The Government’s latest thought bubble of super savings for housing has been labelled “crazy”, a “thoroughly bad idea” and now, new research shows it will cost the Budget over the long-term.
Rice Warner research shows that for a 35 year old on average earnings using $100,000 in super savings for a housing deposit, would cost the taxpayer an additional $92,000 in Age Pension payments in the future.
It’s yet another reminder that the Government will come up with any crazy idea to avoid having to do the hard work on housing affordability by reforming negative gearing and the capital gains tax discount.
And we know that the Coalition will continue to do everything in its power to undermine Australia’s retirement income system and compulsory super system in particular.
This latest re-run on a proposal scrapped by Joe Hockey creates new financial risks, undermines the compound saving of superannuation, and does nothing more that bid up house prices and make housing more unaffordable.
The Turnbull Government is deeply divided over this latest thought bubble.
Malcolm Turnbull once called it a “thoroughly bad idea” but now seems to have taken ownership of it from the Liberal Party backbench.
Mathias Cormann confirmed on RN Drive last night that he remains deeply opposed to the idea he once said would “reduce housing affordability, including for first home buyers”.
No wonder confidence in the housing market is at 40 year lows.
And these figures come after repeated warnings from the RBA, APRA, the Government’s own Financial Systems Inquiry, and the OECD, about the risks in the housing market.
These are risks that not only threaten housing affordability for young home buyers but they threaten the economic and financial stability in the Australian economy.
This latest Government proposal would just encourage first home buyers to use their own super to bid against investors who would continue to have access to the most generous property tax concessions in the world.
That isn’t a plan; it’s a sham and would just increase house prices.
FRIDAY, 17 MARCH 2017
Senator Katy Gallagher is Labor's Shadow Minister for Small Business and Financial Services.
This is a joint release with Labor's Shadow Treasurer Chris Bowen MP.