Vested interests distort debate on super change

The federal Coalition plans to let prospective homebuyers did into their super early.

A vote for the Coalition this year is a vote to allow Australians to use their own money in superannuation to assemble a deposit for a first home.

If elected, the Coalition would allow Australians to access the Australian Dream by taking up to $50,000 from their super fund for a deposit.

This recognises the key determinant of success in retirement is your housing status – not your super balance.

Labor stands against this policy and they are supported by the superannuation industry and unions and banks which benefit from the scheme.

Bizarrely, Labor actively supports super funds using your super money to invest in residential property – but they don’t want you to use your own money to do it yourself!

It is clear that vested interests are trying to distort this debate.

As the new year commences, we must see this campaign for what it is: an attempt to scare voters with lies.

The Super Members Council is funded by Big Super. They are co-ordinating the campaign against super for housing.

They paid economist Saul Eslake to do a report for them. Unsurprisingly, Eslake found super for housing was bad.

Accordingly, Big Super emotionally asserts: “Using super for a housing deposit would make homes more expensive, hinder the home ownership aspirations of young Australians, reduce retirement incomes, and lead to a significant long-term cost to the budget.”

Let’s step through these eye-popping claims.

Firstly, the impact on retirement incomes is positive, not negative. For most Australians, a house is the core of their retirement and the No.1 priority.

Modelling by actuaries Michael Rice and Jonathan Ng found Australians using their super to support the deposit on an entry-level Sydney unit would be $881,000 better off in retirement.

If that money had been kept in super it would appreciate to just $319,000. This example assumes a couple combine their assets for this purpose.

Based on historical data, Australians get a better outcome from investing in their own house than leaving it in super.

That is the economic factor, but there is also the psychological benefit of home ownership that underpins the Australian Dream itself. As Darryl Kerrigan said in The Castle: “It’s not a house, it’s a home.”

Liberal Senator Andrew Bragg.

Secondly, on house prices, few agree with the scare campaign.

Economist Cameron Murray says of the impact on house prices: “So I think the price effect is probably small, and definitely temporary, and in the debate we don’t get that subtlety.”

The Grattan Institute said Big Super is telling porkies: “That does seem excessive given we’re talking about a $10 trillion housing market and the additional money made available out of super … is going to be a small share of that in additional demand.”

Former Reserve Bank economist Peter Tulip also said Big Super is lying: “That seems way too high to me … it seems implausible that it would be anywhere near that big … We have had experience of financial assistance to first-home buyers … it hasn’t had a very big effect on overall house prices.”

The independent economists of varying perspectives tell a clear story – there is no prospect that super for housing could blow up the housing market.

Thirdly, on the budget impact, Big Super offers no advice on why it thinks having more home ownership would be fiscally bad. Eslake doesn’t cover it in his paper.

Yet we know that super for housing would help the budget because there would be fewer Australians in need of rent assistance payments.

Parliamentary Budget Office modelling says it would “reduce the cost of Commonwealth Rent Assistance by $1bn over the 2024-25 budget forward estimates period and $2.7bn over the period to 2034-35”.

This is a conservative estimate based on modelling the impact of 20 per cent of individuals aged 35-59 using their super for a housing deposit. It was not mentioned by Big Super in their propaganda even though it has been publicly available for six months.

So what does Labor have to say about all this? They mindlessly repeat Big Super’s data and Housing Minister Clare O’Neil recently said the quiet part out loud: “We see Aussie super funds investing in residential property overseas … lighting a fire under the build-to-rent sector will lead over time to strong super engagement in this kind of property.”

Translation: Labor wants Big Super funds to invest in housing, just not the Australian people.

So what’s in it for Big Super? They are desperate to pollute the election year with their propaganda for a very simple reason. They love the system as it is. They get to hold 12 per cent of our money for more than 40 years.

They can use our money to buy houses we will never own and they can send money to unions and banks as they wish.

They want to keep giving millions to the CFMEU.

In fact they are spending some of your money to pay Eslake for his report. But they just won’t say exactly how much. Maybe it is immaterial in the context of their $100m advertising blitz.

Australians are too smart for these tricks – I’m sure people will see the lies and the self interest for what it is.

Senator Andrew Bragg is the Coalition home ownership spokesman