Grattan: Wind-back retiree tax breaks to pay for aged care

Over the past several weeks, I have lobbied hard (here, here and here) against lifting income taxes to pay for aged care for three primary reasons:

1. Older Australians are the wealthiest cohort in Australia, with around 80% owning their homes, whereas home ownership has crashed for younger Australians.
2. Older Australians have experienced by far the biggest increases in wealth over the past 20 years, whereas younger working Australians’ wealth has stalled.
3. Raising income taxes to pay for aged care would worsen the inter-generational divide by penalising the working-aged population for the benefit of the wealthy elderly population.

Instead, I proposed a HECS-style subsidy where the federal government would pay for a person’s aged care upfront and then recover the cost from the person’s estate once they die.

This approach would lift funding for aged care without burdening younger working Australians with additional taxes.