A government proposal to allow first homebuyers dip into retirement savings for a house deposit is drawing a mixed response from affected industries, with superannuation funds criticising the initiative and builders welcoming it.
In an election campaign fought prominently on combating the rising cost of living, Prime Minister Scott Morrison unveiled the Super Home Buyer scheme over the weekend ahead of the May 21 vote.
The plan would let Australians access up to 40 per cent of their super, up to a maximum $50,000, for a deposit on their first home.
Eva Scheerlinck, chief executive of the Australian Institute of Superannuation Trustees, the peak body for the $1.6 trillion member-owned superannuation sector, called it an “ill-informed and ill-targeted measure” that would drive up house prices.
She said it would reduce asset diversification in retirement accounts.
“First home buyers are being asked to choose between a home and saving for their retirement, they should be able to have both,” Ms Scheerlinck said.
“The Australian government must address this modern-day inequity by addressing supply issues rather than raiding super. A first home should not come at the expense of dignity in retirement.”
The Association of Superannuation Funds of Australia pointed to a report it published on the issue in March 2021, which argued that early release of superannuation for housing deposits would increase house prices, making home ownership even more out-of-reach for low-income earners.
Supporters of the scheme say it retains the integrity of the retirement savings system, given that when the property is sold, the amount contributed from super would be returned to the fund, along with a share of any capital gain.
“The success of this policy is that it is aligned with the intent of superannuation which is to provide sufficient retirement income,” said Master Builders Australia chief executive Denita Wawn, representing the country’s building and construction industry.
“People who own their home, particularly in retirement, are significantly more secure financially than those who do not. They enjoy a higher standard of living.”
Eliza Owens, the head of research for CoreLogic Australia, a leading provider of Australian property data, struck a measured tone in an analysis of the Liberal proposal.
She wrote that given the importance of housing as a contributor to lower housing costs, greater financial independence and higher living standards at retirement, the plan “has some merit when considering housing as an investment in one’s future”.
But she agreed that the program could push up the cost of housing, which would be good for sellers but erode the scheme’s benefits for first homebuyers.
