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Super Members Council puts a trillion-dollar price tag on ‘Home First, Super Second’

The Coalition’s plan to let Australians access their superannuation for a house deposit would create a “budget blackhole”, according to modelling commissioned by the Super Members Council.

Letting Australians access their superannuation to enter the housing market would result in heavier reliance on the aged pension and rising budget costs, according to new modelling from the Super Members Council (SMC).

SMC CEO Misha Schubert said the modelling demonstrates that the Coalition’s policy is “economically reckless”.

“It sets a policy trap for young Australians because it hikes house prices and blows a Budget blackhole in the decades ahead mostly by pushing up age pension costs – which every taxpayer would pay,” Schubert said. “Ideas to break the seal on super just leave people with less savings in retirement and a bigger bill for all taxpayers.”

  • The modelling comes as the senate economics committee, headed up by super for housing proponent Andrew Bragg, hands down recommendations that first home buyers be permitted to withdraw some or all of their superannuation balance to pay for a house deposit while rejecting “arguments that a superannuation withdrawal for housing scheme would dramatically inflate the housing market”.

    “The committee is of the view that any increase in house prices would be temporary, negligible or no more than current trends and that any depletion in retirement income would be more than compensated by the capital benefits of home ownership,” the committee’s report reads.

    The SMC modelling is comprised of two scenarios. In the first, withdrawals are capped at the lower of 40 per cent or $50,000 of a superannuation balance, leading to a reduction in earnings tax paid on accumulation assets and increased age pension spend due to a reduction in retirement assets. That leads a $304 billion cumulative fiscal impact. In the second, withdrawals are uncapped and result in the headline $1 trillion figure.

    “We all desperately want more Australians to own their own home, but this idea won’t achieve that,” Schubert said. “It’s unfair to lump the next generations of Australians with a policy that would only make the housing affordability crisis worse by driving up house prices.”

    “We urge a sensible rethink on any policy ideas that undermine the strength and success of super to continue to deliver for all Australians in retirement.” 

    The use of superannuation for housing has been Coalition policy since the dying days of Scott Morrison’s government but has long had advocates in Bragg as well as former MPs Tim Wilson and Jason Falinski despite arguments that it would inflate house prices further and disproportionately benefit those with higher superannuation balances. Previous modelling from the SMC indicates that the policy would raise capital city house prices by an average of $75,000, “forcing future generations of young Australians to wait even longer to buy”.

    Lachlan Maddock

    Lachlan is editor of Investor Strategy News and has extensive experience covering institutional investment.

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