Matt Burnell (Spence, Australian Labor Party) Share this | Hansard source

I rise to speak today in support of the Social Services and Other Legislation Amendment (Incentivising Pensioners to Downsize) Bill 2022. This bill is another example of the Albanese Labor government putting legislation before this parliament to fulfil a commitment made to the Australian people before this year's federal election. This bill is one that many, particularly seniors lobby groups, have been crying out for for some time. This bill sensibly aims to reduce the impact and therefore a potential impediment for someone on income support payments thinking of selling one family home and buying a new one without falling foul of the assets test for an increased period of time.

Whilst not the only beneficiaries of the provisions in this bill, age pensioners will see significant benefits as a result of these changes, and it goes hand in hand with our government's commitment to support pensioners to live with dignity and ease cost-of-living pressures for them and, indeed, for all Australians, particularly those doing it tough. This bill will benefit around 6,260 age pensioners, 600 disability support pensioners, 380 carer payment recipients and 830 JobSeeker recipients each year, with roughly 60 per cent of those being women.

I'm always keen to take an interest in legislation before this place concerning amendments to social security law. My electorate office, like those of many members here in the chamber, naturally receives quite a heavy flow of inquiries relating to social security payments daily. Another possible reason for this case load could be down to the raw numbers—a big reason why this policy area is of great interest to me. My electorate of Spence, according to the latest available data, is in the top third of the 151 electorates for our number of age pension recipients. It is the sixth-highest for carer payment recipients, has the second-highest number of JobSeeker recipients and ranks first for its number of disability support pensioners.

It is worth noting from the outset that this bill does not claim or intend to force people to downsize their homes. It is merely to make the decision-making process one goes through with such an undertaking a bit easier, with less time pressure. This bill aims to minimise the barriers one faces when making important life decisions such as this, whether those decisions occur by circumstance or by design.

Even without the amendments this bill is introducing, 8,000 pensioners downsized last year. There are many and varied reasons why someone may wish to downsize their home, no matter what stage of life they are at. Many people out there might look to downsize due to all their children leaving the nest, meaning a larger house could now be made available for a larger family that would be able to utilise it. Many choose to downsize simply due to retirement. For some, it is due to an inability to maintain the home or yard, which I know is a cause of great sadness for many people who have spent many hours impeccably maintaining their gardens over several years. Another reason—and this goes to my last point—is the need for some people to literally downsize their home, where mobility issues prevent them from being able to traverse multistorey homes or continue with larger-than-necessary upkeep costs for their homes. Others have more tragic circumstances guiding their decision to downsize, such as losing a spouse, whether that be due to the death of their partner or to the breakdown of their relationship. These are all unfortunate facts of life that can occur no matter what stage of life someone is at.

I have not touched on all of them, but the fact remains that, despite one's situation in life or circumstances, this government is eager to make the transition easier and make the process more adaptable to sometimes unavoidable and unforeseen circumstances that might hamper or prolong the process of someone buying or building their new home after sale of their principal home. Despite the long list of reasons which I've mentioned, ultimately the motivations that contribute to someone's decision or need to downsize, whilst important, aren't entirely so for the purposes of the bill. What is important, however, is that, despite what has brought someone to downsize, they needn't risk losing income support payments or their pensions as a result of those circumstances, which I know is a cause of a lot of anxiety for many, especially when these life decisions are more out of necessity than choice.

This bill, concisely, has two core goals for people that sell their home from 1 January 2023: (1) to increase the time frame before the proceeds of a sale of a principal home impact an income support payment by way of the assets test; and (2) to apply a lower deeming rate to those proceeds to reduce the chance of an income support payment recipient falling foul of the income test requirements of their payments. Additionally, this bill aims to complement several other changes that this government committed to enact, such as freezing deeming rates for two years and allowing for providing for those 55 and over to make a one-off contribution of up to $300,000 of those proceeds to their superannuation funds.

Currently, as things stand, after the sale of your home, the proceeds of that sale are exempt from the income test for a period of up to 12 months. This bill doubles this to 24 months, with the potential for an additional 12 months in certain circumstances. These are some commonsense amendments to the law as it stands. They account for the known unknowns that could happen, whether it be delays on a building or renovations due to development approvals, or builders or tradies going bust or AWOL partway through, just to name a few possibilities. It's the things that you'd rather not happen but that are ultimately outside your control and not something you would want being the sole cause for your income support payments being unduly impacted.

After the assets test, the second key issue that this bill aims to address is the income test that many income support payment recipients must abide by. Currently, income above $56,400 for singles and $93,600 for couples, on the proceeds of a sale of a principle home, is deemed at the rate of 2.25 per cent per annum. During the increased exemption period provided for in the bill, the lower deeming threshold of 0.25 per cent will apply to deemed income from these proceeds instead, where it currently applies to deemed income below these thresholds. As a result, this bill will greatly assist many to swim between the flags, so to say, by way of a social security income test and not have their payments slashed or reduced to zero while they continue to make arrangements for the eventual purchase of their principal home or finalise renovations and improvement to it after that purchase.

We, of course, cannot ignore what is a clear reason for the introduction of this bill, which is the current state of our housing market. The provisions within the bill better account for significantly higher house prices. This is relevant for the application of both the assets test and the income test. As things currently stand, given the state of our housing market, most of the proceeds of a sale will have income deemed at a higher rate. Many income support payment recipient wouldn't continue to be eligible for their payments due to the assets test thresholds. Though I briefly touched on this a little earlier, whether this is a direct intention or a by-product of this legislation, it will go a long way to increasing the availability in the market of dwellings that are perhaps more suitable to younger or larger families. While this is no silver bullet solution to the problem in its entirety, I'm happy to commend it as an outcome just the same.

Lastly, though I was elected to this place recently, I have been proud to see, in action, our government fulfilling its election commitments. I am proud to be part of an Albanese Labor government that moves to support all Australians through challenging economic times in practical ways, whether it be through sweeping measures or by enacting sensible changes to our social security laws, such as this, changes many have called for over many years, which will assist many Australians out there that are about to go through the arduous process of opening an entirely new chapter of their lives.

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