Government's housing affordability plan still under construction

SBS World News Radio: A group of Coalition backbenchers, including Tony Abbott, is pushing the government to adopt a scheme allowing young people to dip into their superannuation funds to buy a home.

Government's housing affordability plan still under constructionGovernment's housing affordability plan still under construction

Government's housing affordability plan still under construction

As the Turnbull Government works on its housing affordability plan, some on the backbench are raising an old idea.

Liberal MP Craig Kelly says people should be allowed to dip into their superannuation to get a deposit on a home.

"We should always push for those home ownership rates to be increasing, but we've seen in recent years they've been on the decrease, which I believe is not in the best interest of our country in the long term and I'm sure that view is shared by many of our Coaliton colleagues."

Craig Kelly isn't alone in supporting the scheme.

Former prime minister Tony Abbott also says it's a good idea, and Liberal senator Jane Hume thinks it's worth a look.

"It's important to remember that supperannuation isn't the government's money, it's people's money. And they should be able to consider, at least, accessing their savings to buy their first home."

The idea of letting young people divert super for house deposits was raised in the Howard era, but ultimately rejected by the government.

Treasurer Scott Morrison has said there is no plan to implement the scheme, but has not explicitly ruled it out.

Independent economist Saul Eslake doesn't like it.

"I think it is, as the prime minister said a few weeks ago, a thoroughly bad idea. Its effect will largely be to put further upward pressure on home prices, to the detriment of almost all of those who are still looking to buy their home and to the advantage of those who already own at least one property, or more."

Mr Eslake says Australia has experienced 50 years of failed government interventions that have added heat to housing demand.

He says first-home-buyers grants and stamp duty concessions have done nothing to stop falling rates of home ownership, because without more housing stock, increased purchasing power just drives prices up.

"It's hard to think of any area of government policy which has been pursued for so long in the face of such incontrovertible evidence that it doesn't work as the policy of allowing people to spend more than they otherwise would in buying homes, in the mistaken belief that that will do something to support the home ownership rate."

Labor's treasury spokesman, Chris Bowen, echoes those concerns and adds another.

"The only winners would be vendors who would have two first-home buyers with access to super, outbidding each other, spending their superannuation money. This is just the latest Liberal attempt to undermine Australia's superannuation system."

The scheme might limit to three years the amount of super that could be diverted, to minimise the impact on lifetime savings.

But Matt Linden, from Industry Super Australia, says the loss of interest would still add up to a major cost.

"Even accessing super for just three years at the start of your working life will mean that you miss out on the magic of compound interest, so it'll have a devastating impact on final retirement balances."

Details of the government's housing affordability plan will be revealed in the Budget, on the 9th of May.

 






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