Proposed reforms of allowing first home buyers to access super and mandating super to be paid out of post-tax income has been challenged by the Association of Superannuation Funds of Australia (ASFA).
While welcoming the Committee for Economic Development of Australia’s (CEDA) report, the association said allowing people to access super to buy a house has the potential to increase the cost burden on all other members who would have to pay for it.
ASFA chief executive, Pauline Vamos, said first home buyers are likely to be diverting funds in their 20s and 30s — a time when they will be getting the most compound growth from their super balance.
“While those who rent do require higher incomes in retirement, using superannuation to fund house purchases is merely reducing one asset to pay for another,” she said.
The association said housing affordability is best addressed through policy measures such as release of land, rezoning, stamp duty lowering, the funding of assisted housing, and other measures to reduce costs and increase supply.
Commenting on CEDA’s proposal on addressing inequality by mandating super be paid out of post-tax income, Vamos said data shows that tax concessions applied to super concessional contributions support the bulk of the working community to save for retirement.
“Paying superannuation out of after tax income would substantially reduce the incentive for people to save for their own retirement — a face that is directly acknowledged in the CEDA report,” Vamos said.
“I agree with the premise of the paper, in that we must find smart and sustainable policy solutions to alleviate the poverty faced by many Australians in retirement, particularly single women.
“However, we must avoid the temptation to compromise how we deal with an ageing population in order to fix housing affordability for our younger community. Both are important but different solutions are needed.”
