Harbour views and the full pension

So there are some cash transfer programs that are still very tightly targeted.

You think about JobSeeker, Commonwealth Rental Assistance, Family Benefit Part A, Part B.

Those are very tight, what we call means testing programs.

So they are tested on income, and the threshold at which those cut off is really quite low.

So they are very, very targeted.

They also aren't growing that quickly.

What is much less targeted and is growing very quickly is the support that's given through aged care, through the child care subsidy and our health benefits, and that growth is disproportionately flowing to the most well-off households.

What did you discover about the biggest payment of all that the government makes, the age pension?

This is a program that unfortunately now has quite a lot of, well, distributional inequity because of the treatment of the owner-occupied home.

So the situation that we have is that we have a lot of pensioners who really do hold quite a lot of wealth who are still receiving the full pension.

Deborah, back in 2019, Treasurer Josh Frydenberg asked you and two others to examine how much we needed in retirement and how much we had.

And your chief finding sort of shocked me.

It was that it depended very much on who you were.

What was it?

Well, what we found was that most people in retirement experience less financial stress than they do in their working lives.

But there were two groups that don't do so well in retirement.

One is people who don't own their own home and have to rent.

And the other is people who retire earlier than age pension age and who are on JobSeeker for an extended period.

Both of those groups really face huge challenges.

So it really matters whether you own a home or not.

It makes the difference between a comfortable retirement, I think you found that retirement is often more comfortable than working for people who own their home, and one that's anything but comfortable.

It does make a huge amount of difference.

And of course, because the value of property has gone up so much, about 20% of age pension payments go to people who are in the top two quintiles of wealth.

Quintile being top two fifths.

That's exactly right.