Labor has confirmed that it intends to stop the First Home Super Saver (FHSS) Scheme, closing it to new entrants, though details of the policy remain very limited.
Shadow Treasurer Chris Bowen has previously mentioned stopping the scheme to the media.
However it was unclear if this was a policy the party was taking to the election – the change was not (and still isn’t) mentioned in the list of Labor’s policies on its website. These policies already include “Labor’s Plan To Make Superannuation Fairer” and “Labor’s Comprehensive Plan For Housing Affordability”.
But the policy, to “close the First Home Super Saver Scheme to new entrants”, is included in Labor’s policy costings. It is expected to raise $373 million over the four year forward estimates.
The First Home Super Saver Scheme allows a limited amount of savings to be routed though superannuation, taking advantage of the concessionally taxed environment, before being withdrawn along with associated earnings.
Details on how the First Home Super Saver Scheme will be wound down remain extremely limited. One issue is how the scheme would be closed to new entrants, given that super funds don’t know people are intending to use the scheme until they apply for a withdrawal. The ATO says: “Contributions made under this scheme are not a new type of contribution. They are voluntary contributions made to your superannuation fund(s). You do not need to notify your fund that these contributions are being made for the purpose of this scheme, and do not need to establish a separate special account with your fund.”
The First Home Super Saver (FHSS) Scheme was announced by the Coalition in the 2017 Budget, when Scott Morrison was Treasurer.
Labor was opposed to the measure when it was being legislated.
In 2017 Chris Bowen said the FHSS scheme was a “dodgy super scheme” that will “do nothing to address housing affordability but will instead work to undermine Australia’s world class superannuation system”.
“Superannuation accounts are supposed to be locked boxes to generate retirement income, not the play things of the government of the day to give access to super savings for whatever priority they wish,” he said.
The ATO have, via The Guardian, provided new figures for take-up of the First Home Super Saver Scheme:
For the period 1 July 2018 to 30 April 2019 the ATO received and approved 3,337 First Home Super Saver (FHSS) scheme release requests from individuals totalling over $41 million.
For the same period, 1 July 2018 to 30 April 2019, first home super saver scheme amounts were paid to 2,803 individuals totalling $33 million.
Labor open to good ideas, not bad ideas
When asked why Labor planned to close the First Home Super Saver Scheme, but had quickly adopted the Coalition’s other first home buyer policy, Bill Shorten said: “We’re open to good ideas and that’s what you’ll get under Labor. But we’re not open to bad ideas…”
Chris Bowen said the First Home Super Saver accounts were “undermining” superannuation.
“We made it clear from the beginning we would have no part of the undermining of superannuation. It was a thought bubble when the government was desperately trying, desperately trying to come up with a housing affordability plan. We’ve been consistently opposed to it. We’ll tick a good idea. We’ll oppose a bad idea.”
This article has been updated since publication with the ATO statistics and comments by Bill Shorten and Chris Bowen.