Australians should be allowed early access to their superannuation in order to buy a house, a major think tank has said.
In a new paper on retirement policy, the Committee for Economic Development of Australia (CEDA) also recommended Australians be able to make mortgage payments with pre-tax income, in a move to improve housing affordability.
“Two key trends, our ageing population and decreasing housing affordability, mean Australia’s retirement system structure needs a significant rethink,” CEDA chief executive Professor the Hon. Stephen Martin said.
“Talk about our ageing population and the impact on retirement policy has been part of national debate for many years but the impact of sustained housing affordability issues is only just beginning to be recognised as a significant issue for retirement policy.”
Professor Martin’s rationale for giving Australians early access to their super was that home ownership should be the foundation of a secure retirement.
Other key recommendations included cutting superannuation tax concessions and including the family home in the age pension assets test.
“Obviously taxation arrangements need review because currently concessions are benefiting the rich and are being used as tax mitigation measures rather than to encourage retirement savings. However, the other area that needs review is the treatment of the family home,” Professor Martin said.
“One option would be make the family home part of the assets test for the Age Pension and change superannuation payments to an after income tax payment, with all other super tax concessions removed.”
CEDA’s recommendation on early access to super is not a new idea. Treasurer Joe Hockey floated the same idea earlier in the year, for which he was almost universally slammed, on the grounds that it would damage the integrity of the super system and push house prices up even more.
Professor Martin acknowledged that his policy recommendations could push up house prices. However he said that “with the right combination of policy levers and checks and balances they are genuine options that should be explored given the trends we are now facing.”
Speaking to ABC on Tuesday morning, Assistant Treasurer Josh Frydenberg re-affirmed the government’s commitment to make no changes to superannuation.