The idea of super to buy a home was proposed and knocked back towards the end of last year; however The Australian is reporting that Coalition Ministers are pushing the idea within the party in the lead-up to the May Federal Budget.
Treasurer Scott Morrison is reportedly looking for a way to tackle the issue of housing affordability without resorting to tax increases, and this strategy is seen by government MPs as a potential option.
That’s despite Prime Minister Malcolm Turnbull describing it as a “thoroughly bad idea” back in 2015.
We’ve previously written about the pros and cons of accessing super for housing.
What’s different this time around?
This latest incarnation of the ‘using super to buy a home’ idea comes with a handful of differences. The key stipulation is that one’s entire superannuation balance would not be available for use – one would only be able to access an amount equal to the sum of their voluntary super payments.
This would mean individuals who don’t make voluntary super payments stand to gain nothing from the idea, in a possible compromise implemented to placate those opposed to the idea.
However that being said, senior government figures are reportedly still not sold on the idea. They pose the idea that allowing young people to boost their home deposit in such a potentially significant way may only compound the current inflationary problems being seen in the housing market.
Industry Super Australia slams proposal
Industry Super Australia Chief Economist Stephen Anthony described the proposal as ‘bad policy’.
“This could reduce retirement savings and drive up housing prices, while doing nothing to address supply,” Anthony said.
“In the housing affordability debate, the focus should be on land release, regulation, and tax subsidies that fuel investment in existing property rather than new buildings.
“Allowing first home buyers early access to their super will set back a retirement income system that is still struggling to fully deliver.”
Budget deadline has MPs scrambling
With the budget only 10 weeks away, Government ministers are attempting to come up with solutions to the housing affordability problem, which has become a huge political issue.
Today I met with newly appointed NSW Planning Minister Anthony Roberts to discuss housing supply issues in Sydney and across NSW. pic.twitter.com/xpaTNy4ef3
— Scott Morrison (@ScottMorrisonMP) February 2, 2017
While the superannuation proposal is debated further, some MPs are reportedly pressuring Mr Morrison to increase housing supply, by making it possible for elderly Australians to downsize their homes with no repercussions in regard to the pension asset test.
The proposal would work in tandem with the finance aggregator model from the Australian Housing and Urban Research Institute, which is expected to form part of the budget. This model is designed to encourage an increased amount of private funding for the affordable housing market.
It’s an idea that’s supported by influential property lobby group the Property Council, with their Chief of Policy Glenn Byres arguing against suggestions that allowing pensioners to downsize their homes may carry a significant budget cost.
“Our view is that it is feasible, it works to give people the housing choice they need as they age, it opens up options for them rather than having to sit in the large family home that is no longer fit for purpose,” Mr Byres told The Australian.
These new ideas come as a result of Mr Morrison putting a kibosh on the idea of reducing tax concessions for property investors, a decision that has attracted significant criticism from the Shadow Treasurer Chris Bowen and the Labor Party at large.
Morrison just doesn't get it. Reform negative gearing to improve housing affordability. Another economist calls it: pic.twitter.com/wuVH3D9VrN
— Chris Bowen (@Bowenchris) February 2, 2017
Another Coalition move receiving heat was Michael Sukkar saying that that the first step to buying a home was to have a “highly paid job” – a statement Labor seized upon as evidence that the government is “out of touch” with hard-working Australians.
Mr Sukkar has since stated that a number of different measures for tackling housing affordability are being considered by the government, and that there will be a final budget package that includes “a number of interrelated measures”.
“There are many ideas that are in the embryonic stage, as we speak, and we’re many months away from the budget,” he told Sky News.