Liberals oppose Hockey’s super brain fart

By Leith van Onselen

Liberal figures have come out of the woodwork opposing Treasurer Joe Hockey’s brain fart suggesting home buyers should be able to raid their superannuation nest eggs to purchase their first home – a proposal also described by Prime Minister Tony Abbott as a “perfectly good and respectable idea”.

The most telling opposition has come from former Treasurer, Peter Costello, who warned against the proposal during a wide ranging interview with The ABC:

“If you want it to top up people’s retirement, if you want it to save the Government money and it has that dual purpose, then you probably won’t allow people to draw down on it for housing”…

Costello’s criticism follows that of current Finance Minister, Mathias Cormann, who last October strongly opposed accessing superannuation for housing when the idea was first raised by independent senator, Nick Xenophon:

“Increasing the amount of money going into real estate by facilitating access to super savings pre-retirement will not improve housing affordability”…

“The only effective way to tackle housing affordability is by boosting housing supply, not by boosting demand”…

Liberal backbencher, Angus Taylor, has also bagged the move, claiming early access to super would compound house prices while placing more strain on the Aged Pension:

“You’ve got to step back and say what is the purpose of super and very few people ask this question”…

Hockey’s super-housing fix is beginning to look like Abbott’s paid parental leave (PPL) in that it is opposed by virtually all economists, most commentators, and even some within his own party. Let’s hope he will have the good sense to reverse track quickly, before it becomes a damaging embarrassment like PPL became for Abbott.

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Unconventional Economist

Leith van Onselen is Chief Economist at the MB Fund and MB Super. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.

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Comments

  1. Or perhaps he could just clearly say it’s unsuitable for young people and housing deposits, but that older people might need funding to access training to enable them to get a more suitable job and work longer. Perhaps he could actually have the conversation he started instead of every bloody thing always being about housing. I thought his discussion of people needing to change their jobs as they age and needing to work in something well past 60 were the start of a really worthwhile discussion that was not in any way related to housing or the problems of young people.

    • “Or perhaps he could just clearly say it’s unsuitable for young people and housing deposits, but that older people might need funding to access training to enable them to get a more suitable job and work longer”

      Whatever happened to the 40 hr week that was supposed to bring about the 35 hr week ? I well remember those days when that “promise” was being sprouted by the Media. Now 2 wages are not enough for the average family to get ahead.

  2. “before it becomes a damaging embarrassment”

    Too late, she cried, as she waved her wooden leg.

    This said, Hockey could salvage something. If somebody retires with say $500K of super and $100k of housing debt I see no reason for them not to be able to take $100k of that super to pay off that debt.

    • They can already do that. And it’s stupid. It actually makes a lot more sense to keep as much as you can in a tax-free environment and just continue to pay off the debt until it’s gone, and you still have all the tax-free income. I really don’t know why people get so worked up about debt.

      • Depends on the rate of return on your super versus the interest rate on the debt. Not to mention that super assets are risky, unless they are in cash, and for sure the return on cash will be less than a mortgage interest rate.

        Plus, there is a psychological benefit for some people in being debt free, especially when they are old. Sure, it makes no difference to their net assets, but that is not the point.

  3. Phil the engineer

    71% of the 6632 voters in the poll on the Domain website also think its a bad idea.

    Edit.. Patrician beat me by 1 min 🙂

  4. Hockey and Abbot are the two best comics in Australia who keep bloggers in a useful job.

  5. So many notable economic voices coming out in condemnation of this economic lunacy.

    One notable absentee.

    Sack him. He has had ten years to get it right and failed. Sack him.

  6. He should publicly declare the fact that he owns four investment properties. Naked self-interest at play.