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Senate report on cost of living pressures on older people

The Senate Standing Committee on Community Affairs has released ‘A decent quality of life’ which reports on cost of living pressures on older people.

It says the distribution of wealth amongst many older Australians is unbalanced. For a significant minority, cost of living pressures are placing them in increasing financial stress and they do not enjoy a decent quality of life.

Many older people, especially those on low, fixed incomes with little discretionary spending capacity, are vulnerable to rises in the cost of living and are disproportionately affected by cost increases in essential goods and services – food, rent, petrol, household utilities and healthcare. Escalating housing rents and the growing cost of medical care (most notably, a lack of affordable and timely dental services and the cost of pharmaceuticals) are of particular concern.

The number of older Australians likely to suffer these cost of living pressures will increase in the future. Projections show that by 2042 the proportion of the population aged 65 and over will double to be one in every four people, while growth in the labour market is likely to remain stagnant.

Taken together with increasing life expectancies, these trends have the potential to slow economic growth and reduce older Australians’ standard of living.

The Report says that while there has been an increase in the real value of the age pension over the past decade, evidence suggests that for those on a full pension this level may be insufficient to maintain a basic, decent standard of living.

The indexation arrangements for the age pension and other relevant government payments fail to reflect the specific spending patterns of older people.

Along with this, the decline in the value of concessions and the trend towards user-pays systems have eroded the purchasing power of the pension.

Consistently expressed in evidence was the overwhelming view that those most at risk of financial stress are single pensioners – especially women – receiving the full-rate pension and living in private rental accommodation. Older people with severe disabilities or chronic illnesses and those in residential aged care are also particularly sensitive to cost of living pressures.

The committee has made a number of recommendations which aim to alleviate the current pressures experienced by older Australians on low incomes. These include a review of the age pension base level and indexation arrangements, a review of financial thresholds to access government services, benefits and concessions, the introduction of measures to improve access to dental care and changes to residential care fee structures.

The committee has also proposed a series of recommendations designed to meet the future challenges that an ageing population will present.

They include the introduction of measures to encourage an increase in the level of superannuation contributions and enable Australians in part-time, periodic and low-income employment to participate more fully in the superannuation system.

Initiatives to facilitate greater attachment to the labour market for older people have also been recommended.

With the demand for rental housing set to increase dramatically over the next 20 years, the committee has recommended a national strategy that aims to ensure a diversity of affordable housing options for older people. A review of Commonwealth Rent Assistance has also been proposed.

Older Australians have contributed substantially to Australia’s current prosperity and many continue to contribute to the broader community through voluntary work and caring responsibilities. The committee has made recommendations that recognise and support these valuable activities.

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