Sydney, May 9: New economic modelling has revealed that allowing young Australians to use their superannuation for house deposits could cost taxpayers up to $1 trillion by the end of the century.
The analysis, commissioned by the Super Members Council and conducted by Deloitte, examined the impacts of both capped and uncapped withdrawal policies on the federal budget and housing market.
Under the policy allowing a $50,000 cap on super withdrawals for home deposits, the modelling predicts a potential $300 billion drain on the budget by 2100, with annual costs potentially peaking at $8 billion. An uncapped withdrawal policy could see these costs balloon to a staggering $25 billion per year.
The Super Members Council warns that these policies could lead to significant increases in capital city house prices, further exacerbating the housing affordability crisis.
According to the Council’s CEO, Misha Schubert, “It’s economically reckless. It sets a policy trap for young Australians because it hikes house prices and blows a Budget blackhole in the decades ahead mostly by pushing up age pension costs – which every taxpayer would pay.”
The analysis also indicated that median house prices could rise by nine per cent or $75,000 in Australia’s major capital cities, with the uncapped withdrawal option potentially causing even larger increases.
“Ideas to break the seal on super just leave people with less savings in retirement and a bigger bill for all taxpayers,” Schubert added, emphasizing the broader impacts on future generations. “We all desperately want more Australians to own their own home, but this idea won’t achieve that. It’s unfair to lump the next generations of Australians with a policy that would only make the housing affordability crisis worse by driving up house prices.”
Economists agree that such policies would not only fail to improve home ownership rates but would also lead to higher pension costs due to reduced retirement savings.
The report serves as a critical reminder of the long-term consequences of diverting superannuation funds away from retirement savings, with a call for a sensible rethink on policies that could undermine the strength and success of Australia’s superannuation system.
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