Pensioner Subsidies

Back in July 2015 a Councillor moved the above. In January 2018, an agenda item further  progressed this to a draft policy for implementation from 1 July 2018. Next week, the draft policy comes to the Community, Technical, Finance & Corporate Services Committee for possible adoption. The financial implications may be significant.

It should be acknowledged that Seniors have served this country well over their years, and many are struggling with the costs of living. A desire to help them is admirable, but I am concerned whether this proposal is appropriate. So, as the other ratepayers will end up paying more, I’m putting it out for their comments.

Pensioners are currently able to access the following:

50% reduced rates – Residents who hold a Pension Concession Card (Pensioners) can receive a 50% rebate on their local government rates & the emergency services levy. This is capped at a maximum of $750 per annum. To hold a Pension Concession Card you must have income of less than $50,876 p/a* for a single and $77,916 p/a* for a couple, as well as meet the Assets Test:

* It should be noted that assets are deemed to ‘earn’ and income regardless of whether they actually do or not, and regardless of whether they earn an income in excess of deeming rates. The deemed income from assets reduces the allowable income levels.

12 months to pay – Pensioners and Seniors, unlike other ratepayers, are able to pay their rates over a 12 month period without interest and administration fees being imposed.

Deferable Rates Scheme – Pensioners who receive the full pension are currently able to not pay any rates, and instead defer them. Deferred rates do not attract any interest, but neither do they receive the 50% rebate. The accumulated balance of deferred rates becomes payable when the property is sold.

Concerns with the proposed policy

I have a number of concerns with what is proposed.

It is really helping the most disadvantaged? – The proposal benefits a mortgaged pensioner homeowner with no assets or income (other than the Aged Pension) equally as much as a pensioner couple who own their home outright and have an additional $829,999 in assets. When you factor that $829,999 in a superannuation pension account earning 7.5% provides a tax-free $62,249 per annum, is that equitable?

It does nothing to help the pensioners who aren’t fortunate enough to own a home, or even those in society who may be homeless (pensioner of otherwise).

It also can’t be overlooked that there are many families doing it tough; trying to reduce their high mortgage, send their kids to school/day-care, all, whilst possibly, after just losing their job.

Local government over-reach – Has the role of local government now morphed into social security and that of the ATO?  The Officer’s report correctly identifies that the only way to fund this policy is to increase rates for everyone else, or reduce services (or a combination of both). No matter which funding option is chosen, they both equate to some people receiving reduced tax (local government rates) and other paying increased tax – albeit it, if the reduced services option is chosen then it may be lower than rates currently paid.  It still equates to taxing segments of the population in order to subsidise others.

Legal implications – The latest agenda item states that the Local Government Act ’95 prohibits a concession based on whether or not the owner of the land occupies the land. Therefore, a non-City of Bayswater pensioner who may own an investment property in Bayswater, would be eligible for the concession. I also wonder whether the State government may simply reduce the amount of concession correspondingly to City of Bayswater pensioners, as this would maintain a consistent benefit across the State.

Conclusion

I am more than happy to discuss with the community about cutting services and reducing all of our rates. But due to the existence of a 50% rebate for pensioners, the ability to defer rates and even the availability of reverse mortgages, I feel the ultimate result of the proposed policy will be to the benefit of estate beneficiaries. Whilst I don’t predetermine my position before the council/committee has debated an item, I am leaning towards supporting the Officer’s recommendation which is, as it also was in January, not to proceed with the proposed policy.

Cost is also a factor. Whilst the figures cannot be known with any certainty at this stage, the January agenda listed the 20% further rebate as costing ratepayers $985,000 p/a (circa 2.5% rate increase for everyone else), however the latest agenda, which uses a flat $100 rebate, is estimated to be $415,000 p/a (circa 1% rate increase) in the years ahead.

Power to the People.

(Please be aware that these views are my own and have not been endorsed by the City of Bayswater.)

 

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