Quick. Before the East Coast housing bubble unwinds:
Legislation allowing first home buyers to use up to $30,000 of voluntary super contributions for a deposit has been introduced into parliament.
The Turnbull government reckons first home buyers could boost their savings for a deposit by up to a third under its much-spruiked superannuation scheme.
They will be able to make up to $30,000 in voluntary super contributions over two years and then withdraw it when ready to buy a property, under draft laws introduced to parliament on Thursday.
The measure was announced in the May budget in a bid to reduce pressure on housing affordability.
Assistant Minister to the Treasurer Michael Sukkar said home ownership was falling out of reach for many younger Australians.
“With house prices high, difficulty saving a deposit is a key barrier to getting into the market,” he told the lower house.
“The changes in this bill are essential and why we need to act now.”
For most people the scheme could boost savings by at least 30 per cent, he said, compared with saving through a standard deposit account…
Shadow treasurer Chris Bowen labelled the proposal “dodgy”, “dangerous” and “hopeless” and said Labor opposed the legislation.
“(It) will do nothing to address housing affordability but will instead work to undermine Australia’s world class superannuation system,” he said.
In his post Budget speech delivered in May, Labor Shadow Treasurer, Chris Bowen, pledged to block the Coalition’s Budget measure, labelling it a “sham”. So it will be interesting how Labor and the minor parties deal with this legislation in the Senate.
Bowen is correct when he argues that the Coalition’s super savings scheme is bad policy. At the margin, it would raise demand and place further upward pressure on house prices – the antithesis of a ‘housing affordability’ measure.
It also clouds the purpose of super from being a retirement savings vehicle that is intended to relieve pressure on the Aged Pension.
And the measure is budgeted to cost some $250 million over four years – money that could be better spent elsewhere (see below).
The only positive thing that can be said about the scheme is that like its predecessor, Labor’s First Home Savers Account, it is rather weak – both in its likely impact on the housing market (which would be moderate) and its impact on the Budget.
Call me cynical, but I believe the main priority of the Government in introducing this scheme is not to improve housing affordability, but rather to keep momentum in the housing market and prevent a correction.
