Super bosses must embrace Coalition’s super plan: Robert Gottliebsen

Superannuation bosses must understand the importance of the Coalition super plan to the long term future of the industry. Picture: Damian Shaw/NCA NewsWire

It is really sad for the superannuation movement in Australia that the current crop of fund executives don’t understand the importance of the Coalition superannuation measure to the long term future of superannuation.

Forget the politics. An increasing proportion of younger Australians not only see superannuation as irrelevant to their lives but as a source of advantage to older Australians that they do not deserve.

That view, which has validity, is likely to gather greater momentum in the years ahead and will almost certainly result in eventual dismantling many of the superannuation advantages that currently exist and a long term reduction in its importance. .

In a world where people are worried about the impact of climate change, saving for retirement seems an irrelevancy but higher rents are underlining to the younger generation, and even to those coming up through the education system, that there are real advantages in owning your own dwelling.

The absurdity of having money stuck in superannuation and not being able to access it for housing creates a deep frustration with the older generation’s rules that is clearly not understood by those running our superannuation funds.

As the Retirement Incomes report clearly set out ownership of a dwelling is the best pillar for a person entering retirement. Superannuation comes second.

Like me, our superannuation fund managers come from a previous home owning generation who could take advantage of superannuation. The fund executives have not realised that, over time, superannuation frustrated young people in the community will swamp the media and eventually destroy superannuation as we know it.

We must recognise their situation is different to previous generations and they have to be brought into the equalising tent.

Offering access to superannuation to help buy a house is a vital first step. My criticism of the current proposal is that it is not generous enough and that greater access should have been announced perhaps including limited access to future contributions for those that have demonstrated a clear savings pattern.

The wonderful aspect about the plan is that the vast majority of first home buyers will eventually sell their first dwelling and the money returns to mainstream superannuation. One of the criticisms of the Morrison plan is that it will boost house prices. In normal times that would be a valid criticism.

Indeed, some years ago, along with others, I could see the looming issue and I was writing strongly in favour of allowing young people access to their superannuation to buy a dwelling.

But I stopped once the housing market took off because in that environment such a stimulation would have sent house prices up even further. But now the game has changed. Holders of some 30 per cent of the housing loan stock will be damaged by a rate increase above 1.5 per cent. And. as I will explain below, there is a now a greater prospect of such an event.

By far the biggest force causing movement in house prices is the availability of bank credit. Whereas bank money was almost limitless six months ago, now it is now much more restricted. It is a perfect time to enable first home buyers to access their superannuation without pushing up house prices.

In recent days, I have spent some time moving around a number of industries. I am beginning to challenge the Commonwealth Bank’s belief that a 1.5 per cent interest rate rise will be sufficient to curb rising inflation. A large number of employers actually want worthwhile wage rises because they hope it will attract more people into the work force.

Those importing from China are seeing 10 to 15 per cent price rises beginning to come through. Add to that oil and food. But demand is holding.

Just as significant, the vast number of enterprises that have been maintaining their profits by holding back on maintenance and capital improvements are now at last beginning to rectify the problem. Engineering enterprises conducting maintenance are seeing a big rise in demand and linked to that demand are clear signs that companies are updating their equipment and investing in technology.

We have the chance to move into a society with a higher rate of inflation than we are used to but one which will not stagnate despite higher interest rates. .

One of the vulnerable groups in that environment are those that over borrowed at low interest rates who must fund large rises in their bank loan repayments.

Higher wages will help but they won’t off set much bigger payments that will be required if the interest rate rise is above 1.5 per cent.

The impact will certainly moderate our economy and when combined with the bank housing credit squeeze it will put considerable pressure on house prices – a perfect time to allow first home buyers to access their superannuation.