Wednesday, 18 March 2015
I rise this evening to continue the dialogue about home ownership and the possibility of accessing superannuation funds. As I listened to the discussion this afternoon around the table, it occurred to me how disappointing it is that, with the depth of interest that exists in all areas of this chamber, we cannot have a dialogue based on policy and not cheap politics.
I ask the question: what is the ultimate objective of superannuation? Of course, it is to provide sufficient resources for a comfortable retirement. At the moment, the only way of doing that is via the accumulated funds that are in savings, and then as we see, with interest and with compounding, we end up achieving that goal, more or less. A second option may be the possibility of accessing some of those superannuation funds to provide the deposit for a person's first home. The third option may be—and I intend speaking tomorrow evening on this in the adjournment debate—to provide access to higher education for some people aged mid-20s to mid-30s, who missed out on the opportunity of a university education early and are now in the workplace and realising the value of a higher education. The wisdom is that a degree gives you about a million dollars more over your career than you would have without one, so imagine how much better off you would be in retirement to have that million dollars as an alternative or an addition to superannuation.
Returning now to the prospect of the use of some superannuation funds to assist with a housing deposit, I ask: whose money is it? It belongs to the person into whose super fund these moneys are being paid. Why is it that they have no decision or no choice? All of us would be aware that in many instances the only difference between rent and mortgage payments, which are about the same on a monthly basis, is the fact that the person renting does not have the deposit to get into the home ownership market. So, if it is possible to use those funds for that purpose, why not? The third question that I ask is: why does it have to be apart from the superannuation system? Why could the super fund not be able to provide that deposit and hold the mortgage over time with absolutely no loss? Where is the loss? Instead of the super fund using accumulated funds to invest in infrastructure projects in Portugal, Poland or somewhere, they would be spending those funds to invest in young Australians getting into their own homes. Whether that is an Australian super fund or whether it is a self-managed super fund, why do young Australians have to exit the superannuation market?
An added point would be taking pressure off the rental market as people move from rental into home ownership. I think that it was Senator Ludlam who said this afternoon that about a third of adult Australians are renting. It is an interesting statistic. Fifteen years ago, 45 per cent of Australians owned their own home outright; that has now deteriorated down to about 33 per cent.
But where are the benefits? We all know them. We all know the value of a family being in their own home. Senator Wright spoke this evening about issues such as discord in the family and uncertainty amongst children. We all know the best place for children is to be in their own home, in which, each night, they will come back to their own bedroom. What sort of relief of the uncertainty and family discord that exists today will we be able to achieve if we are able to move towards that circumstance?
In 2012 I funded myself on a visit to Singapore to talk to the Housing Development Board there. Let me give you some stats from Singapore. Ninety per cent—I will repeat that: 90 per cent—of adult Singaporeans own or are purchasing their own dwelling, 85 per cent in the HDB system and15 per cent in private housing. And they have used their Central Provident Fund for this purpose. The funds can be used to purchase or to pay stamp duty or whatever. Ninety per cent of adult Singaporeans are in their own home—and, as we all know, possession turns a sow's ear into a silk purse. Over time, in the event that that dwelling is sold, the funds will revert into the super fund or, if older people in Singapore find that the retirement component of their super fund is not adequate, they have the opportunity then to downsize and put the balance back into their superannuation fund.
I am keen to discuss this with Senator Conroy when the opportunity presents. But we know the circumstance. Once somebody is in their own dwelling, we know they have the opportunity to upgrade over time. Capital gain benefit goes to the homeowner, to the person buying. In my own case, my wife and I in 1974 purchased a very humble little timber cottage with a tin roof, in the town of Northam. As time progressed, as it gained in capital value, we were able to sell it and upgrade. So surely the opportunity must exist—and I am very keen to engage with Senator Conroy at a later time. I am very, very keen to have that discussion, because I think there are enormous benefits. There are enormous benefits to the community. There are enormous benefits to individuals. There are enormous benefits to families. And at no time is there a loss to the Australian net value of superannuation, because the additional value over time of that real estate asset actually stays within the retirement funds.
What then can be achieved? First of all, if there are concerns about overheating a market, it could be that the opportunity is limited to new builds, to stimulate housing construction. It could certainly be that, if there is a concern about overheating markets, in certain markets it could be limited to a percentage of the median house price.
I return to the concept of rural and regional. Senator Conroy probably never goes into regional and rural Australia, but I can say to you that there are towns that are dying. There are towns where the cost of a house to a young family is very, very attractive. The opportunity for them to move into that circumstance, to gain homeownership, is absolutely incredible.
So we have many circumstances, in my view, in which this sort of issue can well be discussed. Is it of value to the Australian community for us to have a higher proportion of homeownership?
Senator Conroy interjecting—
Does Senator Conroy believe that it is not a benefit?
I will conclude, if I may, with the story of my own family. My father's mother died when he was a young kid, in the goldfields. At the same time, his father took the family down to Fremantle, where my grandfather got a job on the wharf. An equivalent family, the Migro family—their husband and father died in a mine accident in Boulder. Nanna Migro, as I remember her, was a very, very small woman, widowed in about 1919, 1920. She had no husband, no social security and five children—six when my father was added into it. What happened was that a bank backed her. It actually loaned her those funds, and my father's earliest memories are of living in the safety and the security of the Migro household. She was able to provide a roof over their heads. That little house in John Street in North Fremantle still exists. Time went on. My father, working on the wharf during the Depression and studying bookkeeping, got a job as a banker. Regrettably for me, he died at the age of 60 years, in the bank. What was interesting was, when he died, the number of letters my mother received from people who said to her: 'Your husband supported us into homeownership. He supported us for a roof over our heads, and that was what kept our family together.' I grew up in a household which absolutely valued homeownership, and I for one want to see Australia's funds assisting to achieve that.
Senate adjourned at 19:59