Rumours are currently swirling that the Coalition is considering granting young Australians access to their superannuation to fund a property purchase, against a backdrop of unprecedented price highs in state capitals such as Melbourne and Sydney.
The government has yet to launch any official proposals or outline a specific budgetary measure in relation to superannuation and first home buyers.
This is not the first time early access to superannuation has been floated as a solution to residential housing affordability in Australia.
In early 2015, then-treasurer Joe Hockey opened the conversation, after independent senator Nick Xenophon announced plans in 2014 to put the proposal to Parliament.
The architect of Australia’s superannuation system, Paul Keating, has again come out swinging in defence of super’s sole purpose.
“The two key elements underpinning superannuation are preservation of contributions to age 55 and the compound earnings on those contributions,” Mr Keating said in a piece published by Fairfax Media.
“If the preservation rule is breached and savings, especially those of young people, are allowed to drain away, the loss of the accumulation and its compounding would rob them of a large block of savings at the end of their working lives.”
Mr Keating also took aim at the merits of the policy for improving housing affordability, saying it would push up the price of current stock.
“It would add to demand while doing nothing to supply.”
In a media conference yesterday, Mr Morrison avoided responding to Mr Keating’s comments, and instead hinted at work he’s doing to address housing affordability in this year’s federal budget.
“What I’m focused on as we prepare the budget is to deliver a package of measures that can reduce the pressures on Australian families who are looking to buy a house or looking to rent a house, who are looking to have more affordable access to housing in this country,” the treasurer said.
Don’t like the man personally but he is the simply best politician/prime minister this country has had in many decades. It’s demand primarily through falling interest rates, but also first home buyers, stamp duty exemptions and now this, stupidity writ large. Supply is very rigid, guess what happens to price – it’s simpler than basic economics 101. Raiding super is akin to solving an alcoholics problems with a bottle of vodka.
Best solution, reduce neg gear by 10% per annum for 10 years until you get no deduction and it just adds to the cost base of that asset alone (no pooling). You will see demand ebb away but should avoid a sudden rental crisis if it’s 100% banned in year 0. Also will stop some property “experts” going to the wall or struggling to eat.
For once I’d like to see sensible financial legislation coming out of Canberra. Ever since Howard made super tax free in 2006 the system has ever more progressively stuffed and massively over regulated and expensive.
The politicians from both sides need to understand they are more a part of the problem than the solution over the last 10 years.
I agree with Mr Keating. It’s a stupid idea. A lot (obviously not all before anyone gets on their high horse) of people could likely afford a house just fine if they looked in a different area and downsized their expectations, and their spending habits.
Having been in the business of advising people on the matter of wealth accumulation for 40 years I cannot believe the idiocy that goes with the concept of allowing early access to retirement savings. Paul Keating is absolutely correct and the longer term implications for future governments should not be doubted