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Why the Liberal Party’s super for housing pitch isn’t ‘a real policy solution’

Allowing people to access their super for a deposit isn't going to help people enter the housing market.

Allowing people to access their super for a deposit isn't going to help people enter the housing market. Photo: Getty

The Liberal Party is set to expand and uncap its policy of allowing people to raid their super to pay for home ownership, despite evidence that it won’t assist first-home buyers owning a house.

Liberal politicians are pushing to expand a policy to allow Australians to withdraw their entire superannuation fund for a house deposit, according to The Sydney Morning Herald.

Joey Moloney, Grattan Institute’s deputy program director of economic policy, said the policy will help people who have a higher income and super balance.

“The question is, will this policy help people get into the housing market who wouldn’t otherwise get in?” he said.

“Ones making good coin already and already have a good super fund balance are the ones who will likely break in already, so I don’t think you can characterise this as a policy that is well targeted.”

The Liberal Party took the policy to the last election.

But it was capped at whichever was lower between $50,000 or 40 per cent of the super balance.

Rebecca Thistleton, executive director for Victoria at the McKell Institute, said most first-home buyers won’t have enough super to make a serious contribution towards a deposit.

“Even though it may appeal in theory to a lot of young people, if they went to their super fund and had a look at their current balance, they’ll find it wouldn’t make much of a difference,” she said.

“It doesn’t help in terms of actually getting into the market, nor does it help people longer term, so it’s really just a short-sighted suggestion rather than a real policy solution.”

Higher risk

When the policy was announced under the Morrison government, senior Liberal figures conceded it would increase the cost of owning a house in Australia.

Moloney said it isn’t clear how much the policy would increase prices, but it will.

“It is logically impossible to dispute the fact that if you allow more access to capital to buy housing, it’s not going to push up house prices,” he said.

“The price impact isn’t going to be zero. It’s certainly going to be above zero.”

Internet speed Australia homebuyers

Experts agree that the Liberal Party’s super for housing policy will drive up prices. Photo: Getty

The Australian Council of Trade Unions (ACTU) called the policy “an act of compounding bastardry”.

“This policy is absolutely salivating to property developers, boomer property investors, and the banks who will get to write ever-increasing mortgages with this generation,” said Joseph Mitchell, assistant secretary of the ACTU.

“If the Liberals have their way, their policy would also widen the gender gap in retirement savings and disproportionately harm working women.”

Addressing supply

Housing and property experts almost unanimously agree that to address the housing crisis, a greater supply of housing is required.

Moloney said any political party offering solutions to boost home ownership that don’t address supply have “missed the mark”.

“The story of our housing policy, particularly when it comes to the question of home ownership, for decades now has been looking at the wrong side of the demand-and-supply equation,” he said.

“Ultimately, the one key thing you can do long term to reverse the decline in home ownership is increase the supply of housing and to make it cheaper.”

Although the government has committed to building social and affordable housing through the Housing Australia Future Fund, Thistleton said the Liberal Party’s policy “flies in the face of simple supply and demand economics”.

“It doesn’t require any government funding, whether the current or a future government, so it takes the onus away from the Coalition,” she said.

“This is a lazy idea that continues to put the onus on home buyers and young people, rather than make the housing market fairer.”

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