Coalition’s home deposit plan ‘to create $200bn bill for taxpayers’

The Coalition’s plan to ‘raid’ superannuation to help first-home buyers would also ‘unleash a massive price hike’ in low to mid-priced houses, the Super Members Council has warned.

Super Members Council chief executive Misha Schubert.

“Raiding” superannuation to fund a deposit for first-home buyers would “unleash a massive price hike” in lower to medium-priced houses and cost taxpayers a cumulative $200bn by 2060, the Super Members Council has warned.

Releasing details of modelling by accounting firm Deloitte, the council says proposals being ­mooted by the federal opposition to allow first-home buyers to ­access their super could cost the taxpayer as much as $1 trillion by the end of the century as a result of more demands on the age pension and lower taxes on super­annuation.

Super Members Council chief executive Misha Schubert said proposals to access superannuation for housing would not lift home ownership rates and would “only make housing affordability worse”.

“It’s economically reckless,” Ms Schubert said.

“It sets a policy trap for young Australians because it hikes house prices and blows a budget blackhole in the decades ahead mostly by pushing up age pension costs – which every taxpayer would pay.”

At the last election, the federal opposition promised to introduce a policy allowing first-home ­buyers to access up to $50,000 of their superannuation to fund a ­deposit.

This follows the Morrison government’s move during the pandemic to allow people to withdraw a total of $20,000 from their superannuation, a move that wiped out some super balances.

NSW Liberal senator Andrew Bragg, who was appointed the ­assistant shadow minister for home ownership in March, has raised the possibility of expanding the policy above the initially proposed $50,000 cap, as well as using super to be credited to a mortgage offset account.

The Super Members Council, which represents the industry superannuation sector, says modelling by Deloitte showed that a policy that allowed withdrawals of up to $50,000 of super for housing would cost $320m a year to the budget by 2030, more than $3bn a year by 2060, and rising to a peak of $8bn a year as a result of higher pension payments and the loss of tax revenue on super earnings.

The modelling shows that having no cap on the amount that could be withdrawn from super for housing for first-home buyers would cost $2.5bn a year to the budget by 2030, $15bn a year by the mid-2060s and peaking at $25bn a year by the end of the ­century.

This would cost the budget a cumulative $200bn by 2060 and about $1 trillion by the end of the century.

The superannuation sector is lobbying hard against the idea, ­arguing that the system is based on the key tenant of preserving savings until retirement.

The sector has been concerned at moves by the Coalition parties to use super for other social purposes.

Ms Schubert said the proposals to “break the seal on super” would leave people with less savings in retirement and create a larger bill for taxpayers.

“We all desperately want more Australians to own their own home, but this idea won’t achieve that,” she said.

“It’s unfair to lump the next generations of Australians with a policy that would only make the housing affordability crisis worse by driving up house prices.

“We urge a sensible rethink on any policy ideas that undermine the strength and success of super to continue to deliver for all Australians in retirement.”

The council argues that the current opposition policy of ­capping access to superannuation at $50,000 would “unleash a massive price hike” that would push up the price of a median house in capital cities by 9 per cent or $75,000.

“An uncapped scheme would set off an even bigger property price hike and cost future taxpayers billions in higher pension costs,” it says.

The council says its analysis shows that a 30-year-old couple, who both withdrew $35,000 each from their super, could retire with a balance that was $195,000 less in today’s dollars.

“The creation of super is a remarkable Australian achievement that delivers a dignified retirement for millions and it is rightly the envy of the world,” the council said.

“Any time politicians float using super for something else, it undermines the purpose to deliver strong returns for all Australians.”