Political battle flares after Scott Morrison signals support for house deposit superannuation dip
By political reporter
Dan Conifer
Updated about 3 hours agoTue 11 Apr 2017, 11:42am
Photo: Labor says accessing super for a deposit would fuel an already overheating housing market. (ABC News Breakfast)
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Map: Australia
Federal Labor will oppose young Australians getting access to their superannuation for a house deposit "with every ounce of energy," after it was revealed the Treasurer favoured the controversial idea.
Key points:
- The proposal could see young people divert superannuation payments into a special account
- They would have to match the amount from super dollar-for-dollar from after-tax income
- There would be an age limit for people accessing the scheme, but this has not been settled
The ABC understands Scott Morrison supports a proposal that could see young Australians divert compulsory super payments into a special account.
The proposal has been supported by some crossbench senators, but shadow treasurer Chris Bowen said it could undermine superannuation and further increase property prices.
"It takes a very special plan to actually drive up housing prices by increasing demand as well as undermining Australia's retirement system," Mr Bowen said.
"The only winners would be vendors, who would have two first-home buyers with access to super outbidding each other and spending their superannuation money," he said.
"Labor will oppose with every ounce of energy and with every capacity at our availability in the Parliament and in the community."
The proposal, which was first floated in 1993 but resurfaced in 2015,
has been criticised by Australia's superannuation industry.
How it would work
Under the model, people could put their superannuation contributions into the fund for up to three years.
Super isn't the solution you're after
It's simple economics: if you increase demand without increasing supply, prices go up.
They would have to match the amount from super dollar-for-dollar from after-tax income.
For a person earning $80,000 annually who makes the minimum 9.5 per cent super contribution, their home saver account would be $45,600, plus interest.
There would be an age limit for people accessing the scheme, although this has not been settled.
The proposal is contentious inside Cabinet and has not been approved amid fears it would drive up house prices.
Industry Super Australia's director of public affairs Matthew Linden said the proposal would push up house prices and devastate retirement savings.
"By dipping into super so early in someone's working life, they miss out on the magic of compound interest which will have a significant impact on their final retirement savings," he said.
"Making use of these three years' worth of contributions when someone is 30 years old means they miss out on around 35 to 40 years of compound returns — that's equivalent to being retrenched in your late 50s."
Assistant Treasurer Michael Sukkar is helping to develop the housing affordability package for next month's budget.
"We're going to be pretty keen to examine measures that can bridge that gap and allow first-home buyers to get into the market as soon as possible," Mr Sukkar told Sky News.
"Otherwise, the goalposts keep shifting and it gets harder and harder," he said of people saving for a deposit.
Crossbench crucial for changes
With the Opposition and Greens opposed to the idea, the Government would need support from the Senate crossbench to pass the changes.
Super Ponzi scheme
Allowing superannuation to be used for home deposits would facilitate a great intergenerational theft, argues Michael Janda.
South Australian senator Nick Xenophon cautiously welcomed the proposal provided it was matched with a number of other measures to make housing more affordable.
"As a general concept, using super for a home deposit might work but it has to be done very, very cautiously," he said.
"I think all ideas need to be on the table, including this one, but I suggest it needs to be done in a very cautious and considered way, keeping an eye on the ramifications on the housing market."
Senator Xenophon said owning a home outright before retirement age would provide extra security for older Australians.
Victorian crossbench senator Derryn Hinch rubbished the idea and told the ABC it had "absolutely no merit".
"They won't be getting my vote."
Allowing early access to superannuation has proved controversial with
Prime Minister Malcolm Turnbull describing it as a "thoroughly bad idea" in 2015.
On Monday,
former prime minister Tony Abbott said the idea had merit and needed to be considered.
Dave R.
