wealthier older people and NDIS users can pay their own way

Aged care home packages under the former coalition government went well beyond the basics to include lawn mowing, gardening and cleaning.

Taxpayers should not foot the bill for these non-essential services.

People who have the financial capacity to purchase these taxpayer-subsidized services should be called upon to participate.

Considering that most people don’t spend much of their superannuation in retirement and pass on most of their super as bequests, some users clearly have the ability to pay more.

More broadly, the family home is a largely untapped source of income allowing people to free up cash to pay living expenses.

The federal government’s home equity program and reverse mortgages offered by financial institutions such as Household Capital are expected to become more common.

The government home equity access program allows pensioners, whether they are retired or not, to benefit from a loan of up to 150% of the old-age pension per fortnight.

Participants can also receive advance payments as a lump sum to help pay for larger expenses such as a new car, home renovations or vacation.

The interest rate charged by the government is currently only 3.95% per annum.

In an environment of high inflation and rising interest rates, this borrowing rate is extremely generous as the previous government did not link the rate to movements in the Reserve Bank of Australia’s exchange rate. .

People who receive partial subsidies for elderly care or through Medicare have an incentive to try the much more generous NDIS.

Interest is deducted by the government when the house is sold and/or the participants die.

A non-negative equity guarantee protects users and their dependents.

If the main place of residence remains exempt from the retirement age criterion, more people should be encouraged to use the equity in their home to improve their standard of living in retirement and to be more independent.

The The NDIS is expected to cost $35.8 billion in 2022-23more than Medicare ($30.8 billion), senior care ($27.7 billion) and federal support for state public hospitals ($27.3 billion).

The financially out of control NDIS is expected to exceed $50 billion by 2025-2026 and could reach $97 billion by the start of the next decade, according to the government’s long-term projections.

The NDIS is ripe for users – or more likely their families – to make financial contributions, especially in the case of parents of children with less severe disabilities.

Co-payments, means of testing parental income, and subsidy caps must be considered.

The program must be made financially sustainable to ensure that the most severely disabled people continue to receive the assistance they need and deserve.

Most government benefits are constrained in some way through price or quantity limits, such as Medicare, the Pharmaceutical Benefits Scheme, Old Age Pension, JobSeeker, Housing Assistance, and People’s Assistance. elderly.

But the NDIS has almost no supply or cost limits.

Therefore, people who would otherwise receive partial subsidies, such as for elderly care or through Medicare for mental health or childhood developmental issues, have an incentive to qualify for the much more generous NDIS.

The opportunity for arbitration challenges the principle of fairness and justice in government support payments.

The average participant payment per year for the NDIS is $53,550, compared to $24,021 for disability pension, $20,085 for old age pension, $19,079 for unemployment benefit, $16,541 for care for the elderly, $7,455 for the child care subsidy and $2,178 for closing the gap between aboriginals. health.

“Are these the right benefit ceilings and are we determining them in a fair and consistent way,” asks Hassan Noura, a former executive at the National Disability Insurance Agency and a former Treasury official.

Meanwhile, the other big growing spending pressure for the federal government is in health care, due to people living longer and advances in medical technology being costly.

A $7 co-pay proposed by former Prime Minister Tony Abbott and Joe Hockey receives a hostile response from the community.

But there’s another underappreciated loophole that exempts people from paying Medicare tax on non-taxable income — primarily pension income in retirement.

The Medicare levy is taxed only on taxable income, such as wages and salaries.

Rather than resorting to the usual lazy government approach of increasing the Medicare levy or introducing an NDIS levy on employees, the Medicare levy could be applied consistently across taxable and non-taxable income.

The cohort receiving the vast majority of the tax-free income benefit through super and paying no Medicare levies is the same age group that uses the healthcare system the most.