Monique Ryan (Kooyong, Independent) Share this | Hansard source

The objective of superannuation should be to provide an adequate income to ensure that all Australians achieve a comfortable standard of living in retirement, supplementing or substituting the age pension. Preservation, retirement income, equity, sustainability and a dignified retirement should be at the heart of our superannuation policy.

In this country, housing plays a major role in determining retirement outcomes. Retirees who own a home generally have a better standard of living than those who rent. Those renting in retirement often face financial stress. They face high rates of income poverty. Homeownership rates have declined, especially among younger and lower- to middle-income Australians, in the last four decades. The value of housing has shot up since the 1990s. House prices have increased by as much as 30 per cent in some parts of the country in the last 12 months alone. This obviously benefits existing homeowners, but it does not help those who are renting and those who are hoping to buy.

Australians can generally access their super prior to retirement in limited circumstances—for medical treatment, for home modifications, for disability and in emergency situations to prevent foreclosure. The opposition is keen on extending those provisions to allow Australians early access to superannuation for housing. They have recently suggested that doing so might help address housing affordability and that it might help first home buyers enter the property market. It takes but an instant to see two massive holes in this proposition: firstly, the potential impact on retirement savings; and, secondly, the fact that this change would result in reduced affordability in an already overheated property market. Clearly, raiding your super early will have a significant compounding effect on retirement savings. For example, the Super Members Council found that a couple of 30-year-olds who each withdrew $35,000 from their super will retire with about $195,000 less in today's dollars.

But we don't have to imagine an imaginary scenario. Fortunately—or, rather, unfortunately for those involved—the great minds of the opposition have already provided us with a model for the potential outcome of what happens when you allow Australians early access to their super. In the early stages of the COVID pandemic, before the JobKeeper scheme kicked in, the Morrison-Frydenberg government encouraged Australians to sacrifice their retirement savings to support themselves. Through the COVID early release scheme, 4.9 million Australians applied to access their super, taking up to $20,000 from their super during the period between April and December 2020. Half of them were aged less than 35; almost 40 per cent of Australians between 25 and 35 accessed their super at that time. Tragically, 725,000 Australians effectively wiped out their superannuation accounts in early- to mid-2020.

Compound earnings make up three-quarters of our super balance at retirement. So those who lost that super in 2020 will never recoup those losses. It's estimated that $38 billion of early withdrawals at that time will cost those super fund members $85 billion in their retirement savings. A 30-year-old who took out $20,000 then will be more than $93,000 worse off at retirement. In my electorate of Kooyong, more than 21,000 people elected to access their super in 2020; 5,396 Kooyong residents wiped out their super entirely. We mortgaged the future of a generation.

We're all going to pay for that early release scheme, not just those people who needed help at a critical time and had nowhere else to go. The early release of super scheme will mean a higher reliance on the age pension as well as a lower tax income from superannuation. It will cost this country $2.5 billion a year from the mid-2060s. Industry Super Australia has modelled that, for every $1 taken out, the taxpayer will pay up to $2.50 extra in age pension costs. Those early pandemic withdrawals gave young Australians a lifelong form of financial long COVID.

The cost will be borne by future taxpayers either explicitly via increasing their taxes or implicitly via a reduction in the government provided services that they receive: education, aged care, NDIS, child care or health. Over the course of their lifetime, a person now aged 20 who did not access their super in 2020 will still be expected to pay at least $3,000 extra in income tax just to compensate society for the former member for Kooyong's COVID early release scheme. These are the devastating consequences of schemes that break the preservation rules of super. People are left with far less money at retirement, and the next generation, our children and our grandchildren, will have to pay higher taxes to pick up the bill for higher pension costs.

And what of the potential effect on housing affordability? This country already has a housing shortage. Building approvals are at a decade low, having surged during the pandemic. Allowing Australians to access their super will increase competition for existing stock. It will drive up housing prices. It makes no sense to increase demand when supply is so limited. The Super Members Council has published modelling suggesting that median house prices in major capital cities could jump by nine per cent or as much as $70,000 in cities like Melbourne.

Another question is whether young people have enough in their super to afford a home deposit. Under the opposition's proposed scheme to withdraw $50,000, a person would need superannuation savings of $125,000. This is a sum the average Australian does not accrue until they are in their 40s. So who is this policy meant to help? Most people who are genuinely struggling to buy a home have so little super that allowing them to raid it would effectively make very little difference. But, paradoxically, allowing people to use their super for housing would increase the purchasing power of those who already have a higher income and, hence, a higher super balance. This is the group who are already most able to buy. Giving them access to faster capital will push up prices across the board. It'll make it harder for those people struggling to get a foothold in the market.

The Liberal aligned think tank Blueprint Institute has estimated that the demand for low-cost housing would outstrip supply four to one under the opposition's proposal. The Centre for Independent Studies, another right-wing think tank, has said allowing first home buyers to use their superannuation as collateral or as a home deposit would increase access to housing for favoured recipients but decrease it for everybody else. The RBA and APRA have also cautioned against using super for housing, saying that we, in doing so, will inflate property prices. Saul Eslake, a member of the government's National Housing Supply Council, has pointed out any policy measures which would enable people to pay more for housing than they otherwise would results not in people owning homes but rather in existing homes becoming more expensive.

But why stop there with those opinions? Let's look at what the opposition has said in the past about allowing people to withdraw from their retirement savings to help them buy a home. In October 2014 the then finance minister, Mathias Cormann, said:

Increasing the amount of money going into real estate by facilitating access to super savings pre-retirement will not improve housing affordability. It would increase demand for housing and, all other things being equal, would actually drive up house prices by more. That is, it would reduce housing affordability, including for first home buyers. The only effective way to tackle housing affordability is by boosting housing supply, not by boosting demand.

Thanks, Mathias! Let's see who else has talked about this from the right side. Malcolm Turnbull said it was 'a thoroughly bad idea' and, 'This is not what the superannuation system is designed to achieve.' That was in March 2015. In April 2017, when he was Prime Minister, Mr Turnbull again rejected the idea, at which time the now opposition leader, the member for Dickson, commented: 'I think Malcolm has it right. He's referred back to his previous words on this to say that it's not a good policy, and I agree with him.'

The Deputy Leader of the Opposition, the member for Farrer, said in April 2017:

Young people need their super for retirement, not to try to take pressure off an urban housing bubble, better solved by decentralisation.

The House of Representatives Standing Committee on Tax and Revenue, then chaired by the former member for Mackellar, noted in May 2022:

… the Committee recognises that allowing first home buyers to access or borrow against part of their super to purchase a home would, in the absence of increased housing supply, likely increase demand and lead to higher property prices.

Faced with this genius proposal, in May 2022 Senator Jane Hume said, 'I would imagine in the short term you might see a bump in house prices.' And former prime minister John Howard, the relic they love to roll out at every occasion, said, 'Super is for retirement.'

It is appropriate that we reevaluate how much super Australians are accruing and what they do with it. In my electorate of Kooyong, the political landscape is dominated by cost-of-living concerns. Rent and housing attainability are two of the three highest priorities of my constituents but especially my younger constituents. I've talked to them. They believe in super and the rationale for it. They know it's their money—after they turn 65. They believe that Australians should not have to choose between a house and a nest egg. Their current sense of insecurity heightens their feelings regarding the importance of having security in the future. Some of the young people of Kooyong accessed their superannuation during COVID, but now they feel they have been duped. They are aware of the fact that the COVID early release scheme and others like it can entrench intergenerational inequity. Their response to the opposition's proposal is that this is not the purpose of superannuation. Allowing people to access their super would just put more money into the housing market. In the absence of additional supply, the equation is simple: it would drive up house prices. Those accessing their super would pay more for less. The only people advantaged would be those who own their homes already.

One might think that the opposition is playing to its base: older voters who are already in the housing market. The issue is this: older voters in electorates like mine are smarter than that. They see through this ploy. They want their own children to be able to afford a home in their own lifetime, and they don't want their children to have to rob their future in order to do so. Younger voters in electorates like mine are also smarter than the opposition. They understand the purpose of superannuation. They argue that Australians shouldn't have to choose between a home and a nest egg. They don't trust future governments or their ability to provide adequate pensions in the face of an ageing population and a narrowing tax base. They know that the current housing crisis is the result of successive governments' policy failures.

We all want Australians to have access to secure and affordable housing. It's a right, not a privilege. And we want Australians to have security and comfort in their retirement. With an ageing population and in the face of increasing intergenerational inequity we will not achieve those things by asking our young adults to rob their futures to pay for their present. Governments are responsible for the housing crisis. Governments should fix it. As John Howard said, 'Super is for retirement.'

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