The federal government have put forward the ‘idea’ that people should be allowed to access their superannuation to obtain enough cash to pay at least a deposit on their first home1. This is just one of the numerous options floated to try to make houses more affordable. However, it is more likely to increase house prices as it will presumably increase demand2. It would also have a significant effect on superannuation savings and would mandate that superannuation funds maintain greater levels of liquidity to facilitate withdrawals, making for lower returns on investment2.
True to form, the government, despite raising this idea of access to superannuation, has now dumped the idea after Paul Keating and several economists, property experts and financial regulators raised significant concerns3. This is standard government practice: float an idea, see what the outcry is like, and if any of it comes from your side of the political fence, state that it was never a plan in the first place.
Dumping the idea came despite some support for the idea that buying a home is an investment rather than a frivolity4. This is true, but obtaining the basic deposit on a median Sydney house, of say, $50,000, leaves you with a loan of about $950,000 to pay off. Assuming the loan to be about 30 years, and an interest rate of about 4%, repayments would be about $4,540 per month (i.e. about $1050 per week). Obtaining more than just a deposit would make a massive long-term dent in superannuation, which would defeat its purpose. Upon retirement, the only way you could recover the ‘investment’ would be to sell up and move out into the scrub, where houses are still very cheap.
There is absolutely no chance of the Liberal or National parties, or for that matter, the Labor Party, doing anything that would significantly affect the benefits of negative gearing, or slow down the increase in house prices, let alone decrease them. The main reason why nothing will happen under the current government is because far too many of them have their snouts in the negative gearing trough.
Of the 76 senators and 150 members of the House of Representatives, only 224 are currently sitting, with Bob Day and Rod Culleton5 having left the senate, not yet having being replaced. These 224 members of parliament have between them, 471 houses or units, an average of over 2 each. And these are only the residences they admit to. Given that some members, according to their register of interests, have no houses and no investment properties (e.g. Zed Seselja, Arthur Sinodinos, Trent Zimmerman), it can only be assumed that they have them squirrelled away in trusts or companies, or perhaps in family members’ names. How many of these there are, is difficult to determine.
Does anyone seriously think that people with such a vested interest in the continuation of the tax breaks afforded property investors through negative gearing, or the continued capital gains on such investments will actually want to make houses more affordable for first home buyers? They will only ever fiddle around the edges, and will do anything to protect their investments. This sort of thing is the epitome of a conflict of interest, and indicates that the nation is slowly headed towards a kleptocracy, where the wealthy make the rules to suit themselves.
Sources
- https://newmatilda.com/2017/03/19/the-super-stupid-way-to-get-your-own-piece-of-over-priced-housing/
- http://www.smh.com.au/federal-politics/political-news/using-superannuation-to-finance-housing-is-superbad-policy-paul-keating-20170319-gv1cce.html
- http://www.abc.net.au/news/2017-03-20/no-plan-for-super-funded-house-deposits/8370446
- http://www.theage.com.au/comment/paul-keating-is-wrong-firsthome-buyers-should-be-able-to-use-their-super-20170320-gv1w6d.html
- http://www.blotreport.com/australian-politics/crazy-malcolm-roberts/
