What are we doing? Real wages have barely moved since the Abbott government took office eight years ago and there’s no prospect of them increasing any time soon. In the meantime, property prices will keep rising and our personal indebtedness will go up along with it.
The ratio of house prices to income is moving so far out of whack, helped at least partly by schemes such as negative gearing that push up prices, that future generations may well have to decide whether they want to own a home or have a secure retirement, because having both will be out of reach for all but the wealthy.
We know this because of the push from inside the Morrison government to convert our superannuation system into a property piggy bank. The proponents of this idea argue that it’s more important to own your home than to have a big superannuation balance. Thus, Australians struggling to rustle up enough to qualify for a home loan should be able to pull money out of their super accounts to establish a deposit.
It would build on the increasing practice under the Morrison government for Australians to prematurely raid their retirement savings either to get them through the pandemic or for special compassionate reasons. The government does not like superannuation much. It tried and failed to fit up the industry funds – a joint project of unions and employers – through the banking royal commission. Now it’s toying with the idea of freezing the compulsory super guarantee at its current rate of 9.5 per cent.
On the face of it, the use of super to purchase a home would appeal to quite a few Australians. But it cannot be a permanent fix because it treats the symptom rather than the illness. The proposal exists purely because property today is too expensive and workers have virtually no bargaining power to lift their incomes. Banks and the wages system used to work together to enable people to secure a mortgage and avoid monumental life-long indebtedness. Those days are long gone.
The proposals to buy a home using super and to freeze the super guarantee rate are not government policy. But they’re ideas from inside the government that the Prime Minister and Treasurer have chosen not to rule out. Even if they aren’t taken up now, they’ve been given enough oxygen to enable them to survive within the Liberal Party policy ecosystem for years to come.
Even if somehow the super-for-housing policy ameliorated the problems faced by a substantial number of frustrated home buyers, it would undermine the direction of a retirement policy that has been in place for close to 30 years.
Down the track, there would be pressure for further carve-outs. It would be logical to extend the raiding of super mid-career for, say, school fees or a vehicle that was essential for work or for a business investment. It looks like a good way to appear to solve one problem and create a new one, which is a retirement incomes policy full of holes.
Will anyone in our political system see our property price problem for what it really is and come up with a comprehensive and integrated basket of measures covering taxation, land release, zoning and transport? Probably not because, well, it’s too hard. But going through your working life carrying a mountain of debt is, like most of Go West, not very funny.
Shaun Carney is a regular columnist.
Shaun Carney is a regular columnist. He is the author of books on industrial relations and the life of Peter Costello, and has been commended by the Walkley Award judges for his political columns.