Budget clues point to piecemeal change only in housing policy

Investors seeking federal budget signals from Scott Morrison’s ­address on housing affordability yesterday can be sure of one thing: negative gearing will not be touched.

After that, though, the Treasurer made it clear just about everything from “assisted home downsizing” to changes to superannuation access or even a capital gains tax adjustment could be on the table in next month’s budget.

In particular, Morrison held open the notion of government assistance to help retirees downsize from larger family homes. Recent industry research has highlighted the growing problem of “mortgaged retirees”, with Australian Institute of Superannuation Trustees figures suggesting the number of people set to enter retirement who have not paid off their home mortgage has tripled.

Speaking on radio yesterday morning (an ABC radio interview that seemingly sparked his “split” from Sydney station 2GB), Morrison highlighted that easing the fin­ancial difficulties of retirees selling larger houses to downsize could improve housing supply and underpin retirement incomes.

Judging from the muted re­action to significant changes to pension access in January, the government may be emboldened to make further changes: in fact the notoriously complex pension access arrangement could well be useful in dampening potential community opposition to further adjustments. It is understood the Treasurer may introduce amendments that would mean retirees were not penalised within the pension system by the sudden influx of money from the sale of a home.

On the highly contentious issue of allowing younger people to access superannuation to buy first homes, Morrison added little detail to existing speculation. The government is considering a co-funding arrangement, first reported in The Australian, where first-home buyers would be allowed to divert super contributions into a home savings account, to be matched dollar-for-dollar by contributions from personal savings.

Similarly, prospects of an effective lift in CGT on properties held longer than a year were neither mentioned nor denied; it is ­rumoured the CGT discount could peel back from 50 to 40 per cent.

Morrison also signalled the government would move to entice the nation’s largest super funds into the housing market, calling for a change of attitude among big investors away from real estate transactions and towards a long-term view where affordable housing developments could become a sustainable fixed-interest product.

Corralled by political realities and his refusal to go anywhere near the highly popular negative-gearing tax break, it looks like any changes the Treasurer will make in the budget will be piecemeal rather than fundamental. As he told a Melbourne housing conference, he’ll be using “a scalpel not a chainsaw”in efforts to cool speculation in residential property and improve long-term affordability.