The government split over the idea of allowing people to use their superannuation to buy houses has turned into yet another divide within the government along moderate/right lines. Behold the list of backers of the idea, at least according to The Australian: Tony Abbott, Michael Sukkar, Zed Seselja, Craig Kelly, Angus Taylor. All from the Liberal’s right faction. Right-wing LNP minister Matt Canavan backs the idea too.
The idea is quite profoundly dumb, given it would involve yet another wealth transfer from young people to older Australians and further accelerate house price growth. It has received near-universal condemnation from the superannuation sector, the property sector and economists — and even by the Prime Minister and the right’s own Mathias Cormann (the one senior minister with political judgement and a functioning brain). So why is it being pushed?
You could argue that it’s still another front in the right’s war on Turnbull, but there’s an interesting clue in the work of one of the right faction’s favourite mouthpieces, The Australian’s Simon Benson. On Monday, Benson led heavily with a gushing prediction of an astonishing “cradle to the grave” housing affordability policy in the budget, only for internal opponents of Treasurer Scott Morrison to emerge rapidly and kick the “package” to death the following day. But in a comment piece accompanying his effort on Monday, Benson, who as a policy analyst makes a fine stenographer, justified using super for housing on the basis that super is simply people people ripped off by “union-run funds”.
A somewhat chastened Benson returned to the theme today, to again devote a column to justifying using super for housing. It’s riddled with too many errors and inconsistencies to detail, though our favourite is his claim that it would reduce the cost of the age pension to future governments. But he got one thing right, saying “the Coalition has always regarded [superannuation] as socialism”.
This handily gives away exactly why the right is lining up to back an idea that is universally regarded as a dog: it’s not just about the war on Turnbull, but about the long-term Liberal war on superannuation. For many Liberals, mention superannuation and a red mist descends, they start frothing at the mouth and screaming about “venal unions”. So irrational is the hatred that they ignore the fact that industry super funds are equally run by both unions and their own allies, employer groups, as well as ignoring that those employer/union funds oufperform funds run by the big banks. You’d think the Liberal party would be playing up the remarkable and consistent contribution of Australia’s businesses to a retirement incomes system that is well-regarded around the world in spite of its high fees — but no.
Indeed, the hatred is so intense, they appear not to care that allowing super to be used for housing would not merely harm industry super funds, it would hammer the big bank-run retail funds as well (all at the same time as Morrison wants super funds to take a look at investing in affordable housing). That the effect would also mean even higher asset prices for older, wealthier people and housing investors is just the iceing on the cake. This is really about attacking a hated sector created by Labor and the unions that is now worth $2 trillion.
Economics 101; what happens if you keep the available housing stock the same, but increase the amount of money chasing that housing stock?
House prices will increase even faster.
This is simply pouring even more fuel on the already over-heated housing market. How grown men and women claiming to be the prudent Economic Managers of our nation can suggest such foolishness is beyond me.
We have an artificially tight supply problem; the available land on the outskirts of major cities is not adequately serviced by mass transit and decent road infrastructure. So the demand is for property within the inside ring, within about 15km from the CBD.
Of course it would be the same Economic Geniuses that probably shouted down proposals to build the infrastructure because it may involve borrowing and paying it off over many years – just like a normal business.
Somehow these morons also believe government should be run like a business, except borrowing to build quality assets and plan for the future is somehow irresponsible.
Not to mention the short-sightedness of raiding the superfunds.
FFS, what a weird place Australia is.
This guy is spot on. When will Australians wake up to themselves and join the real world where wealth doesn’t grow simply by trading houses and screwing the younger generation.
Australia’s tax system is backwards: huge tax breaks for investing in non-productive assets and penalties for taking risks to produce something innovative and of long term productivity.
We have an artificially tight supply problem; the available land on the outskirts of major cities is not adequately serviced by mass transit and decent road infrastructure. So the demand is for property within the inside ring, within about 15km from the CBD.
No, the real problem is UGBs.
Within them, people can build houses.
Outside, they cannot.
Therefore the value of the land just inside an UGB us vastly higher than the value of land just outside it. This effect ripples in all the way to the CBD, driving up prices.
Ah! Thanks, Bernard, for clearing up something that was bothering me. This is such an elementary violation of basic economics – Richard Holden called it Economics 101 but you really don’t need any formal training at all to understand what wackiness this is – that I was wondering how anyone with any claim to economic literacy could be behind it. Abbott, Seselja… well, sure – they have no serious reasoning powers at all. But Canavan was at the PC for a while and I thought that surely something must have sunk in, if only by osmosis. There’s nothing obvious in it for farmers so it couldn’t be explained that way. So I think you have nailed it: thanks!
Surely the burr under the right’s saddle-blanket has more to do with what the right deem the unwashed masses deserve? … And “some sort of security into old age” isn’t one of them?
And of course there’s that point about how “employer/union funds out-perform funds run by the big banks” – if they can do that what else can they do better than their sponsor mates?
I don’t know if it’s fair to say that all right-wingers hate Super.. particularly since they’ve spent the last 20 years converting it from a pension-replacement scheme into yet another high-income-earner tax-avoidance scheme with the vast majority of belefits flowing to wealthy individuals who would never have qualified for a pension in the first place.
The interesting thing about the “super for houses” push is that it occurred when the PM was out of the country.
Something is afoot…