It’s Groundhog Day, with Robert Gottliebsen (“Gotti”) once again proposing to allow young home buyers to raid their superannuation accounts to purchase their first home:
It seems that if we are going to change the current falling home ownership rate we will have to do one of two things.
First, allow superannuation funds to be used to help first home buyers to gain a deposit. There would be a cap. That allowance would have to be accompanied by negative gearing changes along the lines being proposed by the ALP or prices would simply jump by the amount of the superannuation help.
It surprises me that young people have not already pushed for this. Given that the dwelling lowers the cost of retirement, it’s really what superannuation should be all about. Politicians have not put enough thought into the subject and listen too much to Treasury.
A second way to get first home buyers onto the property ladder is to reduce the costs of a dwelling by make the planning process much simpler.
This could be done by providing more land in outer suburbs and, perhaps more importantly, simplifying the inner city planning processes, particularly in Sydney where delays can be two years or more. These delays boost costs.
While liberalising planning and land release is a no-brainer, Gotti’s super fix is idiotic on a number of levels.
What does Gotti think the extra demand from first home buyers (FHBs) accessing their super would do to house prices? That’s right, it would raise them, making the scheme self-defeating, much like FHB grants did.
Meanwhile, young people’s retirement nest eggs would be put at risk, potentially increasing their reliance on the Aged Pension (increasing the burden on future taxpayers).
Canada’s Garth Turner, who oversaw the introduction of a housing-super system in Canada in the 1990s, has admitted that it was a massive mistake, placing further upward pressure on Canadian house prices and putting at risk retirement savings.
And PwC has forecast that allowing Australians to access to super for housing, based on the Canadian system, could blow a $31 billion hole in the Federal Budget by 2049-50.
Rather than bailing out their over-exposed parents with further asset inflationist policy, how about addressing the root causes of unaffordable housing, namely: supply-side constraints; tax lurks (including both negative gearing and the CGT discount); money laundering into, and foreign buying of, established dwellings; loose capital rules; and over-investment by super funds?
