In a column originally published in the Australian Financial Review, Mr Howes drew comparisons with the beginning of the global financial crisis, claiming SMSFs risk creating a speculative, debt-fuelled housing bubble.
“SMSF owners can borrow to purchase investment properties and avoid capital gains tax once they reach 65. Business owners can transfer their commercial properties into their SMSF without penalty,” Mr Howes said.
“This dramatic tilting of the field towards unproductive, speculative investment has had a dramatic and predictable result. Already, $75 billion worth of property is held in SMSFs and analysts expect this to boom in the next few years.”
These comments by Mr Howes were likely endeavouring to apply the “blowtorch” back onto the SMSF sector, Mr Dunn said, as the Coalition begins to focus on bringing more transparency into the governance of APRA-regulated funds.
“The likely loser out of this process with the inclusion of independent directors? Yep, you guessed it: union sector representation,” he said.
“SMSFs have become disruptive to such an extent that the rest of the superannuation industry is fighting hard to counter the revolution and at the same time trying to redefine its purpose with a growing number of individuals becoming engaged with their retirement savings,” Mr Dunn added.
In his column, Mr Howes also indicated the number of SMSFs with borrowing has tripled in the past four years, with the average loan size now being $357,000. However, Mr Dunn told SMSF Adviser that it is “grandstanding” to write about the tripling of borrowing when it has started from a base of practically zero.
“The level of negative gearing is nowhere near the levels some individuals seek to obtain outside of super – and at least with LRBAs they are limited recourse against the fund… the bank may expose the individuals personally with guarantees though,” he added.
Mr Dunn previously told SMSF Adviser there needs to be a greater understanding of the ‘hype’ in property and the ‘action’ taken by trustees.
“Much of the commentary in recent times appears inflammatory towards what is a well-functioning SMSF sector and doesn’t put into context the facts around the supposed boom of property within SMSFs,” he said.