The Turnbull Government’s defacto housing spokesman, Michael Sukkar, has given the strongest indication yet that the Budget will allow first home buyers (FHBs) to access their superannuation to fund a housing deposit. From The Age:
Assistant Treasurer Michael Sukkar, who is spruiking housing affordability as a key platform of the May budget, said allowing first home buyers to access their super could work if supply in the housing market was also increased.
“If all a government does is try to pump further liquidity into the residential housing market, inevitably all you do is push up housing prices,” Mr Sukkar told Sky News on Tuesday.
Mr Sukkar would not comment on any specific policy details ahead of the budget but said anything done “on the demand side of the ledger,” would be “finely calibrated to make sure we are not lazily pumping more money into the market,” he said.
“We’ve got to be a bit more sophisticated about it and I’m confident we will be,” he said.
Shadow treasurer Chris Bowen said Labor would oppose any move to raid super, labelling the idea “stupid”.
“Early access to superannuation for a home deposit would undermine retirement savings, create new financial risks, and ultimately serve no credible purpose other than bidding up the price of housing and pushing home ownership further out of reach of young aspirating Australians,” he said.
As I argued this morning, allowing FHBs to access their superannuation for housing would be incredibly self-defeating and wasteful policy from an affordability perspective, since it would be inflationary for house prices. This is because it would increase FHBs ability and willingness to pay, therefore would soon be capitalised into higher housing values. The Budget and people’s retirement savings would also be placed under increased strain for no apparent gain (other than to existing property owners, who benefit from higher values).
Indeed, analysis in 2015 by PwC estimated that allowing home buyers to raid their superannuation to purchase their first homes could blow a $31 billion hole in the Federal Budget by 2049-50!
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.
It is also worth pointing out that Malcolm Turnbull in 2015 labelled the proposal to allow FHBs to access their super for housing “a thoroughly bad idea”.
Australia needs genuine policies to tackle Australia’s affordability woes that seek to reduce demand via tax reforms, cutting immigration and restricting foreign buyers, as well as freeing-up land supply and planning.
What we definitely don’t need is more demand-side stimulus that would make the affordability situation even worse, cost the Budget a fortune, and place Australia’s retirement system at risk.
