Liberal Senator Andrew Bragg wants the Morrison government to redeploy an emergency scheme introduced at the height of pandemic letting workers withdraw $20,000 from their superannuation for other purposes such as first home deposits.
In a speech to be delivered at a launch for Arch Capital founder Nigel Baker’s new book The Super Secret on Thursday evening, Senator Bragg says the federal government’s early access scheme had been “one of the most successful policies of the coronavirus recession”. The policy allowed struggling workers who had lost hours or been made unemployed during the crisis to access up to $10,000 twice from their funds.
Between April 20 last year and January 31, the Australian Prudential Regulation Authority recorded $36.4 billion worth of payments to 3.5 million people under the scheme. The superannuation system is worth about $3 trillion in total.
“It was hotly contested by Labor and the super industry but it worked. It was a success for two main reasons: firstly, it helped Australians improve their personal balance sheets, and secondly it drove engagement with super,” Senator Bragg said.
“By breaking the seal of preservation and allowing people to access their own money Australians realised super wasn’t monopoly money that fell out of the sky only to be locked away and eaten by fees and junk insurance,” he said. “We should consider using this scheme again in future but for targeted policies.”
One of the ways he thinks this could be used is for future crises or other situations leaving households in severe financial stress. Currently, people can apply to the Australian Taxation Office for early access to their super on compassionate grounds for the coverage of some medical treatments, which has allowed some people to pay for IVF, weight loss surgeries and other treatments using their retirement funds. They can also apply directly to their funds in cases of financial hardship.
Senator Bragg’s suggestions will rile the superannuation industry, which has been advertising on free-to-air television to publicly raise concerns the government is “meddling” over the possibility of a backflip on the currently legislated rise in the super guarantee from 9.5 per cent to 12 per cent by 2025. Industry Super Australia has previously warned letting first-home buyers tap into super for a deposit will result in higher property prices and would harm the growth of peoples’ retirement savings due to the loss of compound interest.
Senator Bragg’s book on superannuation, Bad Egg: How To Fix Super, recommended the expansion of the government’s existing First Home Super Saver Accounts scheme to allow first-time buyers to not only tap into additional contributions but mandatory super payments. Liberal MP Tim Wilson recently launched a “Home First Super Second” campaign to drum up support for letting young renters tap into super to help them buy a property.
“Super has damaged home ownership, especially for lower-income Australians and this trend must be reversed. Home ownership is more important than super,” Senator Bragg said. “I am not saying that super for housing is a silver bullet, especially in an overheated property market.”
Jennifer Duke is an economics correspondent for The Sydney Morning Herald and The Age, based at Parliament House in Canberra.