers need to be well advised about their income needs and lifestyle expectations in retirement and to be assisted to move away from full time paid employment as and when they wish.

Education about the labour market of the 21st century: many older workers need help to come to terms with the changes in Australia's workforce and how they might best tap into new and emerging job opportunities.

Other important recommendations of the report Participation Support for a more Equitable Society include:

A6: Solicit through the Job Network and other employment assistance programs, employers and organisations that are prepared to offer work experience for mature age people (including voluntary work) perhaps with a focus on small business.

D16: Specific initiatives are required to publicise the contribution that mature age people make to businesses and the community and to counter age discrimination in employment, which places mature age people at high risk of long term joblessness and social disadvantage.

One of the most important tasks ahead for Government is to take forward its election promise to introduce age discrimination legislation to match the legislation covering race, sex and disability.

The introduction of the legislation should be accompanied by positive messages to the community and business about mature age workers, in addition to clear information about the illegality of discrimination on the basis of age.

There should be a specific budget allocation for this task.

Recommendation 9.2

The introduction of age discrimination legislation to be accompanied by a campaign of positive reinforcement about the benefits of employing mature age people.

10. Public housing the best solution for the most disadvantaged older people

COTA is of the view that a range of policies and program responses are needed to cover the diversity of housing circumstances and needs of older people. The substitution of rent assistance for public housing has failed as a policy. The private rental market is tight especially in the capital cities. There is little investment in low cost housing and waiting lists for public housing have become impossibly long.

For older people on low incomes who do not own their own homes, public housing is the most effective means of preventing poverty. However, under the policy directions of the Government, there may be lower levels of access to public housing as a result of:

Our major concern is that the increased reliance on the private rental market is placing pressures on older people who do not qualify for residential aged care.

The typical older person who would most benefit from public housing would be an independent person or couple in their later fifties or sixties, who do not own their own home, who may have rented privately while working, but who are unable to adequately manage private rental after retirement or retrenchment.

Such people previously may have looked forward over time to placement in public housing units which would guarantee them affordability and long term stability.

However, with the lower levels of new additions to the public housing stock, such people would be almost permanently reliant on the private rental market. The drawbacks of such arrangements for disadvantaged but independent older people are many:

Clearly a good public housing system in competition with the private rental market can influence these problems associated with private tenancy.

Public housing, however, is not a suitable form of accommodation for an older person if it is poorly maintained, designed and located. Upgrading of the housing stock and its building in good locations is also necessary.

Recommendation 10.1

The Commonwealth Government re-establish a public housing policy and through the Budget allocate funds to the Commonwealth-State Housing Agreements for the purpose of increasing public housing stock and upgrading existing stock.

11. Assistance for older people in private rental accommodation

COTA is aware of the immediate problems of affordability faced by older people in private rental accommodation. The situation of older people in private rental accommodation should be subject to review and appropriate response. For older people, affordability is but one of a continuum of issues they face in private rental. Other issues include security of tenure, location and physical access and appropriateness. While Rent Assistance is an important income supplement and should be maintained and augmented, it does not address these issues. COTA considers that public and community housing would be better options than private rental for older people on the full Age Pension for the long term.

Recommendation 11.1

Older people on the full Age Pension in private rental accommodation be able to access good quality public and community housing.

12. Assistance for owner occupiers through home equity conversion and other schemes

While public housing and rent assistance are the major forms of housing assistance in Australia, COTA is of the view that any discussion of housing assistance for older people should also incorporate issues relating to owner occupancy. Most older people own their own homes or are close to paying them off.

Some older people have very large investments in their housing, often as a result of large, sustained capital gain over a very long period of time. Others, however, may have experienced a decline in the capital value of their house due to the economic decline of an area, as the condition of the house has deteriorated or other factors.

Most people wish to remain living independently in their communities as they age. However, the difficulties of up-keep on a house and garden may prevent this. In addition, where an older person becomes frail or incapacitated, the design and layout of the house may need to be modified.

COTA continues to identify home maintenance and gardening as amongst the major issues of concern to older people. There is some funding available through the Home and Community Care program (HACC) for home maintenance and modification and gardening. However, there is a lack of consistency in the availability of this type of assistance and generally poor accessibility. There is an urgent need for the Commonwealth to take on a leadership role in this area and to improve the availability of this type of assistance.

COTA is committed to the notion of "ageing in place" as far as is practicable. This means maximising opportunities for older people to remain in their homes and communities to the extent that they wish to do so as they grow older. "Ageing in place" is important for most older people but often has particular significance where there are attachments to localities based on ethnic and cultural ties.

As stated previously, COTA believes that the Commonwealth Government should take a leadership role in coordinating and financing home modification and maintenance schemes to assist older people to remain independent. One option would be to increase specific funding for this purpose through the HACC program.

There are, however, some older people in their own homes who would like to relocate, for instance to be closer to family or to move to another type of accommodation, but the costs of moving may prohibit uptake of this option.

There is a need for services which address the barriers to relocation for older people who wish to move. Costs involved include removal costs, rental bond, stamp duty, conveyancing, transaction costs, connection fees and financial advice. There is an absence of co-ordinated government policy with relation to costs of moving. Some States offer minor assistance or concessions and these need to be approached in an integrated fashion. There is need for further services such as COTA (South Australia)'s advisory service which offers legal and financial advice on relocation.

In addition, there is a need for Government support of Home Equity Conversion programs for those people who wish to make use of the equity they hold in their house.

COTA is of the view that there is demand for home equity conversion that is not being met. This issue relates to the issues raised above. This is a very strong theme amongst callers to the Seniors Information Service (SIS) that COTA auspices in a number of States and Territories. The demand for home equity conversion has risen considerably over 2001 related both to the difficulties people have in managing on low incomes and the capital gains they have in their homes.

Many older people ring the SIS with inquiries about access to the equity in their homes which is often their only asset. The need for loans is generated by a large number of factors but usually either to help with day to day living costs or to get essential repairs and maintenance done related to the home. Sometimes people wish to prepay for a funeral by borrowing against their home.

A typical case is of an older person in good health with no other income than the age pension and no other assets than the home which is of considerable value.

This demand is increased by the reforms to aged care which require many older people to find ways of releasing equity in the family home.

Home equity conversion would assist capital issues in residential aged care. The opportunity to pay an accommodation bond through home equity conversion is preferable to either paying high levels of interest on an unpaid bond or having to sell the family home quickly.

A number of schemes will be launched in 2002. It is critical that Government develops appropriate responses to these schemes so as to support older people to make use of these.

However, Home Equity Conversion will be an inappropriate option for many older people. For instance, the value of houses in many areas of Australia has not grown in many areas of Australia and in some areas has declined. It may not be desirable for older people with low value housing to access these programs.

Other assistance will be needed. This will include both direct assistance in maintaining a home and income support assistance.

Recommendations

12.1 Support older people to make use of Home Equity Conversion programs to help them remain in their own homes and to improve their quality of life.

12.2 Fund housing relocation services which address the barriers to relocation for older people who wish to move. Costs involved include removal costs, rental bond, stamp duty, conveyancing, transaction costs, connection fees and financial advice.

12.3 Improve home modification and maintenance schemes to assist older people to remain independent.

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Copyright © 2001 Council on the Ageing. All rights reserved.
Date: 16 January 2001
Revised:

Council on the Ageing (Australia)
Level 2, 3 Bowen Crescent, Melbourne Vic 3004
Tel (03) 9820 2655 Fax (03) 9820 9886
email cota@cota.org.au
www.cota.org.au