Homeowners should be able to pay their super into their mortgage offset accounts, the Coalition says, as it looks to expand its signature super for housing policy.
Andrew Bragg, appointed the shadow assistant minister for home ownership in the March reshuffle, has confirmed the opposition will push for first home buyers to be able to withdraw more than the $50,000 proposed before the 2022 election.
In an interview about his new portfolio with Guardian Australia, Bragg also dismissed claims the policies would inflate house prices as “rubbish” and said the opposition will consider how it can “coerce” states and councils to increase density.
On Thursday the Senate inquiry into the retirement system chaired by Bragg was extended for 12 months to June 2025, with an expanded remit to consider ways to use super to increase home ownership including establishing “super/mortgage accounts”.
One week before the 2022 election, the Coalition proposed allowing first home buyers to access up to $50,000 of their super for a deposit, on the condition they pay the lump sum and a share of any capital gains back into super on sale of the property.
The opposition leader, Peter Dutton, recommitted to the policy in his first budget reply, although it is being recalibrated ahead of the next election.
Bragg said given the average deposit in Sydney is $150,000, it’s a “big thing to deny” people – such as a millennial with $90,000 in their super account – access to that capital.
“Because in the absence of the bank of mum and dad, a lot these people will never be able to get into the housing market,” he said.
Asked if he thinks first home buyers will need access to more than $50,000 from super given increases in prices, Bragg replied: “Yes I do.”
Bragg said the inquiry is considering how the super for housing policy could “be built upon” including increasing the “scope of the policy” and “whether it could provide more assistance through the life of a mortgage – such as an offset”.
“I want Australians to own their own houses as soon as they can. And we know the key determinant for success in retirement is your home ownership status, not your super balance, so … if people have faster access to owning a house, that’s good.
“A lot of Australians are getting to preservation age and using their super to pay down their mortgage.
“Why are we forcing people to pay all this interest to banks, if their own money could have retired their mortgage in earlier years? It just seems like warped thinking – I’m trying to unwarp this world of vested interests.”
Bragg said another live question in the Senate inquiry is “does all the money need to go back into the super scheme, or could it just be left in … the housing sector”.
“Someone with a big Sydney mortgage, with a couple of hundred grand in super, say 50 years of age – they could use their super to cut their interest costs, and get their home owned by themselves much faster.”
Ahead of the 2022 election, the McKell Institute modelled accessing super for housing, finding it would both push up prices and disadvantage people in retirement given super has historically outperformed the housing market.
Bragg said that claims of a price impact were “massively exaggerated” and had been exposed as a “load of rubbish” by economist Cameron Murray, the Centre for Independent Studies and the Grattan Institute.
Brendan Coates, the economic policy director at Grattan Institute, agreed that modelling by the Super Members Council suggesting a $75,000 price rise in Sydney “seems too big” but the policy “certainly would raise prices”.’
Coates said the Coalition policy “isn’t going to help home ownership much”.
“Those who aren’t buying homes any more don’t have much in super,” he said, citing a median super balance of less than $5,000 for the poorest 20% of people aged 25 to 34.
On housing supply, Bragg said the Coalition would “think about how we can incentivise states and local councils to provide more density in cities”.
“The question is: what can federal government do to coerce development? And that’s something we’ll look at in our policy process.
“Labor’s housing targets are a joke … The state government in NSW has repeatedly said they won’t meet their targets, and Canberra is doing nothing … their targets on supply are unenforceable.”
Asked if states should be penalised for failing to build houses, not just rewarded for meeting the target, Bragg said that “all options should be on table”.
Labor has a suite of housing policies including its help-to-buy scheme, to help 10,000 homebuyers a year through shared equity, which is being held up in parliament by the Coalition and Greens, who want Labor to cut housing investor tax concessions.
