Housing Crisis... your fault, old people

Discussion in 'Property Market Economics' started by larrylarry, 2nd Nov, 2015.

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  1. wogitalia

    wogitalia Well-Known Member

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    Change money to wealth, same difference. They have an asset worth millions that they sit on because it is "protected" and allows them to exploit the system for personal gain. They are not unique.

    The other key part I have bolded, they are able to look after themselves yet they want handouts. Why should they get handouts if they are able to look after themselves and that especially includes financially as you indicate they are.

    No one is saying they have to do anything drastic, they should just not get the pension and have to use their million dollar asset to support themselves, it's up to them how they wish to do it, whether it be downsizing, renting or mortgaging but they absolutely should support themselves and not rely on handouts.

    This isn't even middle class welfare, this is millionaire welfare.

    Look for me it's pretty simple, if you've got millions in assets then you can afford to support yourself and thus you should support yourself.


    Why not reverse mortgage it then? Doesn't force her to move at all, just forces her to support herself off the back of her asset that she bought 50 years ago for nothing and is now worth millions. The fact that she hasn't planned to support herself in those 50 years and has decided "I'll just take the handouts instead" should mean she has to make the "tough" decision on the asset she has decided to hold. No one is saying kick these people out on their asses (well no reasonable person anyway) just that they should have to use these million dollar assets to support themselves just as I should be expected to use my current cash holdings to support myself before I should be eligible for any kind of support.


    You will get absolutely no arguement from me on targeting those types even harder. They should be targeted even before aged pensions because they're a bigger blight (at least aged pensioners have generally contributed something towards that kitty they are now grabbing at gleefully).

    BUT, if you have millions in assets and draw an age pension, you are absolutely sponging off the government, I don't think there is really any other way to put it. Being old doesn't change what it is. Drawing a legitimate aged pension where you have no other means of support is welfare and while it's rather unfathomable that anyone that is of age pension age now should be in that position given Australia's prosperity and focus on protecting the wealth of the older generations in the relevant period, it is fair enough to support them anyway.


    It's poor planning to have not provided for your retirement. Maybe poorly is the wrong word, realistically they've planned brilliantly, they've poured all their money into a protected asset class so that they can be eligible for welfare and make taxpayers support them instead of supporting themselves, I mean it's crafty and all but it's no better than the dole bludgers with the same mentality and, imo, it shouldn't be tolerated just because people are old. We don't want to tolerate young people who want to be permanent students, we don't want to tolerate the middle class from exploiting our health system (medicare levy surcharge) so why are we accepting of pensioners who are very wealthy exploiting the system?

    It's not hard, you set a reasonable threshold where the house is protected (I'd suggest the median property price of the capital city) and if your PPOR is above that, your pension phases out based on a reasonable rate of return for how far above you are to a certain point where you become ineligible. If you have millions in assets, you support yourself in retirement.

    I don't think it's an unreasonable position and I fully agree that there are other classes of welfare cheats that are just as worthy of time, the difference is this one is a particularly easy fix and a massive drain on the economy, so the logical option is to fix it first and shut down this particular element of welfare exploitation.

    I'm not going to be swooping in on their properties or anything, I have no horse in the race, it's just the common sense approach to welfare. People with millions in assets shouldn't get welfare, they are the least needy and welfare is for the needy.
     
  2. Azazel

    Azazel Well-Known Member

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    And the poor oldies who were close to retiring - and then their meagre super got screwed by the GFC.
     
  3. juzzy

    juzzy Well-Known Member

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    This is what kills me. How can you assume that the person in Melton has blown all their money?

    Maybe they were a low income earner, which is why they lived in Melton?

    Maybe the person in Malvern was a low income earner too, but just happens to be now sitting on $2m worth of land that they bought 50 years ago. But it doesn't matter how they got to this level of net worth, the fact is that they have it.

    Person number 1 needs the pension.

    Person number 2 doesn't.

    People are over-complicating this issue and bringing emotion in to it.
     
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  4. Travelbug

    Travelbug Well-Known Member

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    When I originally posted I was responding to the OP that said people should downgrade and not expect your people to support them via a pension. $250K is a nice topup to the pension but downsizing is not going to make people self funding.

    I did some work for Meals on Wheels many years ago. There were quite a lot of grannies living in huge houses that they could not afford to upkeep. Family can be scarce until they think the time is near.
    Yes but it just means they still own one house to live in. It doesn't equate to increasing cashflow or quality of life. People 30 years were probably saying "oh those people and their big fancy $100K houses shouldn't be on the pension".
     
    Last edited: 3rd Nov, 2015
  5. wogitalia

    wogitalia Well-Known Member

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    Brilliant post.

    There is a massive difference between "deserves" and "needs". Those who need the aged pension should get it. Those who deserve it but don't need it, should not.

    You can make a case that person one who blew their earnings doesn't deserve the pension but the fact is that they need it (welfare is for those who prove incapable of supporting themselves, whether you agree with that concept is a whole different matter).
     
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  6. Graeme

    Graeme Well-Known Member

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  7. MTR

    MTR Well-Known Member

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    How effective will this be?? One rule for those who worked hard all their life and paid off their house, their one and only asset and another for those who did not, who is more worthy?? Great way to cause a divide in this country, it will never happen.
     
  8. dabbler

    dabbler Well-Known Member

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    Not coming to any functions you hold with light snacks provided ! ba ha ha
     
  9. dabbler

    dabbler Well-Known Member

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    To those that would force people out of the family home, well I think your forgetting they paid their dues and whilst they are able to live independent and happy, I think it is a bit rich to try and push them out early (especially rich on an investment forum from investors), have you forgotten the new pension age ? do you not realise you will be there quick enough.....hands off I say.

    I am all for ridding those who milk the system, but this idea is like what you would expect living in a communist country, have to be careful not to punish those who are genuine.
     
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  10. Esel

    Esel Well-Known Member

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    I think its something we will have to look at for future generations. I dont think its fair to change the rules on the current crop of pensioners. do we even have enough suitable housing stock for them to downsize into?
     
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  11. JohnPropChat

    JohnPropChat Well-Known Member

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    The first thing the government should do is stop calling it "Pension" - It should reflect what it really is - a support payment for the elderly who can't take care of themselves financially. Call it Elderly Assistance payment or something.

    I am in favor of a proper means test. That should include "all means" - However, there should be a safety provision so any value in PPOR below say median price is excluded from the means test. That way home ownership is still encouraged and exemptions keep up with times.

    For those arguing that why the *hard working* should be penalized - It's no so black and white. A small business owner who started out doing 100 hour weeks to get his business to where it currently is doesn't get any concessions on tax because he worked hard - he makes more so pays more. Similar thing with university education - A uni grad looses 4 years in employment time/wages in addition to HECS debt. In the long run he may end up making more than someone who dropped out of high school and started working right away. Since the uni grad worked "harder" should he get tax incentives or kickbacks - absolutely not.

    People who intentionally abuse the system are scum. No point in comparing good people with the pieces of **** these abusesers are.

    End of the day - if you have the means then by all means support yourself. How one ends up with the means is irrelevant.

    Welfare is a wonderful thing - it's important that it be available for decades to come to those who need it and for second chances.
     
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  12. sash

    sash Well-Known Member

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    OK.

    Lets just say the govt is looking at the following to manage the amount projected costs of an ageing population:

    1. GST increase to 15%...personally I think they will go to 12.5% first.
    2. Start taxing incomes of retired people where most are now exempt if is primarily through super. I think they will leave a generous tax free threshold in place - i.e. 30k for singles and 40k for couples prior to the marginal rates kicking in. So vast majority of retirees will not be affected by tax.
    3. Force employees to contribute to super in addition to companies (they plan to increase super to 12% for employers)...so they might ask employees to contribute another 3-6% on top. If people tuck away 15-18% of income over 35-45 years...they will end up with 50-70% of the average wage at retirement. That way they have more self funded retirees.
    4. Very possible they will implement a national health insurance system with a safety net down the track.
    5. They will also apply the assets tests for houses worth over a certain amount by location.

     
  13. Scott No Mates

    Scott No Mates Well-Known Member

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    we need more good acronyms.
    Help oldies live in dignity as young Capitalists are more priority (holiday camp).
     
    Last edited: 3rd Nov, 2015
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  14. Chrispy

    Chrispy Well-Known Member

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    From the age of 23 we knew we would not qualify for the pension. We simply continued to work and pay off IPs. So I get to retire at age 68 and live off rents and gradually sell off some of the IPs, keeping only those that are the least trouble. I get no pension, no assistance with reduced prescriptions, no assistance whatsoever. I am quite happy except when I pay huge tax on the CGT when I sell properties. This is my super but I get no special tax.

    I believe we should have a similar system to the UK where people working pay stamps for their old age pension and get it no matter what they own. In other words its super. People who have not worked still get the pension but it is reduced.
     
  15. joel

    joel Well-Known Member

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    Sure, force me to contribute to my super, and then either a) its all be wiped out in a GFC-type event, b) the rules/fees change or increase, and the balance is eaten away, or c) I'll die before I can even access it.

    I've seen what happens to super when you stop working a 9-5 job - my parents became self employed 10 years ago and now only have a few K left. Woo, what a retirement. Let's scrap the pension while we're at it.
     
  16. Scott No Mates

    Scott No Mates Well-Known Member

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    They stopped contributions? Great savings plan. The basis of super is that you contribute (employer), there's no compulsion for the self employed but there are concessions if they sell the business.

    My super has more than recovered post gfc but I didn't crystalise my losses by changing investment streams when the crunch hit.

    I know that I am looking forward to a healthy untaxed income stream equivalent to my net salary for 30 years post retirement age.

    Pretty much a government controlled defined benefits scheme - at least it's funded by contributions (unlike our old public service super scheme).
     
    Last edited: 3rd Nov, 2015
  17. sash

    sash Well-Known Member

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    OK ...I am lobbing the grenade with the pin pulled out......

    I am a Gen-Xer......from where I sit some of the most selfish people I know are the baby boomers and generation before. A lot of these people sit on homes worth in excess of 1.5m in Sydney and Melbourne as they bought over 20-30 years ago. Most don't have large amounts in Super...but they expect to get the pension despite having a house worth 1.5m. In my opinion this is where the target needs to target....any one with more than $1m worth of PPOR needs have the excess applied to the assets test.

    Why am I in favour of this..it is because we should try not to screw the generations below us too hard. This is not good....people need to give a little to get something in return. In my opinion this is going to happen irregardless anyhow. I am not in favour of a 15% GST as it is very regressive and will hurt the poorer people more.

    I look to diatribe of vitriol any moment now.....
     
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  18. twistedstats

    twistedstats Well-Known Member

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    I agree something needs to change as there are serious questions over equity. I am 100% certain that the age pension in the current form will not be around when I retire. What I particularly dislike is when some people refer to Australia as a "rich country" as a way of legitimizing handouts and excusing themselves from a bit of hard work.

    However, some pensioners did indeed buy their house (for not much) 20-30 years ago and they live in the same house (it might be worth a lot now but their lifestyle hasn't really changed). They may have no other means to support themselves and including PPOR in assets test will essentially force them to sell. Which is why an inheritance/death tax seems a good idea. Doesn't need to be as high as 30% as in UK. On an average $1.1m property in Sydney, a 10% tax could go some away to offsetting this. Could apply an exemption to those never on age pension?
     
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  19. JohnPropChat

    JohnPropChat Well-Known Member

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    What the payment is called means squat, really. I think the current payment rates should keep up with costs - I've seen some really needy retirees that are single and can barely pay rent and have little left over for everything else.

    How many people think "dole" is an entitlement?
    Now how many people think "age pension" is an entitlement?
     
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  20. Chrispy

    Chrispy Well-Known Member

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    Neither is an entitlement. If houses are to be included in asset test then so should super.
     
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