Desperate to keep the East Coast property bubble going, the Turnbull Government has passed through the lower house legislation to allow first-home buyers (FHBs) to use up to $30,000 of voluntary super contributions for a housing deposit. From SBS:
The coalition used its numbers in parliament’s lower house to pass the measure – announced in the May budget – on Wednesday.
The legislation also allows older Australians to contribute the proceeds of the sale of their family home to their super.
Labor and the Greens are against the proposal, with the opposition claiming it will do nothing to address housing affordability.
Shadow treasurer Chris Bowen argues it will instead work to undermine the country’s superannuation system, labelling it a “sham”.
Assistant minister to the treasurer, Michael Sukkar, accused Labor of deliberately peddling misconceptions about the scheme…
“It’s quite shocking and surprising to see any political party take a view that a tax cut for first home buyers is something that they cannot support,” Mr Sukkar said.
Chris 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.
It also comes on top of FHB bribes introduced by the NSW and VIC Governments, which have been successful in driving an 80% and 45% annual increase in FHB commitments respectively:
Anything to keep the bubble going!
