Labor’s Shadow Minister for Financial Services, Senator Katy Gallagher, has hit out at the Turnbull government’s planned First Home Super Saver Scheme, saying it could be “disastrous” and “severely undermine the superannuation system”.
“Superannuation is to build up savings for retirement; it is not a savings tool for housing or for that matter any other significant financial liability that a person may have during their lifetime,” Senator Gallagher told the SuperReview Future of Superannuation Conference on Thursday.
The policy could be a precursor to opening up the super system for other purposes which would seriously undermine it, she said.
The proposal, which would allow tax advantaged salary sacrifice contributions of up to $30,000 to be put aside for a first home deposit, could negatively other peoples’ super.
“The Government’s policy is that the amount of earnings that will be released to the first home buyer will be calculated using a deemed rate of return based on the 90 day Bank Bill rate plus three percentage points.”
That could mean that if the super fund’s overall return rate is less than that then all members would effectively be cross subsidising the deposit savers’ accounts, Senator Gallagher said.
Implementation of the scheme will be difficult with the Australian Taxation Office having to administer it by determining elegibility and the amount that can be withdrawn.
“We know from a recent Senate Inquiry into the non-payment of the superannuation guarantee that there are significant gaps in data and reporting of superannuation to the ATO that have constrained its ability to identify when employers do not meet their superannuation guarantee obligations.
“These data gaps may make it difficult for the ATO to implement the first home super saver policy effectively and with job losses and other pressures on the ATO, which are well known and documented, its difficult to see how they would prioritise or manage this scheme,” Senator Gallagher said.
The scheme would not be ” a game changer” for home savers, as property prices are likely to significantly outgrow the amount that can be saved. Also it does nothing to level the playing field between home buyers and investors that Labor says is necessary to tackle housing affordability, she said.
“Labor’s housing affordability plan is to respond across the housing spectrum with tax reform, national leadership through COAG, new financing vehicles, homelessness support, better outcomes from national agreements and for the expenditure contained within them, and support for a better supply of housing.”