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Not such a super way to buy your first home



As a millennial, I frequently find myself being told by politicians and journalists to stop complaining about housing affordability. It's all about working harder, saving more and, for goodness' sake, keeping off the avocado.

Broken piggy bankWe're often painted as living too much in the moment with little regard for what lies further down the capitalist path. I understand where they are coming from. It's important to self-motivate and navigate personal savings — but this should not be at the cost of future wellbeing.

The Coalition in the past week has been divided over whether young Australians should be allowed to withdraw from their superannuation to make deposits for first homes. Under this scheme, Australians could use the money earmarked for their retirement to gain assets during their working life. 

Tony Abbot, Craig Kelly, Ian Goodenough and Tony Pasin have all voiced support for the idea which remains on the budget agenda. Nationals Senator Matt Canavan told ABC radio this economic reshuffle has been used in other countries, but he didn't give any examples of where it has been successful.

The government has asserted the money shouldn't be used for luxuries such as overseas holidays, but thinks that if superannuation can be invested in other people's assets and equities, then individuals should be able to use it towards their own.

A mentality of individual investment when it comes to super may be a dangerous guideline for young professionals to follow. A few years of super payments in a career may seem trivial, but Industry Super economist Stephen Anthony warns that with compound interest, it could mean losing as much as 12 years' worth of payments from your fund.

As a young person, I'm concerned about using a system which was put aside for our economic welfare in retirement as another savings account for instant gratification. If anything, it seems the government is trying to solve the housing crisis not through direct action, but by encouraging young people into lifelong debt as a quick fix.

If the property market is a fire, it feels like the government is giving us all a fire blanket instead of fighting the engulfing flames.


"Perhaps under this scheme there would be an argument for young business owners to be able to withdraw to further their entrepreneurial ventures, the same way a first home is considered to be an asset."


Prime Minister Malcolm Turnbull has been warning against using money that was intended to give Australians 'a dignified and comfortable retirement' for such a purpose. Not to mention, super was devised in the first place to alleviate economic pressure on the welfare system by eliminating a demand for retirement pensions. With life expectancy on the rise, government should be safeguarding against an ageing population and the burden this will put on taxpayers. Have we lost sight of super as a form of welfare for all Australians?

The idea behind super wasn't to save for Australians, but to secure their financial situation when they couldn't work anymore. Perhaps under this scheme there would be an argument for young business owners to be able to withdraw to further their entrepreneurial ventures, the same way a first home is considered to be an asset.

More concerning is what would happen in the case of a housing crash, if money drawn from super had been used on high interest home loans. Credit agency Moody's has warned Australia could be the next country to experience a crash like what was seen in Dublin. Young people in Ireland are still navigating financial ruin and struggling to move out of their parents' homes even years after the property bubble burst, leaving people to pay off loans for assets which were suddenly worth a pile of bricks.

When you're in your youth it's hard to visualise how your life will turn out. Perhaps I'll still be working long after my hair has turned a wispy grey. Maybe I'll be sickly and be pressured to buy expensive drugs which will keep me alive. I fear the idea of picking up the phone and calling my super fund only to be told the lifeline I need was used up by a decision I made in my mid-20s.


Francine CrimminsFrancine Crimmins is studying a double degree of Journalism and Creative Intelligence & Innovation at the University of Technology Sydney. She is on twitter as @frankiecrimmins. Francine is the recipient of Eureka Street's Margaret Dooley Fellowship for Young Writers.

Topic tags: Francine Crimmins, housing, superannuation



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Existing comments

If all goes well, Francine, you statistically have a long period of retirement to enjoy so breaking the compound interest momentum for a home is unwise. The removal of negative gearing, looking at capital gains tax, stamp duty for first home buyers, receiving fair tax for our resources and from big companies such as Google, Apple etc who draw income in Australia, ensuring those who are well off do not avoid paying fair tax through artificial means, trusts, offshore arrangements etc Basically it's about social justice and a fair go for all but the dominant philosophy is 'each one for themselves said the elephant as it danced among the chickens'. Dipping into the superannuation slow growing honeypot - no matter how laudable the context at the time - attacks the accumulation phase and should be ruled out not just for housing, but for all instances.

Peter Donnan | 14 April 2017  

Not a good idea leaving you with less income when you retire from work. Also superannuation is subject to the vagaries of the casino, the so-called stock market. Another GFC will see superannuats lose lots of money from their super accounts. I wonder whether Australian Federal and State Governments have considered investing in public housing as a solution to the current housing crisis. Good old Keynesian economic thinking is better than neo-liberal economics.

Terry | 18 April 2017  

Can't these foolish people understand that their superannuation proposal will INCREASE the cost of housing, make the situation WORSE. About $11b a year is lost to schools, hospitals, roads, infrastructure by the negative gearing swindle. The ALP suggestion of removing it from new investments is just a token: get rid of it completely and immediately. It will bring on a recession of course. You mention Dublin - Ireland has clawed its way out of the bust caused by irresponsible bank: Australia could do the same. BITE THE BULLET.

Frank | 18 April 2017  

Thanks Francine for your article. I share your concern for the economic wellbeing of young people. Unfortunately, the current government won't address policy positions that inhibit an improvement in the market access to housing by young people. Negative gearing, capital gains and State government approaches to stamp duty all serve the political interest of others but certainly not young people seeking a house. I agree with Peter. I return to a fair go requires a rebirth in Australia in order for a young people not to be locked into the working poor. The current generation of young people will have their taxes supporting baby boomers in their retirement! Baby boomers should take up the challenge and respond in goodness to what is required to support a fairer society for all and particularly young people.

Michael McDonald | 18 April 2017  

Hi Francine, No one is compelled to go into debt. We all make our own decisions and should assess our own risk to debt. That used to be the advice from the “bank manager”. If Super is used to fund a property, prices will rise further. Let the market fall. It won’t be catastrophic. I agree that Super should be left for its intended purpose- but many will access their Super at retirement to pay off the mortgage at the back end. There needs to be other policy interventions to address this problem. Go have a look at Singapore. Perhaps some Creative Intelligence is needed....

Peter | 18 April 2017  

Francine, you could add the reality, that if thousands of young earners began to use their super for their housing, in a market driven housing economy, prices would escalate! Housing provision should be based on social policy, not just market forces.. I agree with Peter Donnan as well as you.

LOUIS VAN LAAR | 18 April 2017  

A basic house in Australia would cost a few thousand dollars, including the land, if the state got out of the way. Angsting over these trivial policy suggestions is a waste of time.

HH | 18 April 2017  

Francine, I really feel for people like you who have been sold out by The Federal Government. They, the Government know what to do but they will not do it. Property prices commenced the huge movement when the Howard/Costello halved the Capital Gains tax and left negative gearing in place. The answer is a combination of a number of issues that need to be dealt with. First abolish or reduce negative gearing, adjust capital gains, combine with the States to remove stamp duty and bring in a land tax, work with the States to make land available for housing and finally strengthen the laws which limit foreign buyers of housing. Ron.

Ron Hill | 18 April 2017  

By allowing youth to dip into their super savings to buy a house, the government is eroding the effectiveness of super and peoples financial security come retirement. By extending the age at which people can access super, allowing for redundancies in the mid to late 40's, nest eggs cannot grow as they should. Subtract withdrawls by youth from the super funds investment pools, and the result is less return for everyone super fund member. Government policy is therefore attacking superannuation from both ends. The LNP just hates the socialism of superannuation. Very few will enjoy their retirement as it was meant to be.

Cam BEAR | 18 April 2017  

As a recent retiree I think the idea that people could use their superannuation to buy their first house is the silliest idea that I've ever seen. Super is for retirement, not for buying houses when you are 20-something. And as yet, I haven't seen any analysis of why housing is so expensive. Let's look at reducing negative gearing first.

Eric | 18 April 2017  

Many seemed to have swallowed the argument of the superannuation industry and the negative gearers: vested interests if ever there was one. An investment as a deposit on a house compounds far faster than any super fund because it is leveraged five times. Housing appreciates, without bubbles at about the same rate as super. It also reduces rent paid. This scheme also effectively reduces the benefits of negative gearing as there are less renters. The best financial investment most people make is buying a home to live in. Apart from social housing schemes this is the best option to bridge that deposit gap. The Andrews government floated a co-ownership scheme, what about your super account as a co owner as well? It’s a weird argument put forward that if you let more FHB buy then the market will sky rocket, I thought we wanted more FHBs. More FHB, less renters, less investors, near equilibrium. Denying FHB access makes NG more attractive.

Bruce | 18 April 2017  

I really cant see what difference it makes - using the money now to put a deposit on a home, or leaving it for retirement, People seem to be forgetting that money spent paying rent is no longer going down the drain when someone has a mortgage. And if by chance the early dipping into the super cash cow did result in a shortfall in retirement income at 65, at least people will have a roof over their heads. And can I also add that I'm tired of hearing people whinging about the housing market and how hard it is. If young people were more adventurous and stopped expecting to live in 3 story terrace house or a 3 bedder, garage and 1/4 acre block, they might find a way to get into the housing market in a more creative way that takes them out of their comfort zones.

AURELIUS | 19 April 2017  

Aurelius is correct on this. It's just a pity that the state demands that new homes conform to standards that drive up the price exponentially. In the good old days, people started with four walls and a roof and built from there as their wealth and family increased. Perfectly sensible. So of course the state had to make it illegal.

HH | 19 April 2017  

taking money from super for housing was tried in England all it did was push the price of housing up. dont touch super

BERNARD TRESTON | 20 April 2017  

Hi Francine, I totally agree with most respondents responses to your well thought out article. . I feel very sorry for your generation as most of you will miss out on owing your own home if you happen to live in Sydney, Melbourne or Canberra . Sure even for us , the mortgage payments involved much pain. As a recent retiree , I can't see for the life of me why young people should tap into their meagre Super to fund a deposit on a house. prices will jump making it even harder to find the deposit. Then there is the impact on retirement savings as you will most likely live longer than my generation. My youngest daughter now almost 30 has Buckley's chance of buying her own house with out our help. We had to assist our older daughter and her hubbie to buy their house by being guarantor for them. There is a huge economic cost .Ditch Negative gearing and Capital gains tax concessions as I can assure you that contrary to government claims, teachers can not negative gear to buy investment houses- my wife is still a teacher and I am a retired one!!!

Gavin | 26 April 2017  

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