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Allowing Australians to raid their super for a house deposit could cost taxpayers $1 trillion in the long run, according to new modelling.
Commissioned by the Super Members Council (SMC) and conducted by Deloitte, the research showed that if young home buyers were allowed to access as much of their superannuation as they choose to use for a house deposit, it could cost taxpayers around $1 trillion by the end of the century and a cumulative extra $200 billion by 2060. This is mostly due on how it would push the age pension bill skyward, but also the result of a loss of tax revenue on super earnings.
And even if super withdrawals were to be capped to $50,000, the modelling projects that the impact would be $300 billion weight on the budget by the end of the century and $40 billion cumulatively by 2060.
Previous research by SMC also indicated that injecting super money into the housing market through a capped scheme had the potential of raising capital city house prices by up to $75,000. The body holds that an uncapped scheme could push prices even higher.
SMC chief executive officer Misha Schubert called the policy “economically reckless,” and described it as a “policy trap for young Australians”.
“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,” Schubert said.
“We all desperately want more Australians to own their own home, but this idea won’t achieve that. 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,” she added.
SMC is pushing for a “sensible rethink” on any policy ideas that involve allowing Aussies to dip into their retirement savings, noting that any reductions in balance magnify over the long-term course of the savings fund’s lifetime.
The modelling showed that a 30-year-old couple who withdrew $35,000 each from their super would retire with about $195,000 less in today’s dollars.
“Ideas to break the seal on super just leave people with less savings in retirement and a bigger bill for all taxpayers,” Schubert said.
Calling Australia’s super policy “the envy of the world,” the body warned policymakers of undermining its purpose.
“The creation of super is a remarkable Australian achievement that delivers a dignified retirement for millions … any time politicians float using super for something else, it undermines its purpose to deliver strong returns for all Australians.”
ABOUT THE AUTHOR
Juliet Helmke
Based in Sydney, Juliet Helmke has a broad range of reporting and editorial experience across the areas of business, technology, entertainment and the arts. She was formerly Senior Editor at The New York Observer.
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