Liberal and Labor MPs have locked horns over whether younger Australians should be given greater access to dip into their superannuation to pay for a housing deposit.
Days after Treasury released its long-awaited Retirement Income Review on Friday, Liberal MP Tim Wilson launched a new campaign calling for home ownership to be prioritised above superannuation savings.
Noting that research from the Grattan Institute found renters were at a much greater risk of poverty in retirement than home owners, Mr Wilson said the government should allow workers to tap into superannuation to pay for a deposit. (The New Daily asked Mr Wilson’s office for more details, but did not hear back from them.)
Former Reserve Bank governor Bernie Fraser supported the policy for low-income workers, telling the Nine newspapers that “the long-term return of owning a house rather than having to be renting one would outweigh the return of even a good-performing super fund”.
But Labor politicians opposed the idea.
Labor leader Anthony Albanese told the ABC the plan would inflate house prices and make young people less secure in retirement.
“We’ve seen this government trying to undermine superannuation, our universal system, at every opportunity. We’ve seen 600,000 Australians now left with zero dollars in their superannuation accounts,” Mr Albanese said.
“That will have a devastating impact on their retirement and will also hurt the fiscal position of future governments down the track because people will be more reliant upon government rather than their superannuation balances.”
As it stands, first-home buyers can withdraw up to $30,000 worth of voluntary superannuation contributions to pay for a housing deposit.
The government scheme enables Australians to take advantage of super’s favourable tax environment to save for a deposit much faster.
Liberal senator Andrew Bragg wants the scheme to be expanded to include mandatory employer contributions. He argues this would make it easier for first-home buyers to break into the property market.
But some economists are worried the policy would make housing even more unaffordable by boosting demand without increasing supply.
Grattan Institute household finances program director Brendan Coates told The New Daily it’s “clear that unaffordable housing is the biggest threat to a comfortable retirement for many Australians”.
But he said there were better ways to improve housing affordability than relaxing access to superannuation, which he said would inflate prices by driving up demand for housing.
“Allowing access to super isn’t a panacea to housing affordability,” Mr Coates said.
“There are plenty of ways government could make housing more affordable – and particularly the federal government – but few of them are likely to be very popular.
“We could reform planning rules to boost supply – and that would make house prices and rents cheaper. And [we could reform] tax policies like negative gearing and the capital gains tax discount, which inflate demand for housing and therefore raise house prices.”
Mr Coates noted, however, that relaxing superannuation access for housing deposits would make more sense if the super guarantee (SG) was lifted from 9.5 per cent of wages to 12 per cent, as is legislated – not least because Treasury found that workers will have enough money at retirement if the SG stays at 9.5 per cent.
But, he said, the reason why Australia hasn’t solved its housing affordability problem is because the reforms required to fix it are politically challenging.
“And so governments have tended to resort to things that sound good, but won’t make much of a difference. And super for housing is probably in that camp,” he said.
AMP Capital senior economist Diana Mousina also opposed Mr Wilson’s policy suggestion.
Ms Mousina said it would give an unfair advantage to people who were already planning to buy a home, while pushing up property prices and eroding the retirement savings of younger Australians.
“Fixing affordability problems is obviously a much harder issue to deal with,” she said, describing the super for housing idea as an ineffectual “Band-Aid” solution.
The New Daily is owned by Industry Super Holdings