New research shows a push for Aussies to access their super for a house deposit could prove costly for taxpayers in the long run.
The modelling—commissioned by the Super Members Council—shows pension costs climbing exponentially as first-home buyers start to retire with far less super in the coming decades and are forced to rely more heavily on the taxpayer-funded age pension.
Adjusting for population change, super contributions and balances, the latest push for an uncapped policy by NSW Liberal senator Andrew Bragg, as well as using super to be credited to a mortgage offset account, is expected to cost taxpayers an extra $200 billion by 2060.
This would continue to climb to a whopping $1 trillion by the end of the century and add an extra $2.5 billion a year to the budget by as early as 2030.
Even for the considerably more modest $50,000 capped policy raised during last year’s election, the figures still estimated a devastating economic fallout that would see $300 billion in costs added to federal coffers across coming decades.
At its peak, the capped super policy could cost taxpayers an extra $8 billion per year, while an uncapped would cost taxpayers an extra $25 billion a year.
Previous Super Members Council modelling also shows the policy would simply raise capital city house prices by $75,000 – forcing the next generation of young Australians to wait even longer to buy.
Super Members Council CEO Misha Schubert said a growing body of expert evidence showed the policy would not lift home ownership rates – it would only make housing affordability worse while eroding retirement savings and leaving all Australians a tax bill.
“It’s economically reckless,” said Ms Schubert
“It sets a policy trap for young Australians because it hikes house prices and blows a Budget blackhole in the decades ahead mostly by pushing up age pension costs – which every taxpayer would pay.”
The news follows the Morrison government’s decision to allow Aussies to withdraw a total of $20,000 from their superannuation, a move that wiped out some super balances.
Ms Schubert said the very idea to “break the seal” early on super leaves people with less savings in retirement and a bigger bill for all taxpayers.
“We all desperately want more Australians to own their own home, but this idea won’t achieve that,” she said.
“It’s unfair to lump the next generations of Australians with a policy that would only make the housing affordability crisis worse by driving up house prices.
“We urge a sensible rethink on any policy ideas that undermine the strength and success of super to continue to deliver for all Australians in retirement.”
According to the council, the analysis found that a 30-year-old couple who both withdrew $35,000 from their super could retire with a balance that was $195,000 less in today’s dollars.
“The creation of super is a remarkable Australian achievement that delivers a dignified retirement for millions and it is rightly the envy of the world,” the council said.
“Any time politicians float using super for something else, it undermines the purpose to deliver strong returns for all Australians.”
