A leading Liberal senator pushing to allow Australians to raid their superannuation funds to purchase their first home has had to defend the proposal – from himself.
Five government backbenchers, including MPs Andrew Hastie and Dave Sharma, have backed a proposal to expand the amount home buyers can withdraw under the First Home Super Saver Scheme, Nine newspapers reported on Tuesday.
The existing scheme, legislated in the 2017-18 federal budget, allows Australians to use up to $30,000 provided they make additional superannuation contributions towards their first property.
NSW senator Andrew Bragg has led the charge to go further after offering numerous proposals to shake up the system in his book, Bad Egg.
But the modern campaign contradicts his previous opinions.
In 2015, as the then-director of the Financial Services Council, Senator Bragg wrote in the Australian Financial Review that superannuation is “not for housing, estate planning or a honeypot for governments with short-term fiscal problems”.
“Super must provide a higher standard of living to Australians in retirement than the age pension,” Senator Bragg wrote at the time.
When questioned as to why his current proposal contrasts with his previous opinions, Senator Bragg told The New Daily he believes the “positions of the super industry are not necessarily in the public interest”.
“Following my election to federal Parliament, it became very clear that super is failing – it costs the budget a bomb (now and in the future) and it gets very few people off the pension,” he said on Wednesday.
“Constituents have written to me explaining their inability to access super for a first home means they will never have a home.
“No one is saying super for housing will solve the supply problems, but it will make a material difference to Australians struggling to pull together a deposit.”
Housing Minister Michael Sukkar told the Sydney Morning Herald the scheme in its current form has saved more than 10,000 Australians a collective $128 million on their first property.
First-home buyers ‘worse-off’
Labor assistant treasurer Stephen Jones said the Liberal superannuation proposal would not address the fundamental barrier first-home buyers face: Housing affordability.
“Choosing between having retirement savings and the ability to own a house is not a choice Australians should have to make,” Mr Jones told The New Daily.
“Housing affordability is, at its essence, the failure of the government to deal with supply issues and a whole heap of other issues that push housing beyond the limits of ordinary workers.”
Buyers’ agent Pete Wargent said any proposal to increase the amount prospective property owners could withdraw would “obviously” spike house prices.
But there could be some tangible benefits for the wider economy.
“There’s also the first-home buyers’ deposit scheme with 10,000 places rolling out in July. So if you combine those two factors, there would be an inflationary effect – especially at the low to medium end of the market,” Mr Wargent told The New Daily.
“I think what the government is interested in at the moment is not prices so much as actually getting more activity, because transaction levels have obviously been in the gutter the last few months, and this has a knock-on effect for consumption habits.”
Should super’s purpose be revisited?
Rice Warner CEO Andrew Boal told The New Daily the forthcoming findings of the retirement income review (released late July) are an opportunity for a broader conversation around the purpose of superannuation.
But he agreed extending the superannuation withdrawal scheme for first-home buyers would most likely boost house prices.
“Supplying more funds for the purchase of a commodity in a competitive market will usually push the price up,” Mr Boal said.
Mr Boal acknowledged some superannuation funds have pledged to invest in more affordable housing stock for first-home buyers, including AustralianSuper’s recent 25 per cent stake in Melbourne-based build-to-rent-to-buy developer Assemble Communities.
He warned that superannuation funds’ foremost obligation is to generate returns for their members, which complicates their role in this space.
“The purpose of superannuation is to fund retirement,” Mr Boal said.
“There is room for a public-private partnership around social housing, but if you’re looking for funds to partially do the government’s job and subsidise it, I don’t think that’s the role of superannuation.”