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Women and disadvantage: a new deal for pensioners who rent

Women and disadvantage: a new deal for pensioners

A bold new approach to help disadvantaged pensioners – mostly women – own equity stakes in their rented homes, is outlined in a new KPMG Australia paper, published today.


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The proposal, in tandem with a call to increase Commonwealth Rent Assistance, aims to improve the lives of 1.3 million low-income Australians, 59 percent of them female. It is supplemented by suggested measures to increase the superannuation balances of pensioners.

The paper, Delivering equity: a new deal for pensioners who rent, is the third in a series by KPMG examining financial discrimination against women in Australia. It specifically looks at a particularly disadvantaged group, in which women are over-represented – those over 50 who are renting privately.

Alison Kitchen, KPMG Australia Chairman, said: ‘We estimate around a quarter of a million single women over 50 receive CRA. Many of these women have experienced disadvantage through their working years and are facing hardship in retirement. Poverty rates among pensioners renting privately is more than three times the national rate. But given the proportion of Australians over the age of 65 who are renting privately is just 6 percent, the budgetary costs of improving the living standards of this group should be relatively modest.”

She added: “Our society is still largely based on the model of a Male Primary Earner and a Female Primary Carer who is also a secondary earner. Unfortunately we are still a long way from a Parent Equality Model, to which Australia should aspire in the long-term. Many single women are on the pension and don’t own their home - they are the victims of an antiquated social framework. This is why we must try to ameliorate the inequalities with measures such as those proposed in this and our previous papers on gender inequality and disadvantage.”

The KPMG paper outlines three key proposals:

  1. Increase the CRA maximum rate by 40 percent. KPMG believes the government should go further and index future changes in CRA not to the CPI, as currently, but to changes in rents typically paid by income support recipients. 
  2. Transition CRA recipients from renting to acquiring a stake in their own homes, via the adoption of a shared equity co-investment model. 
  3. A series of measures to boost the superannuation levels of disadvantaged Australians. 

The shared equity scheme could build upon precedent already established in WA, SA and the ACT for CRA recipients. The key issue for pensioners would be obtaining finance.

Under the KPMG model, the federal government would assign a pensioner’s CRA payment to a third-party financial institution as an income stream for up to 25 years. The institution would then provide a lump sum to the individual to invest in a home, while an investor such as a government-sponsored housing trust or ethical investment fund acquires the balance of the property that is not funded by the lump sum.

Grant Wardell-Johnson, Lead Tax Partner, KPMG Economics & Tax Centre, said; “Under our scheme, the government would be no worse off and the individual would be in a similar financial position but would be acquiring a valuable equity stake in his, or, more likely, her, own home. The scheme would be scalable, with the lump sum payment calculated by reference to future cash flows from the CRA payment.

“A key issue here is the available supply of housing for CRA recipients. But we believe that by negotiating incentives and quota requirements for certain types of accommodation with the property development and construction industries, government could increase the supply of affordable housing stock. There are already useful tax measures in place to keep affordable housing as one of the categories to benefit from the managed investment trust regime – and a possible capital gains tax incentive is also being considered. Under our suggested scheme, the individuals would benefit as would society as a whole.”

The superannuation proposals in the paper include

  • Removing the $450 per month wage threshold for entitlement to employer super contributions.
  • Including super contributions in the Commonwealth paid parental leave scheme.
  • The Commonwealth to consider making top-up contributions (rather than co-contributions) to the super accounts of (a) low-income primary carers with pre-school age children and (b) CRA recipients aged 50-59.

Grant Wardell-Johnson said: “The government already provides a co-contribution of up to $500 for very low-income individuals, but such people have limited ability to take maximum advantage of this as they need to find $1,000 of their own money. A top-up payment instead, going to the carer, would be sensible, given the huge potential benefits of even a small boost to a mother’s super balance. CRA recipients too have limited ability to finance their own super contributions so direct top-ups to them would be justifiable and could ultimately save the public purse through reduced reliance on the age pension.”

Cost estimates of the proposals:

  • The Grattan Institute estimates a 40 percent increase in CRA would cost $1.2bn – of which a quarter ($300m) relates to retirees
  • Commonwealth top-ups of $2,000 for CRA recipients aged 50-59 would cost $400m, KPMG estimates.
  • Top-ups to primary carers of school-age children should be modelled by the parliamentary budgetary office, KPMG suggests 
  • The paper includes various estimated costings and benefits of the shared equity scheme, depending on property values and rents.

Further information

Ian Welch
KPMG Communications
0400 818 891|

Marjorie Johnstone
KPMG Communications
0407 329 430 

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