Deloitte’s Chris Richardson says that Prime Minister Malcolm Turnbull was ‘right’ to embrace ‘innovation’ during the election campaign
MALCOLM Turnbull has moved to settled a cabinet brawl before it erupted over using superannuation accounts to fund first homes of young people.
It’s a bad idea, he indicated.
The numbers show a dip into retirement savings isn’t going to happen, and the proposal might not even get as far as the expenditure review committee which decides the contents of the Budget.
That means Treasurer Scott Morrison will have to look elsewhere to find effective Budget measures to increase housing affordability in the crisis cities of Melbourne and Sydney — the big promise at the centre of the May statement.
Talk of a cabinet showdown on the super solution appears premature.
The economic ministers were divided on the idea. Mr Morrison and his junior minister Michael Sukkar, and Resources Minister Matt Canavan were in favour; Deputy Prime Minister Barnaby Joyce, Finance Minister Mathias Cormann and Revenue Minister Kelly O’Dwyer were against it.
There is a scattering of Coalition backbenchers on either side.
Today Mr Turnbull speaking in India told reporters the debate had gone around.
“I have expressed fairly strong views in the past,” he told reporters.
Those views included his March 2015 comment that it was “a thoroughly bad idea”.
The superannuation industry has also condemned the idea and warned it would push up prices and make housing even more unaffordable.
But Mr Canavan said today on ABC radio: “I agree you shouldn’t be able to touch it for going overseas on a European holiday, but it seems strange that you’re allowed to invest in other people’s assets, in equities, in bonds, but you’re not allowed to invest in your most important asset in your life which is your own home.”
And Liberal backbencher Ian Goodenough, who has properties in Canberra and Perth, also gave support for a proposal he argued meant no extra cost to taxpayers.
“Many young people, after 10-15 years in the workforce, would not be able to have $100,000 in cash but they certainly would have close to that with superannuation,” he said.
Earlier this week the counter argument was given by independent economist Saul Eslake, who said a consequence of allowing people to spend more money on a house than they otherwise would was that prices went up.
That happened with first-home owners’ grants and would be repeated if people were able to use concessionally-taxed retirement savings.
“That is, the benefits accrue primarily to those who already own a home rather than those who would like to,” Mr Eslake told Radio National.