Superannuation funds demand housing subsidies

Industry superannuation funds have demanded that state and federal governments provide cheap land and tax subsidies to encourage funds to invest in affordable housing:

Superannuation firms and community housing groups have been in discussions for 12 months about lobbying the federal government together for subsidies that would make low-cost housing feasible as a long-term investment…

[This includes] offering underutilised state-owned land and tax incentives to super fund investors, said the Industry Super Australia chief economist, Stephen Anthony…

The high cost of residential land in many areas is one restraint that state governments could ease by freeing up underutilised land at reasonable prices, Mr Anthony said…

The Community Housing Industry Association and industry super funds have held roundtable discussions to reach a proposal requesting subsidies from the federal government.

The industry superannuation fund sector has recently landed in hot water for investing too heavily in illiquid unlisted assets like property and infrastructure. As such, do we really want them doubling down to invest in unlisted social housing at taxpayers’ expense?

The fundamental problem is that despite Australia’s compulsory superannuation system being in effect since 1992, the primary purpose of super is still to be defined.

Earlier in the Coalition’s term, it lodged a bill to define the core purpose of super as follows:

“To provide income in retirement to substitute or supplement the Age Pension”.

However, this bill never passed the Senate.

As such, Australia’s compulsory superannuation system has been left at the mercy of politicians and vested interests to use for competing agendas.

Superannuation belongs to its members. It should be managed in a way that maximises risk-adjusted returns, while also being liquid enough to ensure that it can be withdrawn when required.

If policy makers want more investment in public housing – a worthy objective – they should do so directly by taking advantage of the lowest borrowing rates in history.

Unconventional Economist
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Comments

  1. Gotta love this from the article:

    Industry Super Australia has also been working on a report for the NSW Community Housing Industry Council that will be presented to the state government.

    The report has not been finalised but its recommendations include offering underutilised state-owned land and tax incentives to super fund investors, said the Industry Super Australia chief economist, Stephen Anthony.

    I’m not sure the point at which blatant lobbying became “producing a report” but it seems that people doing this are unshameable.

    That said, land tax exemptions for property owners who rent the property to low income earners at sub market rates does seem like a pretty easy win.

    • “offering underutilised state-owned land and tax incentives”

      It’s crazy. If it can only make an acceptable commercial return through govt subsidies then a commercial market for sustainable housing does not exist. The government should just provide the housing themselves (which they do).

      That said, inside govt they think they will be getting the private sector involved which seems like a good thing, except you are paying them to play.

      The “problem” with affordable housing is unsolvable for State Governments. Limit immigration, cap credit availability. Not too hard.

      • “That said, inside govt they think they will be getting the private sector involved which seems like a good thing, except you are paying them to play.”

        I think it is more the case about grossing up the government’s balance sheet. Making social and affordable housing attractive to private and NFPs owners is little more than an off balance sheet accounting trick for governments.

  2. Jumping jack flash

    It is certainly needed but the problem is always where to put them.
    They can’t be anywhere close to houses with debt attached to them. It just can’t be done. If they’re too close, two things can happen, the affordable houses become unaffordable, defeating the entire point of the project, or, the affordable houses drag down the values of the unaffordable ones with debt attached to them. And that’s a huge problem for everyone.

    This really restricts the feasibility of the whole project, and usually they are doomed to catastrophic failure as a result.
    Ideally, they should build them out of old tarps and pallets in the middle of the desert, but there are problems with doing that too.

  3. “offering underutilised state-owned land”

    What underutilized land????

    Oh, silly me, the tiny remnant of what’s left of the fertile land that used to supply all Melbourne’s fruit and veg until we started the mass immigration Ponzi scheme 50 years ago. Mideaswell finish what ya started chaps, hammer the last nail in the coffin of what miniscule hope our mega-cities had of localised self-sufficiency.

    Take that you smug Greens.

  4. ‘If policy makers want more investment in public housing – a worthy objective – they should do so directly by taking advantage of the lowest borrowing rates in history.’

    However, governments seem nobbled or owned by the real estate and property industry, in addition to US Koch style libertarian economics; if super funds can why not? Or is MB playing up to the conservative narrative of nobbling industry and related super funds (vs. rubbish retail), and their influence, for employees?

  5. offering underutilised state-owned land and tax incentives to super fund investors

    With 400,000 immigrant com!ng every year, how much underutilised state-owned land would be needed?

    How much underutilised state-owned land exists?

    Where is this underutilised state-owned land? Is it close to transport and jobs?

    When the last parcel of underutilised state-owned land is sold to house the immigrants THEN WHAT???

    How about selling the underutilised state-owned land to Australians who were born and raised here and now need some land to live on?

  6. If politicians want investment then set up a govt tax payer owned bank to fund what banks don’t, infrastructure, innovative business generated from csiro research instead of selling it off. Etc.