Scott Morrison’s super for house plan will drive up prices, Minister concedes

Allowing Aussies to use their super for their first home is a key part of Scott Morrison’s campaign, but a key minister has made a glaring concession.

Superannuation Minister Jane Hume has conceded that the Prime Minister’s super for houses plan could drive up prices in the short-term.

Senator Hume admitted it could push up prices during an interview with ABC’s Radio National, but argued in the long-term the benefits of home ownership outweighed the risk.

“We expect that a lot of people will bring their decisions forward,’’ she said on Monday morning.

“So I would imagine in the short term, you might see a bump in house prices but that doesn’t play out the long term benefits of more home ownership.”

However, speaking on ABC AM, the Prime Minister said he did not accept that the policy would drive up prices, and suggested the other policies to encourage empty nesters to downsize would mitigate the risks.

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Superannuation Minister Jane Hume has conceded Scott Morrison’s plan to allow first homebuyers to use their superannuation for a house will drive prices up. Picture: Jason Edwards

Speaking later in the morning, the Prime Minister said he “simply just doesn’t agree with the assertion this would have a negative impact”, as an earlier-announced policy encouraging baby boomers to downsize early would help with supply issues.

“You have to look at the balance of policies that this is addressing. It deals with supply and it deals with demand,” he said.

“And these same criticisms have been levelled at every single housing policy I have been bringing forward. And on every occasion they have proved to be wrong on those criticisms.”

Labor’s housing spokesman Jason Clare told the Today Show the policy would simply push prices up.

“You nailed it in that introduction. It just pushes prices up. This is like throwing kerosene on a bonfire,’’ he said.

“In Sydney where we are talking today from, where I am here, the expectation is that it would increase the cost of a home here in Sydney by $134,000.

“This is the last desperate act of a dying government. If they really thought this was a good idea, do you think they would plant it six days before an election. They have been in office for almost a decade.”

Property Council CEO Ken Morrison told Sky News on Monday he did not fear price increases from either party’s first homebuyer offerings - but said a lack of supply, which neither party has put enough focus on, would have an impact.

“The government’s own official forecast shows housing supply is set to drop by a third just as population growth is about to renormalise and take off again,” he said.

“That is where we don’t want to be as a country, where we’ve got falling supply and rising demand. That’s a bad place for housing affordability.”

A who’s who of Scott Morrison’s frontbench including Defence Minister Peter Dutton and former prime minister John Howard have previously criticised a plan to raid super for houses as “a bad idea”.

The Prime Minister has announced he would allow first homebuyers to withdraw up to $50,000 from their super funds to go towards buying a property, declaring it as “your money”, during the Liberal Party’s official election campaign launch on Sunday.

But just last year former prime minister Malcolm Turnbull described it as “the craziest idea I’ve heard”.

The idea was also previously attacked by Mr Dutton, in April 2017, as a bad idea.

“I think [Malcolm Turnbull] got it right. He’s referred back to his previous words on this, saying it’s not good policy and I agree with him,’’ Mr Dutton said at the time.

“I think the prime minister has made the right call … There are other ways that you can provide help, but you don’t want to fuel prices. You don’t want to create a situation that’s worse than what we’ve got at the moment.”

Peter Dutton has previously been critical of the super plan. Picture: Lachie Millard

As has former Prime Minister Malcolm Turnbull. Picture: David Caird

At the time, housing minister Michael Sukkar was pushing the idea in the expenditure review committee of the cabinet.

But social services Minister Anne Ruston said it could turbocharge prices.

“We need to be careful that you don’t pour a bucket of kerosene on a fire,’’ she said.

It was also dismissed by former Liberal frontbencher Christopher Pyne at the time.

“Superannuation has a particular role. It is a retirement income. Our superannuation system is the envy of the world,’’ he said.

“And those people who seek to fiddle with it are putting that risk. And, there is no evidence to suggest that if superannuation was able to be used for housing that would somehow bring house prices down. There’s evidence on the other side of the ledger, which suggests that all would happen in fact was that house prices would continue to go up, and the person selling the house would simply take that person’s super and increase house prices.”

Rising house prices could be an unwanted consequence of the new policy. Picture: Supplied

Even former treasurer Peter Costello, now Chairman of Nine Entertainment and publisher of the Sydney Morning Herald, was critical of the idea in 2015.

“Well, look, this idea has been around for a long time … every generation thinks it invented the wheel,’’ he said.

“But I think they will come to the same conclusion as we did – that if you wanted to top up people’s retirement, if you wanted to save the government money … then you probably won’t allow people to draw down on it for housing.”

Last year former PM John Howard declared: “Super is for retirement.”

In 2014, former finance minister Mathias Cormann dismissed the idea and always opposed it.

“Now for those who are concerned about housing affordability, pumping more money into the housing market by letting people access their superannuation savings more freely will not bring down the cost of housing; if anything, it would probably lead to further increases in the cost of housing,’’ he said.

Last-ditch election policy

Scott Morrison announced on Sunday he will allow first homebuyers to unlock their super to buy a house in a last-ditch effort to win the election.

The Prime Minister announced the bold policy at the Brisbane campaign launch on Sunday, revealing that if re-elected he will allow workers to raid their super piggy bank to buy a house.

Workers will be able to withdraw up to 40 per cent of their super to a maximum of $50,000, but must have also saved 5 per cent of their deposit and must live in the property for at least 12 months. If the Coalition is re-elected, the scheme won’t start until July 1, 2023.

“Under the Super Home Buyer Scheme, first homebuyers will be able to invest up to 40 per cent of their superannuation, up to a maximum of $50,000 to help with the purchase of their first home,” Mr Morrison said.

The proposal would apply to the purchase of new and existing homes.

Under the scheme, homebuyers who buy a house using superannuation will have the amount used returned to the account, including the share of capital gain, when they sell the property.

Former prime minister Paul Keating lashed Mr Morrison’s plan as a “full-frontal assault” on retirement savings.

“The Liberals hate the superannuation system – they object to working Australians having wealth in retirement independent of the government,” Mr Keating said.

“The superannuation taxation concessions exist solely to produce a retirement income for people. Its key is preservation.

“Too good for them, says the Liberal Party. We’ll let them pilfer it away in the supposed good cause of housing deposits. Next it will be aged care or longevity or paying out HECS debt – anything to puncture the pool of money they do fervently hate.

Former prime minister Paul Keating called the plan a ‘full-frontal assault’ on retirement savings. Picture: NCA NewsWire/Gaye Gerard

“If the public needs yet another idea to put this intellectually corrupt Government to death, this is an important offence – and with the Government, its unprincipled Prime Minister.”

Labor’s campaign spokesman Jason Clare called the scheme a “last desperate act from a dying government”.

“You shouldn’t have to raid your super to buy a home, and you won’t under Labor,” he said. “We’ve got to make it easier for Aussies to buy their own home.

Labor had announced an equity scheme that would allow low-income workers to have the Government cover 40 per cent of the cost of a new home and 30 per cent of an existing home.

Originally published as Scott Morrison’s super for house plan will drive up prices, Minister concedes