Morrison enters last week with controversial plan to allow first home buyers to dip into super

Prime Minister Scott Morrison has picked a policy brawl with Labor to shape the final week of the election campaign by unveiling plans to allow first home buyers to withdraw up to $50,000 from their superannuation to get into the property market.

Morrison told voters they should have the right to use their super funds to buy their first homes and made the policy the centrepiece of a campaign speech that held out the promise of a “better future” if Australians backed him at the election.

Scott Morrison announced the policy at the Liberal Party campaign launch in Brisbane.Credit: James Brickwood

But the policy sparked a swift rejection from Labor leader Anthony Albanese on the grounds it would weaken retirement incomes, as well as a blunt condemnation from former prime minister Paul Keating, a key architect of the modern super system.

Days after admitting he could be “a bit of a bulldozer” and would change after the election, Morrison used the campaign speech to tell voters he had made tough decisions during the pandemic but now offered a path to recovery and a brighter future.

“As a prime minister, you pour your heart and soul into this job every single day,” he said.

“You don’t get everything right. I’ve never pretended that I have. But I tell you what, I never leave anything on the field.

“And I’m seeking a second term to ensure that we can take this to the next level, to those better days.”

The super-for-housing policy allows first home buyers to use their superannuation to raise up to $50,000 for a deposit to get into the property market if the Coalition wins the election and passes laws to start the scheme from July next year.

“It’s your home and it’s your super,” Morrison declared.

Keating called the proposal a “frontal assault” by the Liberal Party on the super system.

Former prime minister Paul Keating, with Anthony Albanese, slammed the Coalition’s policy to raid super for a first home.Credit: Alex Ellinghausen

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

“The Libs believe ordinary bods should be happy with the age pension. Let them know their place. 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.”

Keating argued the tax concessions on super existed solely to produce a retirement income and that preserving the fund balance was crucial to this because of the importance of compound growth.

He also warned that allowing people to use super for housing would lead the Liberals to allow the funds to be used for aged care, student debt or other purposes.

Labor housing spokesman Jason Clare said the policy would throw “fuel on the fire” of the housing market.Credit: Alex Ellinghausen

Labor housing spokesman Jason Clare dismissed the plan on the grounds it would throw “fuel on the fire” of the housing market by giving buyers more money and therefore driving up prices.

Industry Super Australia chief executive Bernie Dean mounted a similar argument by estimating the use of super savings would drive up property prices by 16 per cent in Sydney, 9 per cent in Melbourne, 8 per cent in Brisbane and 14 per cent in Perth.

Morrison said the policy would allow first home buyers to invest “a responsible portion” of their own super into their own home.

“You can already use your super to purchase an investment property. But not your own home. Other countries such as New Zealand and Canada also have policies that allow people to use their retirement savings to help them buy their home. And under a Morrison government you will be able to do that,” he said.

The Super Home Buyer Scheme would start by July 2023 and would not be restricted by price caps on the income someone could earn or the value of the property they wish to buy.

It could be used only by people buying their first home who have saved at least 5 per cent of the deposit and who would live in the home at least one year.

The buyers must apply to the Australian Tax Office for approval and could withdraw up to 40 per cent of their super funds, up to a maximum of $50,000, for the home deposit.

If they sell the home, they must return the cash to their super funds along with a share of the capital gains.

It would be able to be used alongside the Home Guarantee Scheme and the First Home Super Saver Scheme as well as a policy also unveiled yesterday to allow all Australians over the age of 55 to ″⁣downsize″⁣ their homes and put up to $300,000 from the proceeds, per person, into super funds outside existing contribution caps.

The downsizing policy creates an incentive for people to sell large homes as they age, potentially increasing supply for younger buyers, but it does not force any sale. Albanese said Labor would match the policy.

The idea of using super for housing has been pushed by Coalition backbenchers including Tim Wilson, the member for Goldstein, and Liberal senator for NSW Andrew Bragg, as well as a suggestion about the change in 2015 from Joe Hockey as treasurer.

Housing Industry Association managing director Graham Wolfe welcomed the scheme on the basis that access to a deposit was the biggest obstacle for Australians trying to buy their first home.

“This scheme builds on the many positive home ownership schemes now in place to support first home buyers achieving their aspiration to own a home,” he said.

But the Financial Services Council, which represents retail super funds, warned the move would undermine retirement savings.

“The FSC is concerned the government’s proposal weakens the sole purpose of superannuation, which is to provide higher standards of living in retirement,” chief executive Blake Briggs said.

“The government has an obligation to do more to boost supply, otherwise unleashing superannuation savings on the housing market risks driving prices higher still.”

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