Assistant Treasurer Michael Sukkar has left open the option of first home buyers accessing their superannuation, provided that there are policies to increase housing supply to offset the resulting price pressure.
The Federal Budget is set to include a housing affordability package, which may involve superannuation. Mr Sukkar told Sky News that it was “largely correct” allowing first home buyers to use their super for housing would push up prices – a view supported by Treasury. However he said such a policy could be “finely calibrated to make sure we are not lazily pumping more money into the market” by at the same time increasing supply.
Allowing people to put superannuation towards housing is popular with parts of the Liberal and National Parties. In February it was reported that the Government was considering allowing first home buyers to withdraw some of their super contributions to put towards a deposit. Liberal MP John Alexander also recently spoke to the media about his idea for super funds to invest directly in the homes of members.
However Labor looks set to oppose such plans, with Shadow Treasurer Chris Bowen reportedly calling the idea “stupid”.
“Early access to superannuation for a home deposit would undermine retirement savings, create new financial risks, and ultimately serve no credible purpose other than bidding up the price of housing and pushing home ownership further out of reach of young aspirating Australians,” he said.
When, then Treasurer, Joe Hockey raised the idea of first home buyers accessing their super in 2015 Malcolm Turnbull said it was a “thoroughly bad idea”.
Industry opposes accessing super for housing
The superannuation industry also opposes the policy ideas coming from the Coalition. Industry Super Australia said it was “bad policy” and the SMSF Association says it “remains emphatic” in its opposition to such proposals.
“It’s been our long-held position that allowing people to tap into their superannuation to assist them acquire their first home is bad public policy,” said Association CEO Andrea Slattery.
“Although it is tempting to view superannuation savings as a tool for fixing policy problems, it is essential that superannuation is maintained to meet its sole policy purpose – to give people security and dignity in retirement. Making superannuation available to housing would be akin to opening Pandora’s box; super would be seen as a cure-all for every social issue.”
“The Association recognises the importance and sensitivity of housing affordability, but does not believe the access to superannuation to fund home deposits is the answer to this problem.”
“The proposal to allow people to access super to fund housing purchases would only see greater demand for housing stock, driving prices higher, achieving the exact opposite of what proponents of this proposal seek to achieve.”
The Financial Services Council (FSC) is “deeply concerned” by the Government not ruling out first home buyers accessing superannuation.
“The strength of the superannuation system is that relatively modest amounts saved early in your working life compound over time and help support a comfortable retirement,” said FSC CEO Sally Loane.
“Withdrawing superannuation savings to buy a house – especially when house prices appear to be at the high end of the cycle in the major states – will not help first home buyers into the market. It will only further fuel the increase in house prices.”
“We do not support diluting people’s retirement nest eggs to solve a housing affordability problem.”