FSC reinforces its opposition to super for housing
The Financial Services Council (FSC) has restated its position that it does not support early withdrawal of superannuation for home purchase.
In a supplementary submission to the Senate Standing Committee on Economics dealing with its Interim Report Into Existing and Proposed Superannuation for Housing Policies, the FSC made clear it differed with the position adopted by the Federal Opposition.
It said that it acknowledged the importance of home ownership on financial security and retirement outcomes but stressed that the success of the superannuation system is “based on the preservation and investment of savings for the objective of consumers’ retirement”.
“The FSC does not support early withdrawal of compulsory contributions for the purpose of purchasing a primary place of residence as it undermines this central premise of preservation,” the FSC said.
“Notwithstanding the size of the superannuation system, contribution rates are not high enough to allow superannuation to solve all policy challenges,” it said.
“The FSC is supportive of other measures suggested in the Report that make it easier for Australians to save for their first home, including through voluntary contributions through amendments to the First Home Super Saver Scheme (FHSSS) to make it simpler to navigate and more accessible,” the FSC said.
“Allowing first homebuyers to withdraw from their superannuation for a house deposit will undermine the purpose of the superannuation system and will force millions of young people to decide between owning a home or having adequate retirement savings. The FSC submits that people should not have to choose, and alternative solutions should be explored that do not impact the superannuation savings of Australians.”
The more important issue than “undermining the central premise of preservation” is that it simply won’t work. Any scheme that puts more money in the hands of potential homebuyers just forces up prices. It does not improve affordability. The only people who benefit are existing property owners, and those working in property related industries.
FSC and Union Super both have major vested interests in opposing this policy. But in this instance their interests do align with the interests of millions of Australians struggling with home affordability.