Forcing you to dip into super is a huge red flag
Scott Morrison’s plan for working Australians has been made clear. You will save for a house or you will save for your retirement – but not both.
The announcement of the Coalition’s so-called housing policy has pulled back the curtain on their ideology. It is a full-frontal attack on Australia’s globally revered superannuation system that has seen generations of working Australians save for a comfortable and dignified retirement.
Morrison’s policy that would allow first home buyers to access 40 percent of their superannuation (up to $50,000) to buy a house will make home buying even more unaffordable.
With no plan to grow wages or deal with the alarming shortfall in women’s retirement savings, it’s a recipe for more working Australians retiring into poverty.
ACTU President Michele O’Neil was quick to identify the real agenda of this latest Liberal party ploy.
“It is in the DNA of the Liberal National Party to attack the superannuation system – a system designed to deliver a decent retirement to working people”.
“After forcing workers to raid their super to fund their own pandemic recovery this Government is now telling them to cut even deeper into their retirement savings to pump up the value of the housing market,” O’Neil said.
Super withdrawal to buy a house will leave you “financially worse off”
Almost immediately, the policy began to come apart at the seams, with Liberal Party campaign spokesperson Senator Jane Hulme telling ABC’s Radio National’s Patricia Karvelas that Scott Morrison’s planned Super raid was going to make the cost of housing spike.
She admitted there would be what she blithely referred to as a “bump in house prices” as people emptied their retirement savings to chase the dream of home ownership.
Earlier this year, the McKell Institute took a deep dive into the impact of allowing potential homebuyers access to their superannuation to buy a home.
Working with researchers from the Centre for Housing, Urban and Regional Planning at the University of South Australia, they found that “given the historical stronger performance of super compared to real housing market returns, the effect of compounding over a long time period (30 years) means that individuals accessing super for housing are likely to end up financially worse off in the end”.
McKell Institute CEO Michael Buckland told On the Job that Scott Morrison’s housing announcement was no solution whatsoever to Australia’s housing crisis.
“There is no way this is a housing policy, it really burns homebuyers from two ends,” he said.
It pushes up house prices to the point where any benefit you had from taking money from your super is undermined by the price of a home. And it burns you at the other end, which is it reduces your retirement savings, so you end up with more debt and less savings.
McKell Institute CEO
“I think this is an ideological battle that the Coalition Government are undertaking where what they’re doing is trying to make it sounds like people will be able to get into the market, but they’re just helping existing homeowners,” Buckland said.
Morrison has pulled policy out of the reject pile
Michele O’Neil agreed with Buckland and cited the looming election as the trigger for a desperate government to try to trick aspiring home buyers into raiding their superannuation savings.
“This is not a housing policy – this is a desperate, last-minute act from a Prime Minister trying to cling to power. The Coalition has had almost a decade to do something about housing affordability and has done nothing.”
“This policy has rightly been rejected by Governments on a number of occasions because it would only serve to drive up house prices and rip tens of thousands of dollars out of the retirement savings of working people,” O’Neil said.
Former Labor Prime Minister Paul Keating was scathing about the announcement. Keating was one of the architects of the Superannuation scheme, which was created in conjunction with the Australian Union movement to provide workers with a dignified retirement.
“The Liberals hate the superannuation system – they object to working Australians having wealth in retirement independent of the government,” Mr Keating 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.”