Only the home-building industry likes Morrison’s super for home deposit promise

The Prime Minister, Scott Morrison has run into a barrage of opposition to his proposal to allow first homebuyers to access their superannuation for a deposit.

The opposition has come from across the industry and political spectrum including the Financial Services Council and industry superannuation funds.

The only voice supportive of the Government’s proposal was the home building industry in the form of the Master Builders Association.

The FSC said the Government’s proposal, announced by the Prime Minister during the Coalition’s election campaign launch would undermine the purpose of the superannuation system and could force 5.23 million young Australians to decide between owning a home or having adequate retirement savings.

FSC chief executive, Blake Briggs said the FSC was concerned the Government’s proposal weakened the sole purpose of superannuation, which is to provide higher standards of living in retirement.

Industry Super Australia (ISA) chief executive, Bernie Dean said the Government’s proposal was both inflationary and contrary to the retirement income objective.

“Throwing super into the housing market would be like throwing petrol on a bonfire – it will jack up prices, inflate young people’s mortgages and add to the aged pension, which taxpayers will have to pay for,” he said.

“Super is meant to be for people’s retirement, not supercharging house prices and pushing the home ownership dream further away.”

“Not only will it lock young people into hugely inflated mortgages without any requirement for their own deposit, it will torpedo investment returns for everyone leading to everyone having far less at retirement.”

“We need sensible solutions to address house prices – like boosting the supply of affordable housing which will bring prices down and get young people into a home without lumbering workers with higher taxes in the future.”

The McKell Institute also sounded a warning that the Government’s proposal risked reigniting a housing price explosion, increasing household debt and depleting retirement savings.

It noted a McKell Institute report, done in collaboration with researchers from the Centre for Housing, Urban and Regional Planning at the University of South Australia, Mortgaging Our Future, released just five months ago, saying it used sophisticated modelling to project the effect on the housing market should Australians be given access to their super to use on a home deposit – a policy announced by Scott Morrison at the Coalition campaign launch today.

Modelling for the report found that allowing prospective buyers to access $40,000 of superannuation would push up house prices and increase housing-related debt. The Government proposal would allow access to up to $50,000 from superannuation.

The Association of Superannuation Funds of Australia (ASFA) said the early release of superannuation for housing was not a panacea and not in line with the objectives of the system.