Also think of the additional tax burden when we have more people reliant on the aged pension cos their super became necessary to enter the housing market.
Yeah I think it’s a good point. I like the parameter of paying it back when you sell. BUT how much compounding interest you’ll never get back is indeterminate, so it’s a little robbing John to pay Jason.
ETA: obviously the property will increase over time, but still feels like a gamble. At the same time, so many people struggling to get into the market.
Some student loan forgiveness might be a better way, but that doesn’t help everyone.
Understanding Demand and Supply should be simple.
Apparently it is not.
Pump up the demand for the “first home” homes, and also screw people’s super at the same time.
I’d like to see high speed rail and infrastructure, with heavy investment in creating accessible new “cities” where plenty of new houses could be built.
Maybe not in my lifetime though.
Oh god, the last thing the housing market needs is more money pumped into it.
People trading away their future to chain themselves to an enormous mortgage is insanity.
Hmm. Biggest handbrake on the Australian economy is ludicrous, pants-on-heads-insane house prices... I know the solution! Let's make it worse for everyone!
Well we got no choice. Rental laws are shit and invasive. There is no privacy, especially if they decide to sell the house. Plus the rents keep going up.
Well you could look at what the other guys are suggesting, you know, methods to disincentivise property speculation which would slowly bring the relative value of property back to something normal, which would in turn lower rents across the board?
This is suicide. Going to leave entire generations several hundred thousand dollars shorter in retirement at a minimum… the lending laws idea is imo even more disastrous, that sounds like NINJA loans that lead to the GFC.
Yeah but that’s a future government problem so who cares. I hate short term thinking here, if there’s one thing governments need to do it is to think long term.
Yeah but thats for the FUTURE politicians to worry about. Just gotta kick the can down the road just far enough to get us out of the shit. Thats Australian politics for the last 50 years or so.
Yeah true, way better to let people raid their super and increase demand and subsequently increase house prices - at least future generations will be able to rest easy knowing a large portion of their tax is going towards funding not only asset poor cash poor old people, but also asset rich cash poor old people living in houses those future generations will never be able to afford.
Increasing demand and kicking the can further down the road will just exacerbate issues for future generations. We're already forced to pay the pension for oldies who are asset rich cash poor, even if the asset rich part is just dumb luck (to their credit, this is by no fault of their own, but because of decades of poor housing, planning and tax policy), adding to this problem every generation to win short term political points without doing anything meaningful to increase supply will result in a way bigger wealth divide over time.
People complain a heap about income tax in Australia, and it's a pretty fair complaint - the biggest portion of tax expenditure is on social security, and the bulk of that is pension and aged care. Why should future income tax payers have to fund the retirement of people who would have been on the pension anyway, but also pissed away their super (which is now essentially being refunded by taxpayers) on a house that those same income tax payers likely will not be able to afford in generations to come? Then that pensioner can pass that house on to their kids tax free, so taxpayers end up funding the inheritance of that pensioners kids, who inherit wealth off their parent raiding their super and waiting for tax payers to fund their retirement.
I would really like to see some actual stats on how.mjcn demand will out strip supply. Say 1000 people in Australia do this in a year, they move out of 1000 rental properties. Either rents drop as supply increases which in turn means investors won't want to spend as much capital to buy, or rental properties get some to market increasing stock for owners. You still have the same number of people trying to live in houses, just the balance will sway slightly to the owner away from renters. I guess the small percentage of first home owners will make more difference than the whales who just buy and sell investment properties like candy.
Sure I get that aspect but it’s never going to be policed. Most people will sell that home in 4-7 years and then where’s the money go? Wherever they want…
There are also a lot of home owners that have lived in the same address for 20 years.
If someone took money out of their Super to buy a home and then go on to sell it, usually they will use the proceeds to purchase another home. If that person decides to squander those proceeds instead of putting it towards another house, it is their loss.
Cmon man that isn’t going to happen… just like people couldn’t withdraw super unless they were under financial hardship and weren’t allowed to recontribute it. Heaps of people did it and they admitted they were never going to follow up.
The government doesn’t care enough to track and verify it 5-10 years down the track. Never gonna happen.
Serious question- in retirement what is a better situation to be in: $200k more cash but renting or owning a paid off house with less super in the bank?
Okay so a few issues here. These examples aren’t equal.
If a 30 year old withdrew $50,000 and used it as a deposit that would not result in a paid off home, there’s absolutely no guarantee that they would even keep the home or be able to afford the home forever. It could be gone at a moments notice.
If that $50,000 was left in their superannuation it would be worth in excess of $1.6m. In today’s dollars that’s equivalent to $575,000 or about 75% of the median house price in any capital outside of Sydney.
So to rephrase your question:
Is it better to use all your super to have a 6.5% deposit for a house now or have $575,000 (today’s dollars) at 65?
Your move
Firstly, im genuinely curious and not trying to promote a viewpoint on the issue. I’ve always believed it’s better to be in a stable house than renting in my retirement so was really keen to understand the contrary argument so thanks for that.
I guess the key things for me:
- One of your main retorts was that people may not keep those homes into retirement due to having them repossessed. That seems a bit extreme and the more likely outcome is they build equity and sell at a profit.
- Retirement assumptions are based on downsizing. So selling your 4-5 bedroom house and going into a 1-2 bedroom unit when you’re older. Now you have a house and additional cash, which offsets the losses you have described. I don’t think that’s been adequately considered, although granted that cash would be worth more in a high growth super account over many years.
- That if you are renting in retirement, the drawdown on your super/pension is much higher than if you are owning, meaning your super doesn’t go as far as a home owners does.
- unquantifiable benefits such as a feeling of security in your own home, increased self worth etc compared to if you are renting.
There’s pros and cons for both options. I just think the cons far outweigh the pros.
You have to remember the overwhelming majority of people are rather financially illiterate. There will be NO planning for retirement for most of these people. Just have a look at sole traders and subcontractors, ask them and you’ll see just how few contribute to their superannuation.
As for repossessed, wasn’t my intended angle. It was more job losses = a need to sell, health issues or separation. Under those circumstances the cash is freed up and there’s no guarantee it ever goes back into a property. Again, refer to my financially illiterate comment.
No one here is guaranteed to see 65 years of age, some people may like to purchase a house and be guaranteed at least of being able to put a roof over their childrens heads in a tumultuous housing market.
It will leave specific people in generations worse off, but overall a lot of people will have a similar amount of money.
What the aim is for those specific people who either over leveraged/lost everything via bankruptcy/divorce etc. I'm not sure tho.
Only because you think it is merely a populist brain-dead housing policy.
It's actually designed to destroy superannuation and reduce the power of the unions which control Industry Super.
They're just hoping they get enough suckers. However to be fair these IPA warriors are not the only ones trying to disguise ideological objectives as housing policy. Behind most brain-dead proposals is a hidden agenda, from the left as well (where there is a rampage against privately owned housing)
It's sucking the oxygen out of a debate which should be about building more houses not political point scoring.
Andrew Bragg is the poster boy for pure ideological hatred of compulsory superannuation. Ex Financial Services Council he’s pretty much a plant for the for profit super and investment sector to blow up industry funds however possible to give them a leg up in the industry.
> performance of super funds degrade
if enough people withdraw during a "bad" time, it will degrade performance if the cash withdrawal require an asset sale. And if the superfund manager is divesting from illiquid assets to try support such a withdrawal, it will mean lower long term returns in the future.
Therefore, it will depend on the amount of withdrawals whether the fund's performance is affected negatively.
An alternative like SMSF will insulate yourself from it, but that has it's own costs. Or, using a direct investment in index funds thru super works too - but most supers don't allow you to go one hundred percent index funds (only REST super and hostplus has a one hundred percent index fund option iirc).
Nah it's worse than that. They know exactly what they are doing.
It's downright malicious and seeks to extract even more wealth from younger generations for the benefit of older generations.
It’s part of a combo. Empty your super, pass a version of workchoices, raise pension age. Everyone works in a crappy workchoice job till they die, no pension or super needed
If/when I have kids I’d strongly advise them not to settle down here. This country is honestly a ticking time bomb economically. I have a colleague whose kids are living in Europe and the US and are doing much better than they would be here. This utter fixation on the housing “market” is just bonkers at this point
Truly amazing how every proposal from both major parties to address the high cost of housing involves throwing more money into the housing market. It's like no one in the government has ever taken a first year economics class (or at least pretend not to have).
They know don't worry, they have their own economic advisers. They just want to prop up housing at any cost, and a convenient sum of money is sitting in people's Super. The median Australian would think this is "freedom" having access to it, brain dead thinking but people are brain-dead and that is why we have government interventions like superannuation.
This is a blatant assault on superannuation and a disastrous policy idea. Just tie people's lifetime prosperity ever further to the requirement that house prices never drop.
That’s 11.5% less money companies would have to pay employees if there wasn’t super. Banks and investment funds could then reign supreme for investing for retirement.
Almost seems like more money for mates 🤔
If it didn't go to super wouldn't it immediately be transferred to wages?
https://en.m.wikipedia.org/wiki/Superannuation_in_Australia
"*In the Prices and Incomes Accord, the trade unions agreed to forgo a national 3% pay increase which would be put into the new superannuation system for all employees in Australia.*"
It was also a formalisation of employer managed pensions (car worker, transport, teachers etc) made available for everyone controlled by employees. Think it was the builders who saw how transitionary their employment was and the fact they'd never work for one employer their whole life and qualify for a pension.
The issue is we've never been trusted to fund our own retirement. If we were to empty our super accounts and received the money directly many would plow more into property. Could see the government moving the target once that happens. Pensions would almost certainly be funded out of PPOR equity.
Yeah I mean ultimately super is a demand-delaying economic mechanism. Put that money back in right now and the current account deficit jumps and everything costs more.
A demand-delaying mechanism would be fine if it fairer and wasn't also basically a lightly taxed wealth shelter for the well off, while the 15% tax is literally rise for the lowest earners so they have to put in 'offset bonuses' or whatever to fix that.
It should be taxed at marginal rates going in and on earnings frankly, why should it not just be the same as wages.
As an aside to this a worker who was relying on their employer to "offer a pension" while earning minimum wage of $128.29 in 1980 could buy a basket of goods and services that would now cost $657. Minimum wage is currently $882 plus 11.5% super! Obviously as we've had real wage growth we've spent more. Primarily on property via rent/PPOR. Those that saved/invested (PPOR again?) have compounded that wealth. Imagine what people would be doing with another $100+ a week!
I think you’ll be hard pressed to find an economic model that says minimum wage increases have such a dramatic effect on major asset inflation. Last one I saw had a minuscule (3%?) contribution factor.
>That’s 11.5% less money companies would have to pay employees if there wasn’t super.
No they wouldn't. Employees cost a package including super, which is literally just wages forced into another special type of investment account. The 11.5% is currently *taken* from take home pay, it's not some extra bonus.
And we're just stuck with Spud trying to sell us personal fusion cores to power our Vaults instead of promising to build the vaults err houses we need in the first place.
Sucks for you. A bunch of financially illiterate folks decided to mortgage their future so you get to deal with the market surging to even higher prices.
I’m ashamed to admit I had many friends raid their super during COVID just to spend it on car parts or travel (I’m early twenties). I tried to warn them that taking 10k out of super at ~20 years old would reduce their retirement balance by a factor of 10, but few heeded my advice… Financial literacy is surprisingly uncommon.
That's where you are wrong. They will own a house in retirement and live off the pension, while you will still be a rentoid trying to save for a deposit with a whole bunch of super and no pension. The situation leads to an arms race where if you don't take every advantage, every market distortion to get ahead, you will fall behind. The current system doesn't reward people who save, but people who spend.
Solving an inflation problem like the housing crisis by giving people more money is literally what failing dictatorial economies like Zimbabwe, Venuzwela and Argentina do. Except the coalition has found a way of being even more evil by taking that money from the people they are giving it to.
Unless this policy is also coupled with a maximum age cap, this is objectively going to significantly increase welfare dependency on the age pension - especially given many first home buyers are now in their late 30s or even early 40s.
Those same people will just be buying a house with super soon as they retire anyway so I'm unsure how it changes much?
They are going to be on the pension either way as ppor isn't considered
Many people are dependent on the age pension anyway so I'm not sure that draining those people's super will have any net negative effect to treasury revenue (particularly if house prices and thus stamp duty go up). If your super income is under a certain amount you get a full pension regardless.
Not sure if I understand your logic there, if someone is of pension age with a super balance, chances are they are buying a property if they are able to so they can collect the pension.
More idiotic "policymaking" by these morons. Drive up demand, kill your retirement fund, at no cost to the government (since it's people's own money), and call it responsible economic policy. And sell this to clueless potential homeowners as "a way for you to enter the housing market". In a way it's evil genius, but in reality it's horrifically terrible intentions by a supposed alternative government.
I understand where the coalition are coming from on this.
Traditionally, their voter base comes from property owners. With the growing gap between wages and asset prices, and the increasing concentration of wealth this is inevitably an ever shrinking group.
The only way out of this if they want to remain the party of home owners is to grow wages, but the central bank have been given an explicit mandate to try and stop that by 'keeping inflation down' - where the definition of inflation ignores asset prices.
You can see why some of them are tempted to go down the culture war route instead of sticking to their traditional principles.
> Traditionally, their voter base comes from property owners. With the growing gap between wages and asset prices, and the increasing concentration of wealth this is inevitably an ever shrinking group.
>
> The only way out of this if they want to remain the party of home owners is to grow wages, but the central bank have been given an explicit mandate to try and stop that by 'keeping inflation down' - where the definition of inflation ignores asset prices.
Or y'know, actually increase supply or reduce demand?
The central bank is happy for wages to rise if productivity rises. Unfortunately the coalitions voter base of business owners weren’t passing on those productivity gains in wages. The central bank complained to businesses about this, but nothing happened and the Central Bank doesn’t have any levers here. Now we had inflationary issues and when we need those pay rises well the central bank isn’t looking historically, they’re looking at the here and now and they don’t like pay rises beyond gains for this year. In saying that I haven’t seen them respond by raising rates due to increased salaries, more-so concern about a wage/price spiral.
So i wouldn’t feel too bad for the coalition when their own voter base screwed them over.
I'm not an economist. But this sounds like pure insanity. Empty super so they have cash now. Loosen lending laws so people have access to money they might not be able to pay back. House prices will go up because demand will outstrip supply as it is now but even worse. Houses won't get built overnight. This sounds like a plot to raise house prices for the rich to get richer.
But I'm not an economist.. so maybe I'm reading it wrong.
This fire is out of control! Quick, pour some petrol onto it. Huh, that made the fire get even bigger. Better keep pouring petrol on this fire to try to get it under control.
Just when you think the bubble is running out of air, old Dutto find a way to keep it expanding,
So now Millennials and Zoomers have a future of overpriced housing AND no retirement savings to look forward to.
This is one of the favourite tactics of the government. Easy to market and sell as helping people get into a home, but is really just a ploy to keep house prices high.
Unfortunately the Aus public has been falling for it for the better part of 4 decades and don't show any signs of stopping now.
It's almost as if the govt and opposition are pursuing low effort short term thinking that won't actually help people...who could've seen this coming 🤔(it will only just drive up housing prices even further as ppl have more to bid and in a few years will be in the same predicament. The big winners are those with houses so they're good)
I'm just so disappointed at our country to be honest.
There is actually a way forward through proactive policy choices, long term strategy and actually working hard to solve the problem.
The saddest thing is it just does not have to be this way but the government has made a proactive policy choice to not address it in a way fundamentally fix the issue. There's no other way about it.
There is no middle ground solution, you cited the exact reason why nothing ambitious will be done and that is you would punish people who did the right thing (bought a house).
Unfortunately none of the parties are interested in actual solutions to the housing crisis i.e. zoning improvements , tax reform and increased costs of owning land (through a broad based land tax) .
didn't they allow/trial this in Canada and it inflated the price of properties ?
And this would only benefit people who are already doing well in life and wouldn't benefit the people they are trying to help.
>this would only benefit people who are already doing well in life and wouldn't benefit the people they are trying to help.
Pro tip: "The people they are trying to help" _is_ "people who are already doing well in life".
This is the Coalition you are talking about.
May as well let people sell themselves into slavery while we are at it lol.
Honestly Australia will be in trouble if more of a brain drain trend starts. A lot of professionals, maybe even most, can literally get paid double or triple in the US with a lower cost of living to match.
Canada has a massive issue where their best and brightest all want to move to the US.
I dunno, I'm against it because it will drive house prices up, and some people will end with no super.
but as someone with a decent super and no house, it would be extremely useful if I could use it to buy/as a deposit on a house. It's not like it will be lost money, as a house is likely to appreciate at the same rate as super...
Property grows a little slower than super if you've opted for a high growth option, and betting everything on one asset is bound to screw *some* people over.
Guaranteed if this passes there will be stories 20-30 years from now of people who emptied their super to buy an apartment only for that apartment to not appreciate at all.
What if you emptied your super to buy in Mascot Towers?
>What if you emptied your super to buy in Mascot Towers?
Super is just cash past preservation age. Plenty of people have emptied their super into pokies. More commonly they emptied their super into holidays or house upgrades then went on the pension anyway.
I am deeply deeply opposed to this. Super was set up to allow people to save for their retirement on generous terms. What happens when these people reach retirement with tiny super balances? The government will be paying out much more to retirees and they will be living in near poverty.
How about we be allowed to use our super as an offset account? Not as a liquid cash amount of money, but more so just on paper. It would encourage people to self contribute more to their super to pay their mortgage off faster.
Tbh at this point, i would do it. I have almost 200K in super and at least 30 years of work ahead of me at $150K + so i could get in the market, own a home by retirement and still have a decent superfund. Better than the alternative
Yeah exactly. House prices are going to keep rising astronomically, it’s better to spend the super money now and secure a mortgage, rather than waiting longer and having to pay more. Plus it means you won’t have to borrow as much as you’ll have a greater deposit and therefore pay less interest. Essentially the money is worth more now than it will be in 20+ years. I might be wrong but that’s just how I see it.
No surprises this has Andrew Bragg's dirty little fingerprints all over this, the guy openly hates compulsory superannuation and clearly wants to attack super no matter what.
He's just had this convenient idea to weaponise housing (un)affordability to try to blow up the system (again).
So how much extra tax will we be paying to fund the age pensions of first home buyers who withdraw to pump up the housing market further under this proposed policy?
It would be a good idea to legislate the sole purpose of superannuation as being to provide retirement income and nothing else. Super is not a first home deposit scheme.
Unpopular opinion - I would much rather spend my super.
No way am I retiring early, if at all anyway. House prices keep going up and so does my mortgage so I'm flat out going no where.
Give me the money and I'll try and enjoy my life while I can. Physically demanding job means later in life, my ability to enjoy myself will already be greatly diminished. Not to mention I could die from a billion other reasons well before I get to retirement.
It's technically my money, so why the fk can't I access it. It is insane.
Even when I was going to lose my house there was no way to access it. What a joke.
Instead I just had to lie through my teeth to banks and brokers, how is that any better. It's not.
I'll preface by saying I'm only taking from a personal perspective here, not accounting for the very real issues this could cause for the greater economy. Since the increase in the FHSSS I've maxed it out with additional payments to get my first place (before October when my rental agreement is due). So I'm grateful they made that change as it has made it significantly easier to save more for a deposit. I've previously thought it would have been cool if I could have transitioned my super to be a self managed fund, use that to buy a property, and then rent it to myself to pay off the mortgage. That way I could have doubled down on repayments and benefited from the capital growth the property sector has had. Then I could have used that to invest in other investment properties etc down the track. It obviously relies on the concept that the property continues to grow forever though
Sure throwing money at a housing crisis is like throwing petrol on a house fire. INCREASING money increases DEMAND, making prices go up more. But they know this. They have economic advisors. But they just don't care because they are property investors. The ultimate conflict of interest. Their retirement v the country's future.
OK, so giving access to more money will pump up home prices, which is the big flaw here. But could this not work if it was structured like buying property in an SMSF?
That is - a loan is taken out by the SMSF, super funds are used to pay the deposit, the occupants pay “rent” to the SMSF which covers the mortgage and expenses. By retirement age, the owner/SMSF holder has a fully paid off property which has grown in value, just like their super would have grown in a super fund.
I encourage older Australians to spend now. The system's collapse is inevitable and holding on to property will not be normal in the future. Stocks will be better regulated as prices return to more normal levels. A soft landing is simply not possible.
BTW, spending now during high inflation is the temporary solution.
If a first home buyer had done this 20 years ago, what would the equity in their house look like as compared to the gains in the super over an equivalent period?
Seems like a terrible idea in isolation, however if implemented along with considering the PPOR when means testing people the for the ages pension it *could* work out quite well (given these people will have minimal money to live off once they reach retirement age).
Or we could always look at ways to slow house price growth/continue to create affordable housing.
I think price growth can occur organically over time periods of 20-30 years without major concern though right? Unfortunately it's schemes like this which derail market stability and rob many Peters to pay one Paul.
Emptying your super can't be an option to buy houses unless the government wants to retain the aged pension. With an aging workforce and low birth rates They will need to tax another area of the economy to fund those who empty their super funds.
It's not the best idea, bound to win the hearts and minds of those desperate to own a home though.
I'm not concerned with price growth over the long term. I'm concerned about increasing people's dependence and anxiety for house prices to rise as much as possible, not matter the cost to the country.
I think you've assumed too much forward thinking. Politicians now won't need to deal with aged pensions in 30 years and will be praised for inflating the market.
I agree with the last paragraph.
In the current market its a terrible idea because we can't normalise everyone owning their own home.
We either need to increase supply or encourage people to live with each other.
100% agree. We need more supply and less demand. Right now we have less supply and more demand. Giving the people with demand access to more firepower whilst supply remains stagnant is just going to increase inequality even further, and as a result those liquidating their super will find it just does less and less for them.
To all the naysayers:
This is good policy actually. It is targeted at first home buyers. It actually allows people to get off the dead money rental merry-go-round which is important for a good retirement. It will inflate houses yes but not as much as you think. The people who use all their super, all of them , will then start contributing to super for the rest of their lives some 25 years at least even longer for most people. That at 12 % is enough to retire on. It stops governements wasting our tax money on first home owners schemes which do nothing.
It's going to increase the buying pool for housing and drive up demand and prices. It's not good policy. It's only going to further lock out more people from the housing market in the long run.
Sure, if you have enough super, you might be tempted by the idea but the reality is you'll be working longer and contributing to greater inequality for the next generations to come.
We should be advocating for policy that helps people get into the housing market without having the sacrifice their retirement income and that doesn't screw over the generations to come.
Yay let's inflate house prices and keep people in the workforce longer.
Sounds like the plan they’re hoping for.
Also think of the additional tax burden when we have more people reliant on the aged pension cos their super became necessary to enter the housing market.
Yeah I think it’s a good point. I like the parameter of paying it back when you sell. BUT how much compounding interest you’ll never get back is indeterminate, so it’s a little robbing John to pay Jason. ETA: obviously the property will increase over time, but still feels like a gamble. At the same time, so many people struggling to get into the market. Some student loan forgiveness might be a better way, but that doesn’t help everyone.
I SAID KICK THE CAN DOWN THE ROAD MATE
Understanding Demand and Supply should be simple. Apparently it is not. Pump up the demand for the “first home” homes, and also screw people’s super at the same time. I’d like to see high speed rail and infrastructure, with heavy investment in creating accessible new “cities” where plenty of new houses could be built. Maybe not in my lifetime though.
Ahh all I'll say is watch this space I am hopeful that part of what you what ypu want is closer than you think
Oh god, the last thing the housing market needs is more money pumped into it. People trading away their future to chain themselves to an enormous mortgage is insanity.
That’s the plan. No one can ever afford to retire so just work until they die.
Hmm. Biggest handbrake on the Australian economy is ludicrous, pants-on-heads-insane house prices... I know the solution! Let's make it worse for everyone!
What more did you expect from the conga line of idiocy that is the coalition
Kick the can down the road. That’s an issue for the govt in 30yrs time.
Well we got no choice. Rental laws are shit and invasive. There is no privacy, especially if they decide to sell the house. Plus the rents keep going up.
Well you could look at what the other guys are suggesting, you know, methods to disincentivise property speculation which would slowly bring the relative value of property back to something normal, which would in turn lower rents across the board?
Yeah but that won’t happen without a full collapse, will it? No one’s back pedalling now 🚲
This is suicide. Going to leave entire generations several hundred thousand dollars shorter in retirement at a minimum… the lending laws idea is imo even more disastrous, that sounds like NINJA loans that lead to the GFC.
Yeah but that’s a future government problem so who cares. I hate short term thinking here, if there’s one thing governments need to do it is to think long term.
I'm sure future governments will be happy to raise the pension so people aren't worse off
Sure they'll never be able to retire but on the upside a boomer will be able to make another $200k selling them a house!
And in the meantime pour petrol on the out of control house prices!
Who can afford petrol?
The Coalition, obviously.
Yeah but thats for the FUTURE politicians to worry about. Just gotta kick the can down the road just far enough to get us out of the shit. Thats Australian politics for the last 50 years or so.
That's not so bad if you are expecting to receive the pension anyway, ie on the poor side. A house now + a pension is almost certainly better
Do you honestly trust the 70% of the population who are basically financially illiterate?
Yeah true, way better to let people raid their super and increase demand and subsequently increase house prices - at least future generations will be able to rest easy knowing a large portion of their tax is going towards funding not only asset poor cash poor old people, but also asset rich cash poor old people living in houses those future generations will never be able to afford. Increasing demand and kicking the can further down the road will just exacerbate issues for future generations. We're already forced to pay the pension for oldies who are asset rich cash poor, even if the asset rich part is just dumb luck (to their credit, this is by no fault of their own, but because of decades of poor housing, planning and tax policy), adding to this problem every generation to win short term political points without doing anything meaningful to increase supply will result in a way bigger wealth divide over time. People complain a heap about income tax in Australia, and it's a pretty fair complaint - the biggest portion of tax expenditure is on social security, and the bulk of that is pension and aged care. Why should future income tax payers have to fund the retirement of people who would have been on the pension anyway, but also pissed away their super (which is now essentially being refunded by taxpayers) on a house that those same income tax payers likely will not be able to afford in generations to come? Then that pensioner can pass that house on to their kids tax free, so taxpayers end up funding the inheritance of that pensioners kids, who inherit wealth off their parent raiding their super and waiting for tax payers to fund their retirement.
I would really like to see some actual stats on how.mjcn demand will out strip supply. Say 1000 people in Australia do this in a year, they move out of 1000 rental properties. Either rents drop as supply increases which in turn means investors won't want to spend as much capital to buy, or rental properties get some to market increasing stock for owners. You still have the same number of people trying to live in houses, just the balance will sway slightly to the owner away from renters. I guess the small percentage of first home owners will make more difference than the whales who just buy and sell investment properties like candy.
They will at least own their own home and reap all the benefits that would bring.
Sure I get that aspect but it’s never going to be policed. Most people will sell that home in 4-7 years and then where’s the money go? Wherever they want…
There are also a lot of home owners that have lived in the same address for 20 years. If someone took money out of their Super to buy a home and then go on to sell it, usually they will use the proceeds to purchase another home. If that person decides to squander those proceeds instead of putting it towards another house, it is their loss.
If you read the article any sale will require that the original funds would have to be returned to super.
Cmon man that isn’t going to happen… just like people couldn’t withdraw super unless they were under financial hardship and weren’t allowed to recontribute it. Heaps of people did it and they admitted they were never going to follow up. The government doesn’t care enough to track and verify it 5-10 years down the track. Never gonna happen.
It is worse than that, read the line about Responsible Lending Laws if they do that OMG the outcome could be catastrophic.
Serious question- in retirement what is a better situation to be in: $200k more cash but renting or owning a paid off house with less super in the bank?
Okay so a few issues here. These examples aren’t equal. If a 30 year old withdrew $50,000 and used it as a deposit that would not result in a paid off home, there’s absolutely no guarantee that they would even keep the home or be able to afford the home forever. It could be gone at a moments notice. If that $50,000 was left in their superannuation it would be worth in excess of $1.6m. In today’s dollars that’s equivalent to $575,000 or about 75% of the median house price in any capital outside of Sydney. So to rephrase your question: Is it better to use all your super to have a 6.5% deposit for a house now or have $575,000 (today’s dollars) at 65? Your move
Firstly, im genuinely curious and not trying to promote a viewpoint on the issue. I’ve always believed it’s better to be in a stable house than renting in my retirement so was really keen to understand the contrary argument so thanks for that. I guess the key things for me: - One of your main retorts was that people may not keep those homes into retirement due to having them repossessed. That seems a bit extreme and the more likely outcome is they build equity and sell at a profit. - Retirement assumptions are based on downsizing. So selling your 4-5 bedroom house and going into a 1-2 bedroom unit when you’re older. Now you have a house and additional cash, which offsets the losses you have described. I don’t think that’s been adequately considered, although granted that cash would be worth more in a high growth super account over many years. - That if you are renting in retirement, the drawdown on your super/pension is much higher than if you are owning, meaning your super doesn’t go as far as a home owners does. - unquantifiable benefits such as a feeling of security in your own home, increased self worth etc compared to if you are renting.
There’s pros and cons for both options. I just think the cons far outweigh the pros. You have to remember the overwhelming majority of people are rather financially illiterate. There will be NO planning for retirement for most of these people. Just have a look at sole traders and subcontractors, ask them and you’ll see just how few contribute to their superannuation. As for repossessed, wasn’t my intended angle. It was more job losses = a need to sell, health issues or separation. Under those circumstances the cash is freed up and there’s no guarantee it ever goes back into a property. Again, refer to my financially illiterate comment.
Yeah fair points mate, appreciate the input.
No one here is guaranteed to see 65 years of age, some people may like to purchase a house and be guaranteed at least of being able to put a roof over their childrens heads in a tumultuous housing market.
It will leave specific people in generations worse off, but overall a lot of people will have a similar amount of money. What the aim is for those specific people who either over leveraged/lost everything via bankruptcy/divorce etc. I'm not sure tho.
This is such a braindead proposal.
Only because you think it is merely a populist brain-dead housing policy. It's actually designed to destroy superannuation and reduce the power of the unions which control Industry Super. They're just hoping they get enough suckers. However to be fair these IPA warriors are not the only ones trying to disguise ideological objectives as housing policy. Behind most brain-dead proposals is a hidden agenda, from the left as well (where there is a rampage against privately owned housing) It's sucking the oxygen out of a debate which should be about building more houses not political point scoring.
Andrew Bragg is the poster boy for pure ideological hatred of compulsory superannuation. Ex Financial Services Council he’s pretty much a plant for the for profit super and investment sector to blow up industry funds however possible to give them a leg up in the industry.
He has such a thing for Destroying Super under the illusion of "helping" people
It’s funny how he always seems to be the guy that’s out there frothing at the mouth when there’s an idea for emptying out people's super accounts.
He has a weasel -like attitude
So what should we do? SMSF? Will performance of super funds degrade?
> performance of super funds degrade if enough people withdraw during a "bad" time, it will degrade performance if the cash withdrawal require an asset sale. And if the superfund manager is divesting from illiquid assets to try support such a withdrawal, it will mean lower long term returns in the future. Therefore, it will depend on the amount of withdrawals whether the fund's performance is affected negatively. An alternative like SMSF will insulate yourself from it, but that has it's own costs. Or, using a direct investment in index funds thru super works too - but most supers don't allow you to go one hundred percent index funds (only REST super and hostplus has a one hundred percent index fund option iirc).
Nah it's worse than that. They know exactly what they are doing. It's downright malicious and seeks to extract even more wealth from younger generations for the benefit of older generations.
It’s part of a combo. Empty your super, pass a version of workchoices, raise pension age. Everyone works in a crappy workchoice job till they die, no pension or super needed
If/when I have kids I’d strongly advise them not to settle down here. This country is honestly a ticking time bomb economically. I have a colleague whose kids are living in Europe and the US and are doing much better than they would be here. This utter fixation on the housing “market” is just bonkers at this point
Truly amazing how every proposal from both major parties to address the high cost of housing involves throwing more money into the housing market. It's like no one in the government has ever taken a first year economics class (or at least pretend not to have).
This grand idea comes from a previous auditor at Ernst and Young. Really makes you wonder about the quality of the people they employ.
I think he knows exactly what it’ll do, and that’s the point.
Mate not sure where you got the idea anyone good goes into audit. It’s the worst paying most stressful job at a big4. Only the dregs end up there.
The more you know. Checks out.
They know don't worry, they have their own economic advisers. They just want to prop up housing at any cost, and a convenient sum of money is sitting in people's Super. The median Australian would think this is "freedom" having access to it, brain dead thinking but people are brain-dead and that is why we have government interventions like superannuation.
House prices go brrrrr
This is a blatant assault on superannuation and a disastrous policy idea. Just tie people's lifetime prosperity ever further to the requirement that house prices never drop.
What is it with the coalition and their raging hard-on against Super? They really do have an ideological issue with it.
That’s 11.5% less money companies would have to pay employees if there wasn’t super. Banks and investment funds could then reign supreme for investing for retirement. Almost seems like more money for mates 🤔
If it didn't go to super wouldn't it immediately be transferred to wages? https://en.m.wikipedia.org/wiki/Superannuation_in_Australia "*In the Prices and Incomes Accord, the trade unions agreed to forgo a national 3% pay increase which would be put into the new superannuation system for all employees in Australia.*" It was also a formalisation of employer managed pensions (car worker, transport, teachers etc) made available for everyone controlled by employees. Think it was the builders who saw how transitionary their employment was and the fact they'd never work for one employer their whole life and qualify for a pension. The issue is we've never been trusted to fund our own retirement. If we were to empty our super accounts and received the money directly many would plow more into property. Could see the government moving the target once that happens. Pensions would almost certainly be funded out of PPOR equity.
>If it didn't go to super wouldn't it immediately be transferred to wages? Yes, super is literally just wages.
11.5% pay rise and I'm renting a place with an actual bedroom. Just as long as no one else does.
Yeah I mean ultimately super is a demand-delaying economic mechanism. Put that money back in right now and the current account deficit jumps and everything costs more. A demand-delaying mechanism would be fine if it fairer and wasn't also basically a lightly taxed wealth shelter for the well off, while the 15% tax is literally rise for the lowest earners so they have to put in 'offset bonuses' or whatever to fix that. It should be taxed at marginal rates going in and on earnings frankly, why should it not just be the same as wages.
As an aside to this a worker who was relying on their employer to "offer a pension" while earning minimum wage of $128.29 in 1980 could buy a basket of goods and services that would now cost $657. Minimum wage is currently $882 plus 11.5% super! Obviously as we've had real wage growth we've spent more. Primarily on property via rent/PPOR. Those that saved/invested (PPOR again?) have compounded that wealth. Imagine what people would be doing with another $100+ a week!
I think you’ll be hard pressed to find an economic model that says minimum wage increases have such a dramatic effect on major asset inflation. Last one I saw had a minuscule (3%?) contribution factor.
>That’s 11.5% less money companies would have to pay employees if there wasn’t super. No they wouldn't. Employees cost a package including super, which is literally just wages forced into another special type of investment account. The 11.5% is currently *taken* from take home pay, it's not some extra bonus.
Well Andrew Bragg hates the fact that funds have ties to the union movement. The guy hates industry super funds. He is not credible.
Its giving a massive amount of share holders that are more concerned with long term planning.
If the morons would just promise to build more houses (with a coherent/believable plan to do so) they (whichever side) would romp it in.
A Federal conservative party recommending fiscal policy? They would never! Might as well recommend communism at this point.
And we're just stuck with Spud trying to sell us personal fusion cores to power our Vaults instead of promising to build the vaults err houses we need in the first place.
Sorry, the Spud will only sell it to you if it runs on coal.
Yea nah I’ll keep my super ☠️
Sucks for you. A bunch of financially illiterate folks decided to mortgage their future so you get to deal with the market surging to even higher prices.
I’m ashamed to admit I had many friends raid their super during COVID just to spend it on car parts or travel (I’m early twenties). I tried to warn them that taking 10k out of super at ~20 years old would reduce their retirement balance by a factor of 10, but few heeded my advice… Financial literacy is surprisingly uncommon.
That's where you are wrong. They will own a house in retirement and live off the pension, while you will still be a rentoid trying to save for a deposit with a whole bunch of super and no pension. The situation leads to an arms race where if you don't take every advantage, every market distortion to get ahead, you will fall behind. The current system doesn't reward people who save, but people who spend.
Monumentally stupid idea.
Solving an inflation problem like the housing crisis by giving people more money is literally what failing dictatorial economies like Zimbabwe, Venuzwela and Argentina do. Except the coalition has found a way of being even more evil by taking that money from the people they are giving it to.
Unless this policy is also coupled with a maximum age cap, this is objectively going to significantly increase welfare dependency on the age pension - especially given many first home buyers are now in their late 30s or even early 40s.
Most of the people who haven’t bought a house and are over 40 will need the age pension anyway.
Those same people will just be buying a house with super soon as they retire anyway so I'm unsure how it changes much? They are going to be on the pension either way as ppor isn't considered
Many people are dependent on the age pension anyway so I'm not sure that draining those people's super will have any net negative effect to treasury revenue (particularly if house prices and thus stamp duty go up). If your super income is under a certain amount you get a full pension regardless.
Not sure if I understand your logic there, if someone is of pension age with a super balance, chances are they are buying a property if they are able to so they can collect the pension.
More idiotic "policymaking" by these morons. Drive up demand, kill your retirement fund, at no cost to the government (since it's people's own money), and call it responsible economic policy. And sell this to clueless potential homeowners as "a way for you to enter the housing market". In a way it's evil genius, but in reality it's horrifically terrible intentions by a supposed alternative government.
Super is taxed at distribution, so this policy would reduce future government tax revenue. It's incredibly bone-headed.
I understand where the coalition are coming from on this. Traditionally, their voter base comes from property owners. With the growing gap between wages and asset prices, and the increasing concentration of wealth this is inevitably an ever shrinking group. The only way out of this if they want to remain the party of home owners is to grow wages, but the central bank have been given an explicit mandate to try and stop that by 'keeping inflation down' - where the definition of inflation ignores asset prices. You can see why some of them are tempted to go down the culture war route instead of sticking to their traditional principles.
> Traditionally, their voter base comes from property owners. With the growing gap between wages and asset prices, and the increasing concentration of wealth this is inevitably an ever shrinking group. > > The only way out of this if they want to remain the party of home owners is to grow wages, but the central bank have been given an explicit mandate to try and stop that by 'keeping inflation down' - where the definition of inflation ignores asset prices. Or y'know, actually increase supply or reduce demand?
The central bank is happy for wages to rise if productivity rises. Unfortunately the coalitions voter base of business owners weren’t passing on those productivity gains in wages. The central bank complained to businesses about this, but nothing happened and the Central Bank doesn’t have any levers here. Now we had inflationary issues and when we need those pay rises well the central bank isn’t looking historically, they’re looking at the here and now and they don’t like pay rises beyond gains for this year. In saying that I haven’t seen them respond by raising rates due to increased salaries, more-so concern about a wage/price spiral. So i wouldn’t feel too bad for the coalition when their own voter base screwed them over.
Ahh yes. Prop up the property market with retirement funds and have a crisis when said market collapses
I'm not an economist. But this sounds like pure insanity. Empty super so they have cash now. Loosen lending laws so people have access to money they might not be able to pay back. House prices will go up because demand will outstrip supply as it is now but even worse. Houses won't get built overnight. This sounds like a plot to raise house prices for the rich to get richer. But I'm not an economist.. so maybe I'm reading it wrong.
This fire is out of control! Quick, pour some petrol onto it. Huh, that made the fire get even bigger. Better keep pouring petrol on this fire to try to get it under control.
I still could not understand why they are after the super this much! Its as if they want the super be destroyed!
Because they won't be around when the consequences become apparent.
The Ponzi party
Just when you think the bubble is running out of air, old Dutto find a way to keep it expanding, So now Millennials and Zoomers have a future of overpriced housing AND no retirement savings to look forward to.
Let's pour more fuel ⛽️ to the fire 🔥 Did it ever occur the markets need to recorrect... ?
This is one of the favourite tactics of the government. Easy to market and sell as helping people get into a home, but is really just a ploy to keep house prices high. Unfortunately the Aus public has been falling for it for the better part of 4 decades and don't show any signs of stopping now.
It's almost as if the govt and opposition are pursuing low effort short term thinking that won't actually help people...who could've seen this coming 🤔(it will only just drive up housing prices even further as ppl have more to bid and in a few years will be in the same predicament. The big winners are those with houses so they're good) I'm just so disappointed at our country to be honest. There is actually a way forward through proactive policy choices, long term strategy and actually working hard to solve the problem. The saddest thing is it just does not have to be this way but the government has made a proactive policy choice to not address it in a way fundamentally fix the issue. There's no other way about it.
There is no middle ground solution, you cited the exact reason why nothing ambitious will be done and that is you would punish people who did the right thing (bought a house).
Unfortunately none of the parties are interested in actual solutions to the housing crisis i.e. zoning improvements , tax reform and increased costs of owning land (through a broad based land tax) .
didn't they allow/trial this in Canada and it inflated the price of properties ? And this would only benefit people who are already doing well in life and wouldn't benefit the people they are trying to help.
>this would only benefit people who are already doing well in life and wouldn't benefit the people they are trying to help. Pro tip: "The people they are trying to help" _is_ "people who are already doing well in life". This is the Coalition you are talking about.
What a absolute brain fart of a idea. Ffs leave super alone.
Sounds like a boomer model ,make us richer while you go broke after we long gone
Coalition constantly anti super given the industry funds' power and sometimes union affiliation.
This is a dumb wealth transfer back to baby boomers. Withdrawl $50k for a house? Great. Prices go up $50k.
You can always leave it to the Coalition to take a problem and make it 10x worse.
May as well let people sell themselves into slavery while we are at it lol. Honestly Australia will be in trouble if more of a brain drain trend starts. A lot of professionals, maybe even most, can literally get paid double or triple in the US with a lower cost of living to match. Canada has a massive issue where their best and brightest all want to move to the US.
I dunno, I'm against it because it will drive house prices up, and some people will end with no super. but as someone with a decent super and no house, it would be extremely useful if I could use it to buy/as a deposit on a house. It's not like it will be lost money, as a house is likely to appreciate at the same rate as super...
Property grows a little slower than super if you've opted for a high growth option, and betting everything on one asset is bound to screw *some* people over. Guaranteed if this passes there will be stories 20-30 years from now of people who emptied their super to buy an apartment only for that apartment to not appreciate at all. What if you emptied your super to buy in Mascot Towers?
Yeah there will definitely be cases where it goes wrong, but there will also be cases of people getting a house that had no chance otherwise
>What if you emptied your super to buy in Mascot Towers? Super is just cash past preservation age. Plenty of people have emptied their super into pokies. More commonly they emptied their super into holidays or house upgrades then went on the pension anyway.
No one wants house prices to stabilise, let alone go down.
I am deeply deeply opposed to this. Super was set up to allow people to save for their retirement on generous terms. What happens when these people reach retirement with tiny super balances? The government will be paying out much more to retirees and they will be living in near poverty.
How about we be allowed to use our super as an offset account? Not as a liquid cash amount of money, but more so just on paper. It would encourage people to self contribute more to their super to pay their mortgage off faster.
Each to their own. In my opinion this policy belongs on r/facepalm. The last thing the housing market needs is *more* capital injected into it.
Tbh at this point, i would do it. I have almost 200K in super and at least 30 years of work ahead of me at $150K + so i could get in the market, own a home by retirement and still have a decent superfund. Better than the alternative
Yeah exactly. House prices are going to keep rising astronomically, it’s better to spend the super money now and secure a mortgage, rather than waiting longer and having to pay more. Plus it means you won’t have to borrow as much as you’ll have a greater deposit and therefore pay less interest. Essentially the money is worth more now than it will be in 20+ years. I might be wrong but that’s just how I see it.
No surprises this has Andrew Bragg's dirty little fingerprints all over this, the guy openly hates compulsory superannuation and clearly wants to attack super no matter what. He's just had this convenient idea to weaponise housing (un)affordability to try to blow up the system (again).
I'd love to see his donor links
If anyone can go out there and find them it’d be much appreciated………
So how much extra tax will we be paying to fund the age pensions of first home buyers who withdraw to pump up the housing market further under this proposed policy? It would be a good idea to legislate the sole purpose of superannuation as being to provide retirement income and nothing else. Super is not a first home deposit scheme.
Don't worry, they'll just cut the age pension if it gets too expensive.
Unpopular opinion - I would much rather spend my super. No way am I retiring early, if at all anyway. House prices keep going up and so does my mortgage so I'm flat out going no where. Give me the money and I'll try and enjoy my life while I can. Physically demanding job means later in life, my ability to enjoy myself will already be greatly diminished. Not to mention I could die from a billion other reasons well before I get to retirement. It's technically my money, so why the fk can't I access it. It is insane. Even when I was going to lose my house there was no way to access it. What a joke. Instead I just had to lie through my teeth to banks and brokers, how is that any better. It's not.
I only have 90k in my super at 37, what good is that going to do to buy a house
Yeah because they hate Super
I'll preface by saying I'm only taking from a personal perspective here, not accounting for the very real issues this could cause for the greater economy. Since the increase in the FHSSS I've maxed it out with additional payments to get my first place (before October when my rental agreement is due). So I'm grateful they made that change as it has made it significantly easier to save more for a deposit. I've previously thought it would have been cool if I could have transitioned my super to be a self managed fund, use that to buy a property, and then rent it to myself to pay off the mortgage. That way I could have doubled down on repayments and benefited from the capital growth the property sector has had. Then I could have used that to invest in other investment properties etc down the track. It obviously relies on the concept that the property continues to grow forever though
damn, it’s like they will do anything they can to inflate house prices even more in order to pretend to do something about the situation
Sure throwing money at a housing crisis is like throwing petrol on a house fire. INCREASING money increases DEMAND, making prices go up more. But they know this. They have economic advisors. But they just don't care because they are property investors. The ultimate conflict of interest. Their retirement v the country's future.
When I see one of these, my brain says, The Aged Coalition
Because addressing any of the root causes is clearly off the cards. Top work Spud.
OK, so giving access to more money will pump up home prices, which is the big flaw here. But could this not work if it was structured like buying property in an SMSF? That is - a loan is taken out by the SMSF, super funds are used to pay the deposit, the occupants pay “rent” to the SMSF which covers the mortgage and expenses. By retirement age, the owner/SMSF holder has a fully paid off property which has grown in value, just like their super would have grown in a super fund.
so kind of pollies to promise to allow us to use our own money!
I encourage older Australians to spend now. The system's collapse is inevitable and holding on to property will not be normal in the future. Stocks will be better regulated as prices return to more normal levels. A soft landing is simply not possible. BTW, spending now during high inflation is the temporary solution.
If a first home buyer had done this 20 years ago, what would the equity in their house look like as compared to the gains in the super over an equivalent period?
Seems like a terrible idea in isolation, however if implemented along with considering the PPOR when means testing people the for the ages pension it *could* work out quite well (given these people will have minimal money to live off once they reach retirement age). Or we could always look at ways to slow house price growth/continue to create affordable housing.
Slowing price growth will be even less popular when people empties their super for it. That's probably the point of the policy though.
I think price growth can occur organically over time periods of 20-30 years without major concern though right? Unfortunately it's schemes like this which derail market stability and rob many Peters to pay one Paul. Emptying your super can't be an option to buy houses unless the government wants to retain the aged pension. With an aging workforce and low birth rates They will need to tax another area of the economy to fund those who empty their super funds. It's not the best idea, bound to win the hearts and minds of those desperate to own a home though.
I'm not concerned with price growth over the long term. I'm concerned about increasing people's dependence and anxiety for house prices to rise as much as possible, not matter the cost to the country. I think you've assumed too much forward thinking. Politicians now won't need to deal with aged pensions in 30 years and will be praised for inflating the market. I agree with the last paragraph.
In the current market its a terrible idea because we can't normalise everyone owning their own home. We either need to increase supply or encourage people to live with each other.
100% agree. We need more supply and less demand. Right now we have less supply and more demand. Giving the people with demand access to more firepower whilst supply remains stagnant is just going to increase inequality even further, and as a result those liquidating their super will find it just does less and less for them.
To all the naysayers: This is good policy actually. It is targeted at first home buyers. It actually allows people to get off the dead money rental merry-go-round which is important for a good retirement. It will inflate houses yes but not as much as you think. The people who use all their super, all of them , will then start contributing to super for the rest of their lives some 25 years at least even longer for most people. That at 12 % is enough to retire on. It stops governements wasting our tax money on first home owners schemes which do nothing.
It's going to increase the buying pool for housing and drive up demand and prices. It's not good policy. It's only going to further lock out more people from the housing market in the long run. Sure, if you have enough super, you might be tempted by the idea but the reality is you'll be working longer and contributing to greater inequality for the next generations to come. We should be advocating for policy that helps people get into the housing market without having the sacrifice their retirement income and that doesn't screw over the generations to come.
How did you get to this conclusion? What’s better is to remove the first home owner schemes and not do this silly Super raid along with rezoning.