Keating objects to “raiding superannuation”

20 March 2017

Written by: Haley Battersby

Paul Keating says superannuation access for first-home buyers will drive up prices.

Malcolm Turnbull has refused to rule out allowing first-home buyers to dip into their superannuation to help pay for a deposit, telling 2GB on Thursday that he will not discuss issues under consideration for the budget.

Paul Keating has since issued a warning against the idea this morning, labelling it a triple threat to drive up prices.

Rather than the previous simple cash withdrawal, superannuation trustees would be able to access their equity to enter the housing market.

“As an economic idea, this is scandalous. But, of course, for the Liberal Party, this is an ideological proposal,” he told Fairfax Media.

“Only the most reckless and wilful government would abort the policy settings to put the system at risk.”

Mr Keating said it would compromise super funds’ investment profiles and lead people to an impoverished retirement.

He argued the system relies on two foundational principles.

“A preservation of contributions to age 55 and the compound earnings on those contributions,” he said.

“If the preservation rule is breached and savings, especially those of young people, are allowed to drain away, the loss of the accumulation and its compounding would rob them of a large block of savings at the end of their working lives.”

Treasurer Scott Morrison has fuelled expectations of significant change for housing affordability in the May 9 budget.

“The problem is being able to save quickly enough to get a deposit which is big enough to actually get yourself into the market,” he told 2GB’s Ray Hadley last week.

“Young people.. are putting off when they buy their house. They’re putting off when they have kids so they can save more.. that’s why it’s a very important issue, and that’s why we’ll be addressing it in the budget,” he continued.

On the contrary, independent senator Nick Xenophon has lent support for the superannuation housing plan, as long as it doesn’t fuel house prices.

“If all a government does is try to pump further liquidity into the residential housing market, inevitably all you do is push up housing prices” he told The Guardian.

Mr Keating is certain it will be a disaster and questioned the government’s economic credentials.

“How could a country which would wilfully do this to itself have any prospect of rational policy frameworks?”