Health crisis, yes. Home deposit, not so much: What voters think super should be used for

Australians strongly back the case for people to withdraw their superannuation for medical emergencies but most do not want the funds used to buy a home or pay a mortgage, highlighting a political clash on looming laws to set the purpose of $3.3 trillion in savings.

Only 37 per cent of voters think super should be used for a deposit on a first home, despite a vigorous campaign for the idea since the Coalition unveiled the proposal at the last election and called for more freedom to tap into retirement accounts.

Treasurer Jim Chalmers has unveiled plans to define the purpose of super in federal law.Credit: Alex Ellinghausen

An exclusive survey conducted by Resolve Strategic for this masthead reveals low levels of support for other potential uses for super such as helping out relatives in need, which is backed by only 11 per cent of voters, and starting up a business, which is backed by 13 per cent.

Treasurer Jim Chalmers has unveiled plans to define the purpose of super in federal law after years of dispute over the Morrison government’s move to let people withdraw $38 billion from their retirement funds during the COVID-19 pandemic.

Some of that cash went on gambling and takeaway meals, according to an economic analysis showing up to a quarter of the applicants emptied their accounts within days of being allowed to do so.

Opposition Leader Peter Dutton has kept the Super Home Buyer Scheme as Coalition policy after then-prime minister Scott Morrison unveiled the plan at his election campaign launch last May with a call to let people withdraw up to $50,000 from their super funds for a deposit on their first home.

Dutton has also accused the government of breaking an election promise by deciding to double the tax rate on the earnings in super funds from 15 to 30 per cent for people with more than $3 million in their retirement accounts. While the move continues a tax concession, given the new rate is lower than the marginal tax rate for a worker on a higher income, it scales back the concession and increases tax revenue.

Shadow treasurer Angus Taylor has attacked the government for breaking an election promise because Prime Minister Anthony Albanese told voters during the election campaign that “we have no intention of making any super changes”.

Taylor has also argued for the super-for-housing policy on the grounds that super funds invest in property more generally, but young home buyers needed more help to use their own super to get into the housing market.

“With respect to housing, the irony of superannuation right now is you can invest in anybody’s house except your own and that is a bizarre set of circumstances,” Taylor said last month.

“Our simple proposal before the last election, which we’ve continued to back, is that first home buyers should have the ability to invest in a home. It’s still an investment, it will still yield a return over time, and we know those returns have been very strong over the past years, and so we think that is a very reasonable part of someone’s investment portfolio.”

The policy dispute has led the government to propose a new law that will define the purpose of super to emphasise the importance of saving for retirement rather than withdrawing the money early for housing or other reasons.

“Doing that requires that we embed super’s purpose into law,” Chalmers said last month.

“Some of the most disastrous policy proposals we’ve seen in recent years – like allowing billions to be withdrawn from balances during the pandemic – have come about, in part, because our predecessors were navigating the super landscape without a compass.”

The government has issued a consultation paper on the objectives of super and is asking for public submissions by March 31 before it drafts the law.

Asked in the survey about the acceptable reasons for accessing super, 68 per cent of respondents backed the idea of using the funds for life-saving medical treatment, 67 per cent approved using it for palliative care and 58 per cent backed using it for serious financial distress.

The question was: “Some people have argued that someone’s superannuation should be able to be accessed for some purposes other than their retirement. Which, if any, of the following reasons do you think are appropriate for using super balances?” Respondents could approve multiple options.

Federal rules allow the release of super on compassionate grounds or to deal with severe financial hardship, terminal medical conditions, temporary incapacity or permanent incapacity.

The existing First Home Super Saver Scheme, introduced by the Coalition in 2017, also allows people to apply for the release of their super contributions for a first home, with a cap of $15,000 a year and $50,000 in total.

Asked about the purpose of super, 45 per cent of respondents supported the idea of defining it in a way that would rule out using it for purposes such as buying a first home. Another 24 per cent disagreed with the idea of defining super in this way, while 31 per cent were undecided.

The question was: “The government has recently floated the idea of changes to Australia’s superannuation system. One of those changes is to define superannuation and its purpose in law so that the use of super cannot easily be changed in the future. The proposed wording would see it defined as for the purpose of retirement income so that it could not be withdrawn early for things like buying a first home (but could potentially be accessed in extreme circumstances). Do you agree or disagree with giving super a definition that would rule out using it for purposes like buying a first home?”

Cut through the noise of federal politics with news, views and expert analysis from Jacqueline Maley. Subscribers can sign up to our weekly Inside Politics newsletter here.