Finding common ground

We believe that some of Alan Kohler’s latest criticisms of the retirement village industry is unfair and ill-informed, writes Mary Wood.

The retirement village industry has been subject to some strong criticism from respected business commentator Alan Kohler in a recent series of articles for his Business Spectator website, subsequently reproduced for a wider audience on ABC’s The Drum.

We believe some of his criticism is unfair and ill-informed, and doesn’t reflect the typical village experience. The consumer experience is paramount in any industry, and a 2013 national survey (McCrindle Baynes National Village Census) found that 98 per cent of recent village residents would still make the same decision to move into a village, if they had their time again. The same survey found residents also had higher rates of happiness and wellbeing than when they lived in their family home.

Amid the criticism, though, is some common ground. In Mr Kohler’s piece last week, he wrote about the pressing need to provide more housing choice for seniors. “Australia’s retirees are rattling around in family homes that are too big to look after, and often dangerous (because of the stairs) because the houses are not counted in the pension means test, no matter how valuable they are, while the cash proceeds of selling them are,” he wrote.

With this sentence, Mr Kohler identifies a large deficiency in the structure of the current Age Pension Asset Test. The test acts as a big disincentive for seniors who want to ‘downsize’ to a smaller home, such as a villa within a retirement village, because of the hit to their weekly pension.

The Retirement Living Council is a strong advocate for a federal seniors’ housing policy. In particular, initiatives that encourage downsizing, enabling seniors to stay independent for longer, and delay or avoid residential aged care. Downsizing not only has many positive social benefits for the individual, but also very significant cost savings for governments in respect of aged care and hospitalisation spending.

Where we part ways with Mr Kohler in respect to downsizing is his argument that national regulation of retirement villages should occur before seniors housing policy can be attempted. While the RLC supports the recommendation of the Productivity Commission in 2011 that nationally consistent principles for regulation should be spearheaded by the Australian Government, the Age Pension Asset Test is a real and current barrier to downsizing that could be responsibly removed now.

Indeed, the Productivity Commission has also recommended that the Australian Government should support such innovative schemes that allow wealth in family homes to be unlocked, and seniors to downsize without being penalised.

In a fiscally conservative climate, support for a seniors’ housing policy is hard to find. That’s why the RLC has commissioned research, to be released soon, on the economic and fiscal benefits of independent living in homes – such as retirement villages – designed for frail older bodies.

Through this research we aim to show the economic multipliers of unlocking home equity, and supporting seniors who wish to move – an outcome we all can agree upon.

Mary Wood is executive director of the Retirement Living Council at the Property Council of Australia.