The prime minister is betting on a super play to win over young voters by allowing them to take $ 50,000 from their super to buy their first home. It’s a politically sensible move, but it was made by the super-industry and the guy who created the obligatory super-former treasurer and prime minister Paul Keating.
Not known for his subtlety in words, PJK called it a “frontal attack” on the super, linking it to his belief that liberals “hate the pension system”.
He thinks the coalition likes to keep ordinary Australians in poverty and retirement, which shows how good he is in politics, but the reality is that Liberals are more afraid of the industrial sector’s superfund power, which has now become a real force in the economy.
Armed with a small number of supermarkets of millions of workers, these funds are now building some of the huge office towers and apartment buildings in our capitals, buying Sydney Airport, voting at annual general meetings against banks lending to coal companies, and advancing. activists ’goals for climate change, while doing a pretty good job of creating good returns for their members.
They are powerful and they are in favor of Labor because they left the trade union movement. In fact, the coalition prefers the superindustry, which is more dominated by financial institutions that are more on their political wavelength.
So there’s a political reason why ScoMo and the coalition didn’t care too much about promoting super due to the fact that Australians are getting into the property.
And yet there is another political reason that Australians also love property more than super. And there’s a reasonable argument that because mandatory super-fencing now takes up 10% of a young person’s salary, it’s much harder for them to buy a house than it was for baby booms, many of which had no superego until 1992, when Paul Keating made it mandatory in the amount of 3% of their salary.
And yet there is an economic / investment argument that property may be a better investment than super for those buying in the right area where prices are skyrocketing. Also, before retirement you are taxed at 15% super, but a person’s primary property is a capital gain that is not taxed when you sell it and you can sell it at any time and access your money, unlike super.
Your super retiree is not taxable, but your retirement years are increasing, so you can understand why many Australians prefer property over super.
As a financial planner, I like both. Seeing a client with growing real estate and a superportfolio makes me suspect that they are heading in the right direction towards a financially satisfying retirement. But young people feel unable to get on the property ladder because of the high cost of housing and the subsequent difficulty with getting a deposit, and also with the fact that they are losing 10% of their salary in super.
So ScoMo has both political and economic merits, but it will reduce someone’s super, and that will mean they will probably have to reduce and sell their core assets when they retire, and their superbalance is too low .
The Super Housing Buyers Scheme will begin operations in July 2023 and will not be limited by price caps on the income someone can earn or the value of the property they wish to purchase. Each competitor can access up to $ 50,000, and this will bring more people to the real estate market, which will not only increase the number of buyers, but also push prices up.
SMH reported that Industry Super Australia CEO Bernie Dean estimated that the use of super savings would lead to a 16% rise in property prices in Sydney, 9% in Melbourne, 8% in Brisbane and 14% in Perth. I suspect that the way he did it is based on several assumptions and assumptions, but his overall argument has merit.
These homebuyers will need to save up to 5% on deposit before gaining access to supermoney, and will be able to use up to 40% of their super savings in their funds.
SMH says: “It can be used in conjunction with the Housing Guarantee Scheme and the Housing Supereconomy Scheme, as well as with a policy also released yesterday that allows all Australians over the age of 55 to‘ shrink ’their homes and invest up to $ 300,000 in income per person to superfunds outside the existing contribution limits ”.
This will actually allow older Australians with bad superbalances to sell their home, buy something cheaper, and the couple can allocate $ 600,000 at a time for super!
It’s a smart political game with contradictory consequences, both positive and negative, but after a million people have already voted, isn’t it too late this good idea of an election?
I guess we’ll find out on Saturday.