Super-for-housing plan could save government $1.8bn, analysis finds
But critics warn the Coalition’s proposal could inflate house prices and cost taxpayers up to $1 trillion in increased pension payments.
The Coalition’s proposal to allow workers to raid superannuation to buy a home could save the government $1.8 billion over a decade in reduced rent assistance payments, new analysis has shown.
The analysis, conducted by the Parliamentary Budget Office (PBO) on the Coalition’s request, provides more ammunition for proponents of the controversial scheme despite critics warning it could have severe long-term consequences.
Under the Coalition’s “super for housing” proposal, first-time homebuyers would be able to withdraw up to $50,000 or 40 per cent of their super balance. The PBO estimated it would prompt one-fifth of millennials aged 35 to 45 receiving rent assistance to buy their first homes.
“The budget would benefit by $700 million over the forward estimates and $1.8 billion over 10 years just from that 20 per cent of people using their own money to get into a first home,” Liberal senator and home ownership spokesman Andrew Bragg told ABC Radio this week.
But the Super Members Council has warned that the plan would drive up house prices without addressing supply issues, making homeownership even less attainable for young Australians.
According to its modelling, conducted by Deloitte, the SMC said allowing super withdrawals up to $50,000 to buy a home could cost the government up to $2.5 billion a year by the end of the decade due to increased pension costs.
An uncapped version could cost taxpayers up to $1 trillion by the end of the century.
"Ideas to break the seal on super don't help get more young Australians into homes – they just leave people with less savings in retirement, put more pressure on the federal budget, and run up a bigger age pension bill that all taxpayers have to fund," chief executive Misha Schubert said in May.
The PBO’s modelling also listed limitations of the Coalition’s proposal. It said many rent assistance recipients had low superannuation balances, potentially restricting their ability to fully use the scheme. The analysis also assumed the 20 per cent uptake would come from those with the highest super balances in the group.
It said the policy could have additional implications for government tax revenue, particularly superannuation tax, which was not included in its analysis.
“While the policy is unlikely to benefit a large number of individuals on Commonwealth rent assistance, the precise number of affected persons is subject to a high level of uncertainty,” the report said.
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