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A good retirement needs decent income, housing, health and aged care

With an ageing population, Australians are having a debate about how to ensure that we have a decent standard of living in retirement. There is increasing concern across the community about whether our system of tax concessions for superannuation is delivering the outcomes Australians need. A good retirement requires more than an adequate income stream, it also requires people to be able to live in affordable, good quality and secure housing, and have access to affordable health care and high quality aged care.

The Australian Council of Social Service (ACOSS) reinforced this need when released its submission to the Australian Governments retirement incomes review. ACOSS called for the Australian Government to strengthen all three foundations of a secure retirement: incomes, housing, health and aged care. To quote ACOSS’ media statement: “Too much is spent supporting the retirement incomes of a well-off minority, and too little on income support and basic services for all who need them.”

Retirement incomes

ACOSS in its submission sets out the imbalance in the Federal Government’s support for retirement, with around $30 billion spent each year in efficiency tax concessions for superannuation, heavily skewed towards people on higher incomes. Half the value of these tax breaks goes to people with the highest 20 per cent of incomes, and has made superannuation a tax avoidance and succession planning scheme, rather than a retirement income system.

The age pension is a cost-effective way to reduce poverty in retirement, especially now that the assets test has been tightened to target those most at risk. In stark contrast, one-in-seven older people aged 45-65, just before retirement age, are struggling on the $37 a day Newstart Allowance whilst looking for paid work.

There needs to be a comprehensive and integrated review and reform of retirement incomes policy so that every Australian can receive adequate incomes in retirement, and to make sure our superannuation and age pension work together to achieve that purpose.

Affordable, secure housing

Housing affordability and security is one of the most pressing issues for older people who retire without owning their own home. Currently, rent assistance only provides $64 a week private rental subsidy, which is well below housing costs for the one in ten Age Pension recipients who rent privately. ACOSS has also called for reform of negative gearing to close the loopholes that overwhelmingly advantage higher income earners. The ACOSS inequality report shows that around 80 per cent of the wealth in investment properties is owned by the richest 20 per cent of Australians.

ACOSS has called for a national affordable housing strategy which includes substantial investment in social housing, reform of negative hearing, replacing stamp duties with a broad-based land tax, increasing rent assistance, and easing constraints on affordable housing through planning and land release policies.

Health and aged care

As Australians age, a strong and universal health care system will support good health throughout the ageing process. The Australian Government has cut health funding to the States by $10 billion a year, and has also foreshadowed funding cuts to health services they fund directly. Similarly, securing an aged care place has become more difficult, with older Australian increasingly having to use equity in their homes to obtain a place.

Together with State, Territory and local governments, the Australian Government can strengthen guarantees about access to health and aged care, by implementing sensible tax reform which will provide revenue for now and the future to strengthen these essential universal systems to allow every Australian a decent retirement, particularly for those facing poverty and disadvantage.

Looking at all options

We will only achieve sensible reform if our leaders can create an environment for reasonable debate and negotiation. Too often, leaders get drawn into the ‘rule in, rule out’ game too early, which means that potential solutions do not get serious discussion.

We also need to focus in on the retirement situation for groups of Australians who are at risk of being unable to secure a decent retirement. These include Aboriginal Australians, people with disability, and women. The Senate Economics Committee is currently examining the economic security for women in retirement, with submissions due on 30 October 2015.