Liberals’ plan to destroy super will drive up house prices

Only 13 per cent of homes sold in 2022-23 were affordable for a household earning the median income.

Only 13 per cent of homes sold in 2022-23 were affordable for a household earning the median income.

After a decade of failed policies and inaction to address housing affordability, the Liberals have reaffirmed their commitment to forcing workers to raid their superannuation to access housing and have now indicated that they will make every cent of workers’ retirement savings available at auction which will further inflate house prices.

This is an act of compounding bastardry.

The Liberals would once again – as they have with other universal entitlements when they have had the determination to do so – pull the generational ladder out from under young Australians.

Peter Dutton’s plan for the housing market is to make this generation of first-home aspirants choose between a dignified retirement and a house, a choice he did not have to make himself.

This will supercharge house price growth. Every first-home buyer would be forced to raid their super just to remain competitive if all of their competitors are tapping their super balances too. 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.

In an auction where everyone is bidding with their super, the only winner is the seller.

The Liberals’ policy robs workers of the magic of compound interest to enjoy in retirement. Workers, with their unions, fought for universal superannuation alongside an adequate age pension to ensure every worker – not just the wealthy and management – had a pool of retirement savings that maintained their income and standard of living into retirement.

A report by the Super Members Council this year found that forcing first-home buyers to raid their super savings could force median prices in the five biggest Australian cities to increase by $75,000. If a couple of 30-year-olds withdrew $35,000 in super for a house today, they can expect to retire with $195,000 less in today’s dollars.

If the Liberals have their way, their policy would also widen the gender gap in retirement savings and disproportionately harm working women, who already retire with $136,000 less in superannuation over their working lives, according to a 2023 report by The Australia Institute’s Centre for Future Work.

This thoroughly bad policy wouldn’t just rob the workers who are forced to drain their super for a deposit, it would cripple the retirement returns of every worker in Australia. The preservation of superannuation for retirement is a core reason why superannuation funds have been able to get phenomenal returns for everyone and why super funds generate better rates of return than banks.

The fact that superannuation funds do not have to have cash on hand for them to use at any moment means they can invest for the long term. This means that rather than investing in something for a short-run return, they can build and generate returns from nation-building infrastructure like roads, property and airports. If superannuation funds are required to have the cash on hand to pay out their members for a house deposit, the capacity for workers to benefit from compound interest is completely diluted.

Every aspect of this generates harm and perpetuates the problems it purports to solve.

It doesn’t make houses more affordable – it makes them more expensive.

It doesn’t help first-home buyers get a house – it just makes them drain their super for houses that might have otherwise been cheaper.

It makes those who drained their super poorer in retirement by hundreds of thousands of dollars.

It makes every worker in Australia poorer by smashing the ability of super funds to invest.

It is clear that this policy, promulgated by one-note anti-super ideologue Andrew Bragg, is designed to undermine the super system.

Setting the housing market on fire will do nothing to help people buy a house. It is clear we need additional supply of housing to make houses and rents more affordable. Building more housing, including social, affordable, and public housing, will make housing more affordable. This can also be facilitated by taking the handbrakes off supply, which is a meaningful step forward.

We need better rights for renters, so they aren’t subject to excessive rent increases and have more secure housing. And we need to ensure there’s a fair level of Rent Assistance for retirees and those out of work to alleviate rental stress.

Combined with more secure jobs and higher wages, an evidence-based housing policy will mean more workers will get access to permanent housing and affordable rents.

A policy distractions like the one Dutton is tying himself to is yet another example of a policy that doesn’t work for working people, but does work for landlords, property investors and the big banks.

Joseph Mitchell is assistant secretary of the ACTU, and a former organisation political director and policy officer, as well as working with the Innovation and Growth Taskforces

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