16 May 2022
Responding to yesterday’s superannuation and housing announcement by the Coalition, ACOSS CEO, Dr Cassandra Goldie said:
Proposed super for housing policy
“The proposal to allow people to use their superannuation for a first home deposit joins a long line of policies that inflate the cost of housing, making it less affordable for people on low and modest incomes, including:
- Negative gearing and capital gains tax concessions
- Various first homeowner schemes
- The government’s (now ended) Homebuilder scheme.
“For many years, governments have rejected proposals to allow people to use super for home deposits because they knew it would only inflate prices and make matters worse.
“This is poor policy and should not be implemented. Instead, the next government should ease the housing affordability crisis by:
- Investing substantially in social housing.
- Lifting income supports, including JobSeeker and doubling Commonwealth Rent Assistance.
- Removing negative gearing concessions and halving the capital gains tax concession.
Proposed housing for super policy
“This policy adds to a succession of recent policy announcements that make it easier for wealthy older people to transfer their savings into superannuation to take advantage of generous tax concessions, including removal of the work test for people aged 65 to 74 years so they can keep making contributions to superannuation.
“At a time when younger generations are struggling to break into the housing market, it is unfair and unacceptable for wealthy older people, who were fortunate enough to buy when prices were much lower, to be handed yet another opportunity to avoid tax by shifting more of their savings into super.
“The priority for the next government should be to help people who lack the resources and opportunity to buy their homes, including older tenants who face the uncertainty and hardship of renting their homes throughout retirement.
“The next government cannot afford to maintain existing tax breaks for superannuation for retired people, let alone extend them. Once a person retires, the annual investment returns of their super account – including interest payments and capital gains – are tax-free. This is an extraordinarily generous and wasteful concession when governments are struggling to pay for decent health and care services for an ageing population.
“The best way to encourage older people to ‘downsize’ their homes is to ensure that affordable options are available to them where they want to live – often this is close to where they live now. Financial incentives haven’t worked and won’t work.”
Proposed easing of pension assets test
“ACOSS does not support the proposal to exempt the proceeds of sale of a person’s home from Age Pension income and assets tests for two years.
“One year is long enough for people to reorganise their finances after selling their home and in most cases, they have purchased new accommodation by then in any event. Extending this concession would be inequitable since many people on the Age Pension have few or no assets to fall back on.
“Instead of easing assets tests for those who are better-off, the next government should fix income support adequacy, including doubling the value of Commonwealth Rent Assistance for those who are really struggling.”