In a report released yesterday entitled Superannuation and the Economy, ASFA said there is ample evidence to suggest that a change in superannuation tax concessions would see a shift in behaviour in relation to voluntary contributions to super and the way in which household savings are invested.
The report argued that a reduction in the current superannuation tax concessions would likely result in lower voluntary super contributions and “increased savings in other tax preferred vehicles”.
“All policy settings equal, alternate tax preferred savings vehicles include owner occupied housing and negatively-geared investment, much of which is property,” said the report.
“This will likely fuel increases in property prices, impacting on housing affordability.”
The association said a reduction in superannuation contributions would also lead to reduced investment in the main superannuation asset classes including domestic equities and infrastructure.
ASFA chief executive Pauline Vamos said that in the past two decades, compulsory and voluntary superannuation savings have transformed the assets Australians hold.
“In 1990, Australians’ savings consisted almost entirely of real estate and cash,” said Ms Vamos.
“Today, through their superannuation, Australians are investing in a diversified range of assets, including domestic and overseas equities, fixed interest, infrastructure and commercial property.”
The article seems to contradict itself:
Today, through their superannuation, Australians are investing in a diversified range of assets, including domestic and overseas equities, fixed interest, infrastructure and commercial property.”
Yet, if the “through their superannuation” guise is removed, then all of a sudden, Australians will revert to In 1990, Australians’ savings consisted almost entirely of real estate and cash??
If we have really matured as investors, then surely a good investment in diversified assets will occur whether the vehicle is private or superannuation?
It’s an interesting theory, but I think it commits the either-or fallacy. “Either people invest in their super, or into their negatively geared house.” There are many other possibilities for investment. Especially considering that a superannuation contribution can be a “fire and forget” option. Investing in property (even for experienced property investors) is a very significant commitment, financially and in time. Under your theory, the conclusion is, “I’m losing a few percent on this super contribution. I think I’ll commit tens of thousands more dollarsa and a whole lot of time into an investment property to make up the difference.
It is quite a stretch to say that the amount of Australians who would do as your theory suggests is sufficient to put upward pressure on the housing market.