Will First Home Buyers be able to Access Early Super
During these challenging times, novel economic measures have been adopted to help Australians make the most of a bad situation. One bold idea has emerged to help Australians buy their first home, in a plan that would allow people early access to their superannuation. While this plan could lead to greater home-ownership rates among renters and young Australians, it could also have "devastating impacts" according to some politicians.
A group of Coalition MPs is currently lobbying the government to freeze or scrap its scheduled increase to superannuation. Instead, this group wants to focus on direct measures to help first-home buyers enter the property market. Government interest follows the release of the Retirement Income Review, which emphasised homeownership over super savings as the key to financial security during retirement. Despite support for the report, however, this concept is controversial and likely to face further scrutiny.
Under the current First Home Super Saver scheme, first-home buyers can withdraw up to $30,000 of their voluntary super contributions to go towards a home deposit. As things currently stand, the compulsory super rate is set to rise from 9.5% to 10% in July, 2020, before rising to 12% by 2025. However, despite taking this plan to the last election, the government is now planning to review and possibly alter these rates and make adjustments to the scheme instead.
Former Reserve Bank of Australia governor Bernie Fraser has backed changes to the First Home Super Saver scheme, saying it's an effective way to help people direct their super savings towards a first-home deposit. While lots of Coalition members are on-board, recent support from crossbenchers have given it new fuel. One Nation leader Pauline Hanson is in favour of the plan, as is Independent Senator Rex Patrick and Centre Alliance Senator Stirling Griff.
According to Labor and the Greens, however, the government should stick to its pre-election policy and protect vulnerable Australians during this difficult time. Australians have withdrawn more money from their super in 2020 than ever before due to COVID-19 relaxations, with this move likely to reduce financial independence during retirement. While a rise in first-home buyers is undeniably an attractive proposition, this scheme could also help to drive up house prices and undermine long-term financial security.
According to Greens leader Adam Bandt, the government is deliberately contributing to housing unaffordability with other measures, and then trying to have their cake and eat it too: “If the Liberals were serious then we would stop inflating housing prices with ridiculous tax concessions that put the cost of housing out of the reach of first home-buyers... Rather than forcing young people to raid their savings, the government should stop pushing up the cost of housing by handing out billions of dollars each year in tax breaks to people who already own several homes."
Anthony Albanese is also not on-board, with the Labor leader saying that the plan would drive up house prices while making young people less secure in their old age: “Once you undermine the compulsory elements of superannuation and the whole basis of it being for an income during retirement, then you end up opening it up for this,” he told the ABC... We’ve seen this government trying to undermine superannuation, our universal system, at every opportunity. We’ve seen 600,000 Australians now left with zero dollars in their superannuation accounts."