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Thursday, 7 June 1984
Page: 2757

Senator TEAGUE —My question is directed to the Minister for Social Security. Another area of confusion and public concern arising from the Government's imposition of an assets test on age pensioners and not yet taken up in the Press concerns those home owners still paying off a mortgage on their homes. For example, a pensioner owning a home valued at $50,000 on which there is a mortgage may hold half the equity of that property but have a mortgage for the other half, that is, of $25,000. However, a pensioner not owning a house is eligible on this account for a supplementary $50,000 of assets to be exempt from the test. In this comparison, I understand the home owner is disadvantaged to the extent of the mortgage. I ask the Minister whether the assets test will take a mortgage into account. What are the detailed provisions that will apply?

Senator GRIMES —I would have expected Senator Teague to come up with nit-picking objections of this type. The assets test is perfectly clear: The purchase or ownership of a home is completely excluded. The addition of the $50,000 to the assets of non-home owners is to take into account the fact that there is an advantage over those who have their home excluded, whether that home is worth $ 25,000 or $300,000. In fact, in the vast majority of cases non-home owning pensioners-renters-in fact have very few assets at all. The only ones who will have assets of any substance are those who are in nursing homes who have sold their own homes, and it is largely for them that this provision is introduced.

In excluding the home or the principal place of private residence, whether or not there is a mortgage on that home does not come into account. If Senator Teague really wants to complicate an assets test, I suggest the best way to do it is to take into account every mortgage and every encumbrance on the exempt assets and try to make up in some artificial way part of the extra allowance which has been given to non-home owners. There is no suggestion that that should be done. The Gruen Panel of Review of Proposed Income and Assets Test did not suggest that that would be a sensible thing to do, nor have I heard it suggested by any other commentator in this area.