First home buyer plan is ‘really bad idea’

The federal opposition and a key business group have criticised a government proposal to let young buyers access their superannuation.

Shadow Treasurer Chris Bowen told ABC television that Joe Hockey’s idea of letting young buyers use their super to enter the housing market was a “really bad idea”.

“First, if you turn up to an auction with $20,000 or $30,000 from your super in your pocket, guess what, the other person at auction has got the same,” Mr Bowen said.

“You’re just going to bid against each other with your retirement incomes and the only person who wins is the person selling the house who pockets an extra $30,000, thank you very much.”

Australian Chamber of Commerce and Industry chief executive Kate Carnell said the Treasurer’s idea would do more harm than good because of its impact on the retirement system.

Ms Carnell told ABC television Australia needed to set a long-term goal of making fewer people dependent on the pension.

“The only way we’ll do that is to get more money into super from young people,” she said.

Mr Hockey said it was good that Australians were now debating housing affordability for younger Australians, but added that his proposal wouldn’t solve the entire problem.

“There are countries in the world like Switzerland, Canada, Singapore that have variations of it,” he told ABC television. “But OK, if there’s a consensus in Australia that, really, superannuation should be quarantined to retirement income, the question is: how are we going to help [younger Australians] get into a home?”

One organisation to voice support for Mr Hockey’s idea is HomeStart Finance, a lender backed by the South Australian government that helps poorer people into home ownership.

Chief executive John Oliver said it was disappointing that potential buyers with secure employment and a reasonable income couldn't afford to enter the market.

“The concern that a person’s superannuation balance would be forever impacted by drawing on it for a home deposit is understandable,” Mr Oliver said.

“But the majority of the money would be replenished over time and, at retirement, a person is likely to own a significant asset that may not have been possible if not for the assistance they received.”

[Related: Superannuation plan would trigger ‘property bubble’]

promoted stories

REB Events