A group of Coalition MPs is currently
lobbying the government to freeze or scrap its scheduled increase to
superannuation. Instead, this group wants to focus on direct measures to help
first-home buyers enter the property market. Government interest follows the
release of the Retirement Income Review, which emphasised homeownership over
super savings as the key to financial security during retirement. Despite
support for the report, however, this concept is controversial and likely to
face further scrutiny.
Under the current First Home Super Saver
scheme, first-home buyers can withdraw up to $30,000 of their voluntary super
contributions to go towards a home deposit. As things currently stand, the
compulsory super rate is set to rise from 9.5% to 10% in July, 2020, before
rising to 12% by 2025. However, despite taking this plan to the last election,
the government is now planning to review and possibly alter these rates and
make adjustments to the scheme instead.
Former Reserve Bank of Australia governor
Bernie Fraser has backed changes to the First Home Super Saver scheme, saying
it's an effective way to help people direct their super savings towards a
first-home deposit. While lots of Coalition members are on-board, recent
support from crossbenchers have given it new fuel. One Nation leader Pauline
Hanson is in favour of the plan, as is Independent Senator Rex Patrick and
Centre Alliance Senator Stirling Griff.
According to Labor and the Greens, however,
the government should stick to its pre-election policy and protect vulnerable
Australians during this difficult time. Australians have withdrawn more money
from their super in 2020 than ever before due to COVID-19 relaxations, with
this move likely to reduce financial independence during retirement. While a
rise in first-home buyers is undeniably an attractive proposition, this scheme
could also help to drive up house prices and undermine long-term financial
security.
According to Greens leader Adam Bandt, the
government is deliberately contributing to housing unaffordability with other
measures, and then trying to have their cake and eat it too: “If the Liberals
were serious then we would stop inflating housing prices with ridiculous tax concessions
that put the cost of housing out of the reach of first home-buyers... Rather
than forcing young people to raid their savings, the government should stop
pushing up the cost of housing by handing out billions of dollars each year in
tax breaks to people who already own several homes."
Anthony Albanese is also not on-board, with
the Labor leader saying that the plan would drive up house prices while making
young people less secure in their old age: “Once you undermine the compulsory
elements of superannuation and the whole basis of it being for an income during
retirement, then you end up opening it up for this,” he told the ABC... We’ve
seen this government trying to undermine superannuation, our universal system,
at every opportunity. We’ve seen 600,000 Australians now left with zero dollars
in their superannuation accounts."