Treasurer Scott Morrison will use a speech to set the scene for his housing affordability package.
IT’S the housing funding idea that keeps getting clubbed by the experts but won’t go away, and now it’s dividing Cabinet.
Using superannuation to help buy a first home is being condemned by ministers who insist the consequences would be harmful rather than helpful. And officially no such proposal exists.
But it keeps being raised as a live Budget option and is most associated with Treasurer Scott Morrison, who appeared to be backing it today, and his junior minister Michael Sukkar.
But it is being questioned by other ministers including Finance Minister Mathias Cormann.
And the superannuation industry also has hefty doubts.
Chief executive of Vision Super Stephen Rowe today told news.com.au nothing seemed to have been thought through.
But a group of Government backbenchers have been keen to see the idea promoted, particularly for young workers just starting their superannuation schemes.
.@CraigKellyMP says ‘the best security that anyone can have in their retirement is to own their own home’ https://t.co/44iEvfZ4Kg pic.twitter.com/y55scZMmBu
— Sky News Australia (@SkyNewsAust) April 10, 2017
“What’s the point of having lived to 65 years of age and having never owned a home and suddenly you get a lot of cash?” said West Australian Liberal Matt Birney on Sky News.
Two weeks ago Mr Morrison didn’t dismiss super savings as part of a housing affordability measure in the Budget.
“The problem is being able to save quickly enough to get a deposit which is big enough to actually get yourself into the market,” he told 2GB.
“That is a big challenge, particularly for young people, and people are putting off when they buy their house. They’re even putting off when they have kids so they can save more … that’s why it’s a very important issue, and that’s why we’ll be addressing it in the budget.”
Mr Morrison today also urged Australian super schemes to match US and Canadian pension funds investing in cheap rental housing.
“I would hope a similar appetite could be cultivated among Australian super funds,” he said in a speech.
“What could be more in the interest of nurses, teachers or police pension fund members than investing in affordable housing for nurses, teachers and police officers?”
A consistent critic of the idea of hitting personal super savings for housing, independent economist Saul Eslake, today said the 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 homes rather than those who would like to,” Mr Eslake told Radio National.
If a super-for-housing plan is introduced, he recommends getting in quickly, because it would be a “benefits for a small number of people who are early to take advantage of a scheme like this”.
But you would have to face the prospect of not having as much as you would need for retirement because it has been spent elsewhere
“And because of the impact of compound interest (users) will end up poorer at retirement than they otherwise would have been,” he said.