The Coalition’s 'Super for Housing' policy will make housing more expensive and enrich existing property owners. Maybe that’s the point?

One week before the 2022 election, the Coalition mooted the idea of allowing first homebuyers to tap into their super to buy property. This has remained their policy since, and it has subsequently received more attention, thanks to the efforts of Senator Andrew Bragg and a recent Senate Committee report on improving outcomes in the retirement system. Previous polling showed 57% of voters supporting the idea.

This should concern anyone who wants to make decent housing more affordable and accessible for Australians. The Coalition’s policy would directly make the problem worse. But don’t just take my word for it: we can heed the word of the Productivity Commission, in their August 2022 report on the National Housing and Homelessness Agreement.

This report was the definitive word against demand-side subsidies — which is exactly what the Coalition’s proposal is. The Commission argued strongly against government subsidies for home ownership, pointing out that there’s not a clear rationale for governments to subsidies ownership and that subsidies have a strong risk of increasing wealth inequality. They acknowledge that home-ownership has a positive financial impact in retirement, but they say that the challenges for renters in retirement should be addressed through targeted measures like the aged care pension and rent assistance—not through subsidies for ownership.

The Productivity Commission also points out that demand-side subsidies are likely to make affordability worse by increasing prices. This makes sense: if buyers have more financial resources, more people can spend more money on housing. This is likely to result in higher house prices. "The primary beneficiaries," reports the Commission, "will be sellers rather than buyers." 

The Commission’s report came out late in 2022, so while we might pardon the Coalition for having come up with this idea in the first place, it’s curious that they have persisted with their proposal in the face of this evidence. 

But the Coalition’s position makes more sense if we consider that maybe something else is going on. The Coalition has fervently defended policies like negative gearing that benefit existing property owners and make it harder for potential home-buyers to enter the market. It actually makes sense that they would propose a demand-side subsidy -- super for housing -- that the Productivity Commission warns would push up house prices and benefit sellers over buyers. John Howard insisted that Australians wanted to see the value of their homes go up, and letting buyers access more money is one way to do that. 

Really though, the biggest benefit of making 'Super for Housing' their flagship policy is that it allows the Coalition to avoid doing something else that might actually work. The Coalition opposed Labor’s 2019 proposal to wind back subsidies for wealthy property investors. In this term of parliament they’ve opposed Labor’s Housing Affordability Future Fund. At the state level, Coalition governments (and, to be fair, some Labor governments) keep opposing efforts to improve conditions for renters. This is not the conduct of a party that is trying to improve things for renters. 

I am heartened to see a growing number of Liberal MPs speak out against the housing crisis and say that their party should develop policies to appeal to renters. But every time I see the actual policies, I’m disappointed: so far they always involve a bait and switch, handouts to property owners, and a false promise of improved affordability. The Coalition is fixated on ownership, while refusing to consider improving the rental experience for the growing number of people renting long-term, which could be done through ending unfair evictions and winding back investor subsidies to support more public housing.

I understand how someone wanting to buy a home might like the sound of having more money to spend. But consider that everyone you’re bidding against will also have more money to spend. Your extra $20,000 will be matched by their extra $20,000, and it’s the seller who will be taking the money from your super balance and sticking it away in their bank account. Instead of accepting smoke and mirrors from the Coalition, we need to demand evidence-based policies that are actually about making housing better, including for renters, not just another hand-out to existing owners.

Joel Dignam is the former Executive Director of Better Renting.