Government can improve the seniors housing market

Australian governments at all levels spent over $13 billion in 2012-2013 on residential aged care and community care packages for senior Australians. This figure has grown substantially over the last few years, and is set to continue rising with the doubling of the over 65 population by 2050.

The demographic data highlights the need for governments to be efficient with public spending on aged services, to ensure that every older person who needs age adapted housing and support can get it, and can afford it.

The best strategy for ensuring there are affordable options for all seniors is for governments to do everything in their power to enable people to stay independent for longer, thus delaying or potentially even avoiding the need for intensive (subsidised) residential care.

Significant savings could be made by the Australian and state governments adopting policy settings to encourage growth of the retirement village sector. The retirement village sector is made up of both for-profit and not-forprofit providers, housing age pensioners as well as self-funded retirees. Its business model is innovative and uses private finances - allowing asset rich, income poor seniors to unlock their housing equity and pay for the age-appropriate housing, services and support they need.

Care, social and health services are provided on-site at villages. Moreover, McCrindle surveys show that people who choose to live in villages tend to live longer, happier lives with more independence than those in the general community.

Traditionally, the retirement village sector hasn't been well understood at a federal level, due to the historical responsibility of state governments for fair trading and the fact that village residents are not entitled to accommodation or service subsidies.

There's a very compelling case, however, for a coordinated, strategic approach across governments to ensure the retirement village sector can grow apace, through creation of a national seniors housing strategy (as some state governments South Australia and Tasmania for instance - have already done).

The previous federal government took an initial tentative step towards adopting growth settings for this sector with the announcement of a 'downsizing' pilot program in 2013. This program would have enabled age pensioners to sell their family home and move into a smaller property more suitable for their needs, with up to $200,000 of the sale proceeds quarantined from the age pension asset test.

The creation of the program was an admission that the current age pension assets test is a deterrent to downsizing. Old existing family homes on large blocks, often with big backyards and stairs, are hard for many senior Australians to maintain and afford.

Moving to a smaller welldesigned property such as a unit in a retirement village, removes that burden. But under current regulations, age pensioners stand to lose part of their income, so they choose not to downsize.

The pilot program was not perfect in its design, but it was a first step towards a seniors housing plan. Unfortunately due to budgetary pressures, the program, like dozens of others, was axed, in this case before it commenced.

While we understand the need for the budget to return to the black, penalising seniors who wish to downsize just decreases the likelihood of people choosing an independent living option - a result that means more pressure on the aged care system and taxpayers.

Around 6 per cent of the over 65 population currently lives in a retirement village. Without a clear plan for growth of the retirement village industry, the Australian Government will be lumped with unnecessary aged care expenses for years to come, and many senior Australians will have no option but to move to residential aged care facilities, when living in their two storey family home becomes too hard and too expensive.

A national seniors housing strategy, with a focus on lifting the supply of affordable housing that is built to support independence, would help address budgetary pressures and increase individuals' quality of life.

Such a strategy should include an examination of how the age pension asset test rules impact housing choice, and we would encourage a partial exemption of the cash balance from the proceeds of sale of a family home to ensure that all age pensioners who wish to downsize can do so without losing out.

Making retirement living a standing item on meetings of federal and state ageing ministers, and a focus on improving the tax treatment of the retirement village asset class, should also be included in a seniors strategy.

We hope the Federal Government can provide leadership in this area, and recognise the many benefits this sector has for seniors and taxpayers.

Mary Wood is Executive Director, Retirement Living Council at the Property Council of Australia

This piece was first published in the Australian Ageing Agenda