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Super Housing Fix: Super Bad, Or Super Sort-Of-Good?

The idea is to help first-time home buyers crack the fraught market. But it's complicated.

CANBERRA -- There's a complicated debate amid Australia's housing crisis about access to superannuation: should first-home buyers be allowed to dip into their savings nest-egg to break into the market?

It is easy to understand the basic argument for the idea to let young people dive into forced savings meant for retirement 30-40-50 years down the track. Desperate time, desperate measures. As the Treasurer Scott Morrison said this week, it now takes eight years to save for a home deposit in Sydney and six years in Melbourne.

But it's a far more nuanced economic conversation than that.

For most young people, home ownership appears an impossible dream.

Despite the many causes of the current housing affordability crisis, the Turnbull Government has promised to take it head on and has raised expectations of a compelling suite of measures in a centrepiece housing affordability package in the May budget.

Prime Minister Malcolm Turnbull, of late, keeps pointing to the need to fix housing supply, but the idea of dipping into super keeps coming up.

So what's the go?

The Turnbull Government is actively considering the idea, first raised in the 1990's by then Prime Minister Paul Keating. In fact, two of the three main ministers in charge of economic policy -- Morrison and Assistant Minister to the Treasurer Michael Sukkar -- are in favour of the idea.

Former Prime Minister Tony Abbott also thinks it is a"good idea" as "you want your money to be as useful as it can be".

Now it is a distinct possibility that the super-for-housing idea will not become reality as it sinks under the weight of Turnbull, other senior ministers and general economic opinion.

Many people -- respected economists, Labor, super industry types, Peter Costello, the "godfather of super" Paul Keating, academics, the property council and even a 2015 version of Turnbull -- have trashed the idea: from a "thoroughly bad idea", "madness," "horrid," and "lazy" to a "raid on people's retirement savings".

So why is this super-for-housing idea being taken so seriously?

It is the most prominent of regular demands to use superannuation for non-retirement purposes. Super is already being used, sparingly, for severe financial hardship, IVF and life-saving weight loss surgery.

The Opposition also argues that the Coalition is not generally a fan of universal superannuation. There are also cries of "vested interests!" with a prominent super industry lobby worried about losing funds and related fees.

But this is supposed to helping young people get a leg up. The super-for-housing idea is about people using their own money. And on one level, why shouldn't they?

Would not owning your own home, in your old age, would be the aim of a happy retirement?

Super-for-housing also ties into the idea that younger people are thinking about the "now" rather than 40 or so years down the track. And the "now" right now is getting that impossible deposit together.

This idea has "freedom" written all over it. A freedom that many Coalition MPs champion. Young people would be able to what their superannuation funds already do: invest in real estate.

Where is the consumer control over what happens to their super?

There are so many unanswered questions and this is a debate about generations and inter-generational theft. Home ownership has long been the largest and safest form of household saving, but increasingly it is not young people that do it.

According to the Australian Bureau of Statistics, investors and people changing homes dominate the residential real estate transactions. New buyers are only around 13 percent of the market.

Some regard the Australian housing market as a high-risk investment.And so, looking beyond the "now," a super-for-housing swap may very well create a far bigger problem to fix later on.

The whole superannuation system was set up by the Keating Government to deal with the budget disaster of an aging population and the stress of Australia's retirement income system.

But here we could have -- with renewed stress on the retirement income system, taking money out the mega +$2 trillion super system -- what has been referred to a budget time bomb, causing a blow-up in future government pension payments and increased taxes.

The main arguments against the idea are that it would inflate house prices and the general housing bubble, trash future retirement incomes and heighten risk in the banking and mortgage sector. And transferring even more wealth from younger home buyers to older home-sellers.

What 30-year-old has much saved super anyway?

If it was to happen, it would have to be heavily restricted. It could, in no way, be a free-for-all. The transfer of money from a superannuation fund could be temporary, paid directly to the vendor and it could be made to be returned upon sale.

It could be capped and it is hard to imagine anyone being able to withdraw the entire super pool of funds.

What about placing the super funds in a mortgage offset account? It could earn interest while the principle is not touched. Safe as houses! Or is it?

The budget is a month away and the big decisions are being made now.

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