Tim Wilson (Goldstein, Liberal Party) Share this | Link to this | Hansard source

I move:

That this House:

(1) notes that:

(a) the benefits of home ownership are enjoyed during the working life of Australians, and in retirement;

(b) home ownership is more critical for a secure retirement than a large superannuation balance, as income can be supplemented by the pension;

(c) there is a disturbing rise of Australians who are entering retirement in poverty because of a lack of home ownership, particularly amongst separated and divorced women;

(d) currently Australians are forced to save for superannuation first and a home second;

(e) young Australians are struggling to save enough for a home deposit because their savings are locked away in superannuation;

(f) Australians only benefit from superannuation for about 20 years; and

(g) Australians draw the benefits of home ownership for around 50 years—both while working and in retirement; and

(2) recognises and acknowledges that:

(a) the order should be reversed: home first, super second;

(b) if young Australians could use their superannuation with other savings for a home deposit, they could buy a home both earlier and more cheaply; and

(c) by owning a home, young Australians will have a better life and a better retirement.

Currently, Australians are being forced to put superannuation before homeownership. It should be home first, super second. The recent Retirement Income Review highlighted how critical homeownership is for retirement. It mentioned the importance of homeownership 300 times. Research from the Grattan Institute shows a typical homeowner aged over 65 spends just five per cent of their income on housing compared with nearly 30 per cent—and rising—for renters. Until the 1990s, it was conventional practice that Australians saved for a home deposit first, because it was the ultimate form of financial security for them and their families throughout people's working lives and into their retirement. Saving for retirement income then followed. Many corporates didn't even compel young workers to contribute to their superannuation until about the age of 30, knowing they needed to save for a home. They understood the decision had to be made to fit into the slipstream of people's lives. You get the benefits of homeownership for around 50 years: when you're working and in retirement. Super is only for retirement.

Compulsory superannuation reversed these priorities. It introduced a form of social engineering. Former Prime Minister Paul Keating articulated it best in his 2007 speech on the history of modern superannuation. Keating said:

… had employers not paid nine percentage points of wages as superannuation contributions to employee superannuation accounts, they would have paid it in cash as wages.

And, of course, they could have used it for a home deposit. Australians' wages were taken from them for super first, and any savings for a home came second. The legacy has been a significant accumulation of wealth in superannuation and a decline in homeownership in our great country.

In 1992, the Australian superannuation system held $221 billion. Today, it is $3.1 trillion. It has increased almost 14 times. Concurrently, the biggest decline has been in the home ownership rate of those who have always been under compulsory super. Australian Bureau of Statistics data shows home ownership for Australians aged between 25 and 34 has gone from 52.2 per cent in 1995-96 to 36.8 per cent by 2017-18. The challenge has become so serious that the Australian Housing and Urban Research Institute has projected that only half of Australians between 25 and 55 will own their own home by 2040.

The biggest barrier for young Australians to buying their own home is saving a deposit. And, with the price of homes increasing by $23,000 a year on average since 2000, enabling them to buy a home earlier also means buying a home more cheaply. The longer it takes to buy a home, the more expensive it becomes. Since 2000, the price of a home has increased, as I said, by $23,000 a year. Demand influences house prices, but so does delay.

Sadly, these points seem to be lost on the Labor Party and the self-interested superannuation sector, who will say anything to get more of your money. They only want more access to rivers of gold. The response from the super industry and their ecosystem of representative bodies has been fierce. But they're absolute hypocrites. Super funds invest in build-to-rent housing. That means super funds are taking your superannuation to build housing that they own, that you can rent from them. In June, AustralianSuper took a 25 per cent stake in a build-to-rent company. Other super funds are now following suit. In August of this year, First State Super said they wanted to expand their investments in this build-to-rent sector and see the barriers removed to make way for the market to grow. The industry doesn't mind the superannuation savings of Australians being used for housing—so long as they own it, not you. They're the modern equivalent of wannabe feudal lords.

Ultimately, this debate is absolutely about power. Home ownership is about empowering Australians and families, and we can empower individuals and families through that process or we can empower fund managers. I know whose side I am on, and I know whose side the coalition government is on. And soon we will see whose side the Labor Party is on: individual Australians and families, or super fund managers.

Currently, the law says: Super first, home second. It should be the other way around: home first, super second. If young Australians could own their own home, they'd have a better life—but an even better retirement.

David Gillespie (Lyne, National Party) Share this | Link to this | Hansard source

I thank the member for Goldstein. Do we have a seconder for the motion?

Ted O'Brien (Fairfax, Liberal Party) Share this | Link to this | Hansard source

I'm very happy to second this compelling motion, and I reserve my right to speak.

Daniel Mulino (Fraser, Australian Labor Party) Share this | Link to this | Hansard source

I rise to strongly oppose this superficial and dangerous motion. It's a motion by one of a gaggle of government backbenchers who claim to support super, but there's always a big 'but': 'We support super, but'—early release. 'We support super, but'—

Government Members:

Government members interjecting—

David Gillespie (Lyne, National Party) Share this | Link to this | Hansard source

Order!

Daniel Mulino (Fraser, Australian Labor Party) Share this | Link to this | Hansard source

Those opposite, Deputy Speaker, don't like the truth, so they howl. It's actually confirming all of my suspicions about those opposite—that they can't deal with arguments, so they try hollow volume.

Let's think about the strategy and the arguments of those opposite. At every turn, over this term of parliament, where possible, they have tried to weaken the superannuation system. If we have a business downturn, they turn to early release so that people have to self-insure rather than the government doing what it's supposed to and protecting the vulnerable. When they've got a shocking lack of a housing policy, those opposite turn to superannuation and fundamentally seek to undermine our retirement system.

Let's see what's so superficial and dangerous about this mirage of a policy. It's superficially attractive, but the more you look at it, the more you realise there's absolutely nothing to it but the hollow rhetoric we just heard. What we see is somebody trying to set up a completely false dichotomy. The government is saying: 'You can have either housing or a good retirement.' It's a shocking way to frame this for today's young people—a shocking way to frame it.

Those opposite won't tell young people that, if they access their superannuation for retirement early, the opportunity cost is massive. Investment expert after investment expert will tell us that time is your greatest ally when investing, and that is exactly why it is critical that people invest early in their careers and sit on those investments. It is absolutely critical that young people today invest for their retirement with the advice of Warren Buffett, not the self-promoting backbenchers opposite. There are the massive opportunity costs that our young people would be exposed to if they withdrew money for housing, when they should have alternative supply-side policies. They should have both, but, if they withdraw thousands from their early retirement savings, they will be giving up six, eight or 10 times that in their retirement.

The other thing we should bear in mind is that those opposite claim that they are helping the young people who are struggling to buy housing, but the people in the 25-to-34 age bracket will have average savings of $8,000 to 28,000. As we saw in the latest economic downturn, those opposite want people to clear out their super accounts so that, by the time they get to 35, they will have zero. Those opposite will yell and howl and they will publish their little pamphlets with half-arguments, but what they don't like to acknowledge is that what they're really asking of our young people is to pull out their super, drive up housing and have nothing in their accounts at 35. That is exactly what they are saying. Those opposite, who claim to be economic managers, give us yet another lazy demand-side solution to the housing problems.

Sally Loane, CEO of FSC, said early release for housing would be 'counterproductive and further inflate house prices'. Michael Sukkar, the current Minister for Housing, said in 2014 that he agrees that tapping super for property would only drive up house prices because it would pump more liquidity into the market. I'd love to hear what those opposite would say when the current Minister for Housing says, 'I want more supply-side measures,' which is exactly what all serious commentators on the housing market say. Those opposite adopt the lazy strategy of saying to our young people today that it's either housing or their retirement, which is a completely false choice. Finally, it is absolutely critical that we acknowledge that the Retirement income review, just released, did not recommend early release from superannuation in order to buy housing. There is nothing that they can point to in that report. Those opposite want to fundamentally undermine the superannuation system—a world-leading system that the World Bank and OECD point to, saying other counties should follow. It's a completely lazy, superficial choice they're offering our young people.

Jason Falinski (Mackellar, Liberal Party) Share this | Link to this | Hansard source

There are those who say that the Australian dream is dead and that rent-seeking parasites killed it, slowly and then permanently. We say that the Australian dream of owning your own home is not dead. We say it shall never die while there is just one of us who is willing to stand up for it, because young Australians deserve to own their own home. How is it that a nation inhabiting the least populated economy in the world and with some of the highest wages in the world cannot house all its people or create an affordable stock of housing? The answer is simple: Australian state and local governments have spent the last 70 years systematically and deliberately ensuring that housing in Australia is some of the most expensive in the world. This has resulted in homelessness, poverty, entrenched disadvantage and wealth inequality. In fact, this is one of the greatest pieces of intergenerational theft in our history. All the while, self-righteous and self-serving interest groups, always taxpayer funded, vehemently argue that the answer to these problems is more of the same: more regulation, more tax and higher super contributions. Their unexamined urgings have led governments to develop policies with insane outcomes.

At a federal level, compulsory superannuation costs Australians over $30 billion a year—three times what they spend on electricity bills—and taxpayers a net $61 billion. The cost to ordinary Australians is decreasing home ownership. Since the introduction of compulsory superannuation two things have happened: Labor's biggest donors have become rich beyond their wildest dreams, and each generation has had lower and lower levels of home ownership, embedding inequality. The Left is aiding and abetting inequality in Australia in the 21st century.

At a state level, planning laws and taxes have done their intended damage. In the 1990s, first home buyers spent a year saving for stamp duty. Today it takes 2½ years. The ACT government, the self-proclaimed most progressive government in Australia, was going to remove stamp duty in favour of land tax. Now the citizens of the ACT get to pay both! According to St Vincent de Paul, there is a backlog of 500,000 affordable houses. I think they're being conservative.

As for local government, ask the next person you walk past in the street what they think of their local council. They will happily tell you that it is bloated, costly and inefficient and that it spends money on saving the world while neglecting parking, parks, rubbish and footpaths. There is often a stench of corruption, whether it be brown paper bags or just simple incompetence. Mayors drive $270,000 Teslas while their ratepayers see charges increase by 297 per cent. No-one critically examines what goes on because the local media's biggest advertiser is the council.

In a little-noted analysis—but much criticised by self-serving interest groups who already own their own properties—the Reserve Bank of Australia worked out that the average apartment price in Sydney is now $873,000 but that over $355,000 of that is due to state government zoning rules and local government charges. When it comes to greedy property developers, no-one beats out local and state governments. Given all this, is it any wonder that we have some of the most expensive land in the world? This problem is not the result of too few planning laws and approval processes; it is the result of too many planning laws, credit restrictions, government charges and prolonged approval processes.

In the mid-90s, the Japanese government started the world's largest public housing program to stimulate their economy. It did not work and it did not materially reduce homelessness. Five years later, as reported in The Economist, the Tokyo government undertook planning reform. From 2002 to 2012, homelessness in Tokyo was reduced by 80 per cent. The lessons are clear. Our clear preference should be for governments to increase home ownership, not to force people to rely on governments for shelter.

Anne Stanley (Werriwa, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak in opposition to the motion moved by the member for Goldstein. I'm deeply disappointed but not at all surprised by the premise of the motion. As Paul Keating said recently, 'You can't eat your home, nor when you get to retirement should you have to sell it to live.' Superannuation was an agreement of the accord process between workers, employers and the government during the early years of the Hawke and Keating governments. Workers understood then that putting their wage rise into super would help them have a better retirement and not be beholden to governments for pensions or support. Ultimately, governments knew at the time that it would assist the budget if most people had sources of income in retirement and didn't have to rely on pensions.

Compulsory superannuation is one of the nation's greatest reforms. Like the NDIS, Medicare and successive higher education reforms, super is a compact between the government and Australians. Despite your circumstances, despite your disadvantage, the government will provide the backing and support for you to fulfil your potential and achieve a decent standard of living. In return the nation is better able to harness its best and brightest. It's a new social contract. Like the majority of this nation's great reforms, it of course came from a Labor government, and, as with most great Labor reforms, it's the Liberals who are hell-bent on tearing it down—probably because they didn't think of it first.

This motion isn't fooling anyone. Compulsory superannuation, particularly through industry funds, benefits workers, so the Liberals attack it. It's part of a decades-long ideological war by the party against compulsory super. They opposed it when it was introduced. John Howard said one thing before the 1996 election and another after it, freezing increases to super. Tony Abbott froze it again when he came to power, and once again this government is floating a freeze to super while backbenchers seek to attack it and undermine it in other ways.

There have been numerous attempts by this government to undermine and destroy compulsory superannuation and industry funds, but what have the numerous commissions, inquiries and reports into superannuation found?

The Australian retirement income system is effective, sound and its costs are broadly sustainable.

That's from the recently released Retirement income review: final report. What did the Productivity Commission report in 2018 say about industry funds and retail funds? On performance:

Not-for-profit funds, as a group, have systematically outperformed retail funds.

On governance:

… some retail fund directors, although considered 'independent', are on a number of related-party boards, which raises questions about their independence and fuels perceptions of (and sometimes actual) conflicts of interest.

And then there's the scathing Hayne royal commission. It's recommended strengthening regulation and banning what it called 'the hawking of superannuation'.

What each of those inquiries and reports understands is a simple concept on how best to regulate, govern and manage superannuation. That is to act in the best interests of the fund and in the best interests of the members. The member's motion seeks to equate homeownership and superannuation as a mutually exclusive trade-off. The reason young people can't afford a home or find it difficult to qualify for a home is far more complex than having to put money into super. We need to look at the continued casualisation of the workforce, with labour hire companies that pay the lowest possible wage with no guarantee of any leave or a job at the end of the contract. We have, unfortunately, seen the consequences of that in this pandemic, when the choice to go to work when sick has dire outcomes.

Furthermore, in Sydney, you require an average of $80,000 for a house deposit. A 26-year-old is likely to have less than a third of that in super. The best way to get Australians into the housing market and to provide safe, secure housing is not to smash their retirement savings. It's by constructing more and repairing existing social housing, expanding the First Home Loan Deposit Scheme and offering grants to first home buyers who will build their first home. As Paul Keating, the architect of compulsory superannuation, said in 2007, 'When you hear conservatives these days speak of superannuation as a tax on employers they are either ill-informed or they are lying.' It seems not much has changed in 13 years. (Time expired)

Dave Sharma (Wentworth, Liberal Party) Share this | Link to this | Hansard source

I rise in support of the motion moved by my friend the member for Goldstein. Like with most Australian communities, homeownership represents a key milestone in the lives of many of my constituents, and ideally it's the start of their journey towards financial freedom, economic security and an enduring sense of comfort in retirement. I am not anti superannuation, but I am pro homeownership. As the Retirement income review found, housing status is a strong determinant of retirement incomes. People who own their home outright have generally lower housing costs compared with renters as well as a store of wealth that can be drawn on in retirement. People who rent may require incomes similar to working life to maintain living standards in retirement.

The incomes review also found that the home is the most important component of voluntary savings and is an important factor influencing how people feel about retirement. Homeowners, as you would expect, have lower housing costs and an asset that can be drawn on in retirement. The review also found that, if a decline in homeownership among younger people is sustained into retirement, there will be an increasing number of retirees who rent. The system, as we know, currently favours homeowners such as through the exemption of the principal residence from the age pension assets test.

Using superannuation's assets more efficiently and accessing equity in the home can boost retirement incomes without the need for additional contributions. That was one of the main findings of the Retirement income review. Whilst the Retirement income review flagged a range of measures, including the Pensions Loans Scheme, I think there are others that are worth exploring, as my colleague the member for Goldstein has highlighted.

Over the past 40 years, increases in home values and delayed workforce entry have contributed to falling homeownership rates. These factors have particularly effected lower-income and younger households. Overall homeownership rates have declined from around 70 per cent in 1981 to 67 per cent in 2016. Whilst, among people aged 55 and over, rates of homeownership have been consistently high, homeownership has fallen among younger age groups. The median age of people buying their first home increased from 24 in 1981 to 33 in 2016. The independent Grattan Institute has identified that those aged 65 and over spend nearly 30 per cent of their income on housing, compared to homeowning retirees, who spend merely five per cent. Such a significant disparity in cost represents an equally significant disparity in terms of quality of life in retirement.

This government believes in homeownership. We believe that individuals should be empowered with the freedom and the choices to make the best decisions in the interests of themselves and their families. We also believe that everyone should be able to look forward to a safe, happy and secure retirement. This means creating a superannuation system that supports these goals and serves as a contributor, rather than a detractor, to these goals and aspirations. A superannuation system that holds back the property ownership ambitions of all Australians is a superannuation system that is in need of reform. Prior to the introduction of compulsory superannuation, most Australians worked to save and invest in property. It was the financial priority of most households, with neighbourhoods built on the back of this shared local interest. Fast forward three decades, though, and we've seen property ownership rates fall, from 52 per cent in 1995-96 to 36 per cent just a few years ago, for those aged between 25 and 34. Meanwhile, the superannuation system's assets under management have grown from $221 billion to $3.1 trillion over this same period.

With initiatives like the federal government's First Home Super Saver Scheme and First Home Loan Deposit Scheme, interest rates at an all-time low and responsible lending reforms on the horizon, it is a good time to buy a home. But the biggest barrier faced by young Australians who want to buy their first home is saving for a deposit. As Association Superannuation Funds of Australia data shows, Australians between 30 to 34 have an average of $38,000 in superannuation which they could use for a deposit if only they could access it. As I said, I'm not anti super, but I am pro-homeownership. As the early access scheme for superannuation showed, there are many Australians who have come to realise that the money in superannuation is their own money. Australians should have the freedom to choose how they best save for their retirement.

Ged Kearney (Cooper, Australian Labor Party, Shadow Assistant Minister for Skills) Share this | Link to this | Hansard source

I rise to speak to the motion moved by the member for Goldstein. He just can't help himself! He and his coalition colleagues hate industry superannuation and, by extension, the superannuation guarantee charge, the SGC. The fact that the SGC is slated to increase gradually, from 9.5 per cent to 12 per cent starting next July, is sending him and his colleagues apoplectic. The fact that unions founded industry super and that employers, along with the unions, run the sector sends his rage into overdrive—not to mention that the average returns of industry super far outweigh those of his mates in the retail sector and probably those of Wilson Asset Management. He can't stand it!

But now the COVID pandemic has given the member for Goldstein and this government an excuse to rob workers of their SGC increases, rob them of retirement wealth and undermine industry super all at the same time. But he isn't the first to do this, I'm sorry to tell him. He's simply the last in a long line of Liberal super haters, from John Howard to Tony Abbott. Every time the coalition can, they find an excuse to defer legislated increases to super.

In this motion, the member argues that owning a house is more important than super. I for one think that having a roof over your head is important. It's crucial, especially for older, single women. Having secure housing in retirement is as fundamental to a decent standard of living as universal health care or a decent social security system. But the member for Goldstein sets up a false argument, as though owning a home and a decent retirement income are mutually exclusive. To own a home, you shouldn't have to rob your retirement to pay for it. As many commentators have pointed out, allowing workers to access super for first home ownership will simply drive up house prices. Saul Eslake, a leading independent economist, told Greg Jericho in The Guardian recently that any policy that puts more cash in the hands of Australians to buy houses means they would ultimately end up paying more for housing. So not only would homes be more expensive; those same workers who dip into their super will have hundreds of thousands less in retirement savings.

You can't separate this out from the fact that Liberals have an appalling record on housing affordability and social housing. There was the measly budget announcement of $1 billion to assist the National Housing Finance and Investment Corporation to guarantee social housing projects built by community providers, allowing a small reduction in their repayments. There was no direct investment, not a single new dwelling and not a single cent for actual houses.

Mr Tim Wilson interjecting—

Thank you, member for Goldstein. Compare that to Victoria's budget announcement of 12,000 housing units at a cost of $5.3 billion. Even the Liberal Party in New South Wales committed an extra $812 million to social housing. The Morrison government should be ashamed of itself. Then there is the ludicrous argument that an increase of one per cent in SGC will see a one per cent less increase in wages. The argument is that, without the SGC rise, workers will have more money to pay off their house. I know that workers out there will be laughing their head off at this argument. Very few workers have ever come across an employer who says, 'Wow! That change to the legislation means I don't have to find an extra one per cent for super this year. I'll give you a one per cent wage rise instead.' In your gut, you know that this is laughable.

I am glad the McKell Institute has rejected this argument as well, based on economic analysis, not just a gut feeling. The McKell Institute concludes:

... we find no evidence to suggest that a one percentage point increase in the Superannuation Guarantee minimum contribution rate will lead to a ... reduction in wage growth.

In fact, they say:

... our analysis suggests that increasing the Superannuation Guarantee ... will give workers a share of productivity they have not been getting in the market—with minimal loss, if any, to their cash wages—

as if wages were skyrocketing anyway. Under this government, real wages have gone backwards and private sector wage increases struggled to make two per cent a year before the pandemic. Insecure and gig work has exploded, and the government has nothing to help 40 per cent of workers in precarious work. They can't qualify for a home loan, no matter how much extra they get in their wages, because they're in precarious work. Let's be clear: a deferral of SG increases, which is what this motion sets out, is a grubby attack by the member for Goldstein on industry super.

Debate adjourned.