The Federal Government says it wants a discussion on accessing home equity to meet the costs of Australia’s ageing population, but so far has dismissed one proposed means of enabling it.
Finding “sensible, pragmatic ways” to unlock the capital that seniors have tied up in their homes could drive a very different quality of life for Australians as they age, the senior minister for aged care has said.
Minister for Social Services Scott Morrison said Australia needs to have “a serious conversation” about how we hold onto wealth and capital in our later years.
In a speech on Wednesday at the National Press Club, Mr Morrison said that while the government had ruled out including the home in the assets pension test, the country needed to have a conversation about “how we unlock the capital and provide the deep consumer markets that Mitch [Fifield] knows is needed to drive consumer-driven ageing service into the future.”
Referring to the recent Australia-China Free Trade Agreement, Mr Morrison said there was a new opportunity for Australia to “sell ageing services” into China. While Australia could become “the leading ageing services provider to the world,” Morrison suggested it had to first determine how the system could be sustainably resourced, saying: “you can only really sell offshore what you’ve had a good experience in doing with your own economy.”
He said Senator Fifield was currently working on fleshing this out: “The markets have to be deep, the capital needs to be there; the consumers need to be able to spend… from their own capital, from their own resources.”
Government-backed home equity scheme
Stakeholders welcomed Mr Morrison’s comments, saying they had already been raising with government the proposal for a government-backed home equity release scheme.
Various bodies including the Productivity Commission and the government’s own Commission of Audit have recommended such a scheme as a way of making home equity release a more appealing option to consumers.
Senator Fifield told Australian Ageing Agenda in May last year that this was not something he was examining. “There may well be particular products that the private financial services sector looks to develop, but that’s a matter for them,” he said at the time.
Last July AAA investigated the commercial home equity release products that were available on the market and found the options for funding residential aged care were limited.
In its recently released position paper on housing, Aged and Community Services Australia (ACSA) again called for a government-backed home equity release scheme, as well as an ‘age pensioners saving account scheme’ in which older Australians could invest the surplus from the sale of their home.
Responding to the latest comments from Mr Morrison, a spokesperson for ACSA told AAA that its recommendations had been forwarded to Mr Morrison and Senator Fifield.
The spokesperson added: “There are ongoing discussions with both ministers about the need for older Australians to be able to use the capital tied up in the family home.”
Ian Yates, chief executive Council on the Ageing, said his group had also been raising the issue of a government backed or supported home equity release scheme with Mr Morrison: “We wanted to engage him in the conversation to explore the various options available, which I think we seem to have succeeded in.”
Mr Yates said a wide-ranging conversation was needed, given the issues were complex. “We’ve said [to government] we’re prepared to have a conversation about everything, if they’re prepared to put everything on the table.”