Things That Make You Go MMM…

When a Sydney Home can be Worth Ten Adelaide Homes…

A report from Policy Institute Australia has reignited an old debate — proposing an opt-in scheme that would let the family home count towards the Age Pension, pointing out that a couple in a $5 million home can draw the full Age Pension while renting neighbours with $1.5 million in super receive nothing.

At first glance, exempting the home seems obviously fair. Everyone’s home is treated the same way.

But here’s the part that makes you go mmm…

Under the current rules, a retiree in a blue-chip Sydney home and a retiree in a far more modest Adelaide home can receive exactly the same Age Pension, because neither home is counted — regardless of what it’s worth.

Same pension. Same test. Wildly different wealth sitting in the same “exempt” asset.

Now flip the proposal around. If you did start counting the home, the Adelaide retiree — with a more modest house in a lower-priced market — could be pushed off the pension using the same national threshold as someone whose home is worth four or five times as much. The pension is national. Property values are anything but.

That’s the tension. Whichever way you turn it, a single national rule collides with a property market that varies enormously by postcode.

There’s a deeper problem, too. The proposal assumes that counting the home would prompt people to release the wealth locked inside it. Most won’t — and often can’t sensibly. Between stamp duty, moving costs and a genuine shortage of suitable smaller homes, downsizing frequently frees up far less than the headline value suggests. And the current rules already punish those who try: sell the exempt home, and the proceeds sitting in the bank are immediately assessable, cutting the very pension the sale was meant to fund. A measure aimed at the wealthy could just as easily trap the asset-rich but cash-poor who simply want to stay put. That’s the part that makes you go mmm.

And while we’re here… From 1 July 2027, Australia ends the 40-year exemption that protected its own long-term asset holders — the pre-1985 “pre-CGT” assets — pulling them into the net. In the same Budget, it introduced a new, time-limited CGT concession for foreign investors in renewable energy infrastructure. Domestic patience gets taxed; foreign capital gets a carve-out. There may be sound policy reasons — but it’s the sort of contrast that makes you look twice.