Soaring NSW housing costs drives seniors to brink of homelessness

By Leith van Onselen

Although older Australians have captured an increasing share of Australia’s wealth:

Largely because they have increased their home ownership rates over the past 55 years at the same time as home values have skyrocketed:

The situation is nowhere near as rosy for Australia’s renting pensioners, who are doing it tough. Earlier this month, Mission Australia released a new report revealing that nearly 22,000 people aged over 55 sought homelessness services between 2015 and 2016, up 15% from the previous year.

And yesterday, The ABC released unpublished data from the Australian Department of Social Services, which showed that there are 32,000 homes where seniors are paying unaffordable rents:

It’s a 50 per cent rise in the past five years and includes 9,000 people, 65 and over, who are paying more than half their income on rent.

The figures are included in the latest Ageing on the Edge Project report, to be submitted to NSW Social Housing Minister Pru Goward this week.

The report’s co-author, Dr Debbie Faulkner, Housing and Aging research fellow from the University of Adelaide, said the scale of the problem posed a significant challenge.

“How do we provide better living circumstances for this number of people? Particularly when it’s thought that this situation will only worsen over time,” Dr Faulkner asked.

She said while the crisis was amplified in NSW because of the housing market, it was an Australia-wide issue for people aged 65 and over.

“The Government’s policy direction is to try and encourage people generally to survive in the rental market using commonwealth rent assistance as a subsidy, but we know for older people it just doesn’t work,” he said.

“We are seeing people paying 70-90 per cent of their income in rent on the aged pension, and that is quite standard these days.

“People are talking about not being able to afford basic things like food and medication which are really critical needs for people’s health.”

To be fair, rental stress is a widespread problem for lower income households in Sydney:

Nevertheless, the findings above argue for broad reforms to both the housing and the Aged Pension systems.

On the housing side of the equation, there is a clear need for greater public investment in social and community housing, as well as reforms to taxation arrangements to boost affordable housing via targeting negative gearing at new builds (similar to Labor’s policy). We also need rules that give greater security of tenure to renters, like those that exist across much of Europe.

Regarding the Aged Pension, it should be reformed to provide less taxpayer assistance to wealthy home owners and more assistance to renters, via:

1. Including one’s principal place of residence in the assets test for the Aged Pension at some point in the future (e.g. 1 July 2020), thus allowing current retirees and prospective retirees adequate time to make arrangements.
2. Once implemented, raising the overall assets test for the Aged Pension, and the base rate as well.
3. Extending the existing state sponsored reverse mortgage scheme, the Pension Loans Scheme, to all people of retirement age so that asset (house) rich retirees can continue to receive a regular income stream in exchange for a HELP-style liability that is recoverable from the person’s estate upon death, or upon sale of the person’s home (whichever comes first).

Under this plan, house-rich pensioners could continue to receive a regular income stream as they do now under the Aged Pension, but with less longer-term drain on the Budget and on younger taxpayers. At the same time, the circa 20% of renting pensioners would receive greater financial assistance – both via and expansion of the assets test and an increase in the base rate (see here for a detailed examination of this issue).

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