Joe Hockey has suggested first home buyers ought to be able to tap into their superannuation for a deposit on a house. Works for me. Super is about retirement and we know people who retire without owning their house are prone to poverty compared to those who do.

Plus over a lifetime most end up with a house worth much more than their super.

Houses are generally heavily geared, giving a high return on equity, at least initially, relieve home owners of the cost of rent, and are tax free on sale. Most people who buy a house in their 20s own it by the time they retire.

And owning property gives you a stronger stake in society and builds habits of care and thrift.

I can't see any downside with it, but others like Paul Keating see it as an attack on the poor http://www.smh.com.au/comment/hockey-plans-to-smash-a-worldclass-superannuation-system-20150309-13z1gc.html

Interested in what you all think.

Graham, it's something I've been suggesting for years but, it must be strictly controlled.

My suggests are.
1. Super contributions can only make up 10% of the purchase price, capped at say $70,000. For those born prior to say 1965 this percentage could be increased as they generally have less in super given super didn't start until 1990 or so.
2. Once used, the super money must be repaid to the fund if (a) the property is leveraged in any way and (b) if the property is used to earn income, including renting out a bed room or working from home, (c) if the property is sold.

Once repaid, it must be paid with interest, calculated at the rate of CPI for the time of use.

It should also be limited to a ONCE ONLY option which would help to address the price bubble that would follow as people would not be able to use their super to speculate in the property market, tax free.

Apart from that I see no problem.

sorry, wont work, if you have $70k as a deposit (and so would hundreds of others), house prices would increase. (Supply and demand)

The state governments, councils, property builders and real estate agents, all have a vested interest in increasing house prices.

So you are just adding fuel to the fire, no one benefits

Well, there are already a limited number of exceptions whereby you can access your Super early, such as a medical crisis.

Thereafter, if in the instance of say the so called "working poor," wherein the financial hardship of an individual or family unit was quite plain, and there existed no real prospect for them to own their own home, then on balance the tapping of their retirement savings could well be a positive decision.

In the alternative, if it were to be an open slather run on Super accounts, it would in all likelihood end up a in a situation wherein more people end up wholly dependent on the inadequate Australian Pension system.

But this question really goes to avoid the issue of the real problem, that being the underpinning regulatory environment which has allowed a situation of hyper inflation in the property market to develop.

Whilst the outer chains of slavery may have gone, something of the economic model most certainly remains. Negative gearing has to go and the very manner which allows the state guvments to price and on sell land needs to be fundamentally reformed.

What is important is that the "needs of the many outweigh the needs of the few," and in that regard everyone needing to be housed, as opposed to a very few will be ultra rich at the expense of some people going without.

Now officially cited for both child abuse and torture, Australians need to wake up to the fact of how twisted and evil main stream politicians are, and give someone else a go.

DreamOn, "Now officially cited for both child abuse and torture"

Along with the UK, US and others who have welcomed extensive diversity through large scale migration. They must be mugs in the eyes of other UN members.

The UN doesn't want First World countries to control their borders, or to exercise their right to decide who enters the country and is awarded citizenship. What is the UN's solution, particularly where criminal people smuggling gangs, economic migrants and country shopping are concerned?

The UN would solve(sic) the housing crisis though. Australia would rapidly be diminished to Third World status, with the transported millions living on the street and off the proceeds of begging and crime.

The government is onto a winner (for government) because when the surviving empty nester is no longer suitable for employment and is judged a non-productive burden to the economy, the government will be forcing her to sell the asset to fund her aged care.

To be expected of government (both sides) that takes a damned good bite out of superannuation contributions even before the deposits have even earned anything.

The main reason I might tilt the scales towards Hockey's idea is because it is inevitable that one day the feds are going to get their hands on those superannuation funds anyway - for the claimed 'good purposes of government in a budget emergency' (most know how that works). So the poor SOB who earned the dough in the first place should be able to make use of it for shelter in the interim.

Of course, the Super system itself needs considerable reform.

As far as I am concerned, Super is part of a person's wages and should be paid automatically at the same time as tax and wages, and not 3 months after the fact.

The business community really needs a good kick in the guts.

So, again, pay day is ahead, wages go into a holding area, tax is paid directly to the tax dept, super is paid directly to the beneficiaries account and wages directly to each respective employees bank account.

In short, there should be no free kick for 3 months for businesses with the super of their employees. It's another very bad joke.

People need to be made to understand that with Super it is the individual's right to choose, and not to allow themselves to be bullied by their employer into using their chosen fund.

Unfortunately, particularly with casual workers, we have a situation where some people have multiple accounts with small amounts which in turn, after they have been signed up numerous times without consent to multiple insurance policies which they don't need -> chomp, chomp, chomp and it is all gone.

Underpinning this is a rubbish education system that does not teach the essentials of first aid, the guvment, legal and financial systems, all of which are crucial for success in Australia.

It seems plain that the parasites in the guvment far prefer a situation which keeps people ignorant, such that they are more easily predated upon.

Dear Graham,

Treasurer Joe Hockey has to raise all sorts of
prospects in his attempts towards trying to
gain a "surplus," I guess. However, his latest proposal
of allowing first home buyers to dip into their
superannuation to buy a property doesn't quite
make sense, at least to me.

Sure being able to buy your first home sounds
great - however, if you're going to dip into
your super for a deposit - you'll end up having
to pay tax on it. Plus this idea will also push
up the price of houses.

John Daley from the Grattan Institute tell us that
"We have been here before."
"It won't improve the problem around supply. If
supply remains constant and you effectively increase
the amount that people can pay then prices will go up.
This is economics 101."

Apparently this idea was something Finance Minister
Mathias Cormann had previously ruled out. It appears
that this idea will undermine the very purpose of
doing the most good for young people. Plus as others
have pointed out if you open up superannuation balances
for housing, where will it end?

Saul Eslake, the chief economist of Bank of Americ a,
Merrill Lynch, agreed with Mr Daley, saying the
proposal would only inflate the pcie of housing and
make it harder for young people to buy their first
homes.

"It's exactly the same principle as first home owner grants
and stamp duty concessions." Mr Eslake said.

Mr Eslake also added that if the Abbott government was
considering using the superannuation system differently,
it ought to consider raising the age at which people
could access super and pensions.

Taken from an article by Gareth Hutchens -
The Age, Saturday, March 7, 2015.

Well, what I would take from that *Foxy* is that, as I have already indicated, it could be a minor concession for those most at need

(and better that than burning money on rent)

BUT only as an adjunct used in conjunction with a mix of other corrective actions.

Let's face it, the price of property is an obscene joke and Australians from the middle down are getting terribly screwed for 25-30 years to what amounts to little more than 90% dirt.

Australians should not only have universal medical and legal in addition to a house, but a big fat investment fund on top.

The price of property is a blight, a pox and a stone around the neck of this nation, which serves to ingratiate the wealthy and those to whom they donate.

*OntheBeach*

I have attended the UN, participated in some its discussions and spoken to some of the delegates. Your comments to me indicate that you know next to nothing about what the UN is about.

If you don't like the Asylum Convention then GET OUT! The biggest advertisement for boats is Australia's illegitimate membership of the convention.

Of course now, the guvment advertises its mandatory detention policy in far off places to make potentional Asylum seeker's aware that Australia is every bit as bad as some of the places they are fleeing persecution.

So, how to stop the boats by the scum in the coalition is not to stop the boats per se, but rather to become child abusing torturers such that the boats want not to come.

And tony thinks he should receive congratulations on this? No, I think not ..

Yes Graham, I agree, & my kids also agree.

I have always thought it ridiculous that at the very time when young people are trying to buy homes, all the white goods & furniture a young family need, start that family, &/or pay the cost of schooling a family, a large chunk of their gross is being extracted to get governments off the hook of the age pension.

Granted the cost of welfare has grown out of control now bordering on the ridiculous, & has to be rained in, but that young married starting a family time is the very time kids need their full earnings.

If that forced loss of income could be channelled into securing that first home, the critical one for future security, it would remove this damaging effect of super on young families.

DreamOn, "Unfortunately, particularly with casual workers, we have a situation where some people have multiple accounts with small amounts which in turn, after they have been signed up numerous times without consent to multiple insurance policies which they don't need -> chomp, chomp, chomp and it is all gone"

You are right and it is grossly unfair. Many students and others who for whatever reason cannot build their deposits to where the earnings can more than cover the fund's minimum management fee will lose all of their savings.

Previously contributors and funds were happy to help along the small depositors in their early years, but now the minimum fee is taken regardless and if that means eventual nil in the account, tough luck. It is quite unlike the previous ethics of cooperatives like credit unions and building societies.

Dream on,you can keep dreaming on if you seriously think businesses like the idea of with holding your money.

As a business man myself, I can assure you super is a nightmare with one problem being the fact that employees can choose their own fund.

Super, along with annual leave, should in my view be paid weekly as a portion of the wage and left up to the employee to save their annual leave and contribute their super to which ever fund they choose because it's just another case of unpaid work performed by employers simply because so many employees are too il disciplined to look after their own affairs.

Alternatively, super should be paid into a no fee general account, which employees then manage from their. Either way we have to stop placing the burdens on employers because what cost $10 per hour when super started, now costs more like $35 per hour when valuing the add ons.

As fir governments taking our super, I doubt that will happen, but what I think will happen is they will limit the amount we can draw each week/month/year before increasing taxes as a deterrent, all in the name of reducing the burden on taxes and looking after those who failed to look after themselves for what ever reason.

Take from the rich to support the poor, or the looser.

Oh come now *Rehctum* larger companies make a good earn out of using their employees super on the market in advance of paying it, when it should be making an earn for those who earnt it.

I agree that the admin could be done better, but when you get down to it all you are really going on about is a well maintained file and a few mouse clicks.

Currently, the rate that it is required to be done turns on how often you pay (weekly, fortnightly or monthly) which in turn takes into account the different cash flows of different types of businesses.

rehctub, "As for governments taking our super, I doubt that will happen"

Don't bank on that. It was years ago, but Menzies seized the money taxed from workers' pays to provide their aged pensions. He put it into Consolidated Revenue and it was lost forever. Then the feds turned around and acted as though it never happened.

While the federal government might not directly and obviously grab the present superannuation savings, there is more than one way to skin a cat (or pluck the taxpayer goose). Examples could include more taxation of superannution deposits and earnings, and forced investment by super funds in 'ethical' ventures and companies. An ethical investment could be in green energy production being pushed by a particular government. What about infrastructure? Kites have been flown. Some federal 'experts' have already said that national superannuation savings should be available for government to borrow at low interest to build infrastructure for Australia.

It's a small step in the right direction, but it begs the question - why have superannuation in the first place.

The assumption is that people cannot save, that they are inherently irresponsible, that government knows better what's best for you, which it therefore takes away your money to place it under a shroud of bureaucracy where ordinary people cannot manage their own savings and are instead preyed upon by shrewd managing-agents (only the rich can afford their own self-managed fund, that too with large costs).

Of course, having no debt is the best investment, next best is owning your own home, but why should it stop there?

Ben Eltham writes that if governments want to
address home affordability there's several
things that they can do:

1) Build new houses and flats close to jobs
and amenities that ordinary workers on low
and middle-incomes can afford.

He tells us that the market is failing to build
them for reasons that include huge tax subsidies tied
to existing properties.

We're told that it can be done. That Australian
governments used to build public housing all the
time. However, Joe Hockey has cut funding for
affordable housing killing off the National
Rental Affordability Scheme in last year's budget.

2) Eltham states that governments could also remove
the incentives that benefit landlords and home owners,
and penalise renters and home buyers.

3) Get rid of negative gearing, money spent on stamp
duty exemptions and home owner's grants could be
re-directed to building new houses.

4) Capital gains tax exemptions for property should be
tightened.

As for super? It needs reform too, according to Eltham.

1) Slash the generous tax concessions granted to high
income earners.

Eltham tells us that Super tax concessions will cost
the federal budget approx. $30 billion a year.

You could build a lot of affordable housing with
$30 billion.

Ben Eltham really needs to get out more if he isn't aware of the many initiatives taken around Australia to build low cost dwellings and close to transport hubs, many inner city.

Government doesn't have the money and expertise, and is relying on private investment.

The demand is driven by decades of wildly over-enthusiastic migration, populations that have lobbed in the larger cities. State Premiers, especially NSW, Victoria and Queensland and including Labor's Peter Beattie, Anna Bligh and Carr, just to name a few. Here is Bob Carr on the subject,
http://www.crikey.com.au/2010/04/01/bob-carr-why-our-cities-will-really-choke-with-population-growth/

It is not assisted by the growth in single person households and destruction of the family (fatherless families).

The rest is tired old stuff and solidly rebutted on many previous occasions.

Allowing access to superannuation savings is a good idea - it should be by right, it is the worker's money. It is a good idea that is being opposed for the sake of opposing.

However, there must also be relief from the excessive population growth from migration.

My,

"The demand is driven by decades of wildly over-enthusiastic migration, populations that have lobbed in the larger cities. State Premiers, especially NSW, Victoria and Queensland and including Labor's Peter Beattie, Anna Bligh and Carr, just to name a few. Here is Bob Carr on the subject,
http://www.crikey.com.au/2010/04/01/bob-carr-why-our-cities-will-really-choke-with-population-growth/"

should have read,

The demand is driven by decades of wildly over-enthusiastic migration, populations that have lobbed in the larger cities. State Premiers, especially NSW, Victoria and Queensland and including Labor's Peter Beattie, Anna Bligh and Carr, have been highly critical of excessively high migration, just to name a few. Here is Bob Carr on the subject,

http://www.crikey.com.au/2010/04/01/bob-carr-why-our-cities-will-really-choke-with-population-growth/

DreamOn, I pay my superannuation contributions monthly. Not a lot of interest to be earned there. Onthebeach, the retirement contribution was a 7.5% levy at the time when Menzies decided it should go into consolidated revenue rather than be accounted for separately. Given we're told we need at least 15% in super contributions to have a comfortable old age, and the workforce was mostly male back then, I'd say the contribution was never going to meet the cost of the pension. So it might as well go into consolidated revenue.

You are all waffling around the problem of affordable housing.
I have told you several times before but no one is listening !

Reverse the government decision that forced lending authorities to lend on both incomes.
The developers and builders realised that with twice as much money in
the market, twice the price could be charged.
That is why houses are now so dear that a family cannot afford $1,000,000 for a house.

Borrow on two incomes and you need two incomes to pay it off !

The second income minus child care fees for 2 children means that
only one income is available for interest and capital payment.

Is it any wonder the birth rate is so low that we will be pushed
out of our own country !

Anyway, not to worry, the next crash is not too far off so there will
be plenty of foreclosed houses on the market for a song.

Foxy, you blame Joe Hockey for removing NRAS (National rental affordability scheme) yet you want neg gearing stopped.

I own an NRAS house, it is by far the biggest rort. I get $10350 tax free a year to lower my rent by 20%, I am miles in front. NRAS benefits landlords, it does not help home buyers at all.

Negative gearing helps Landlords too, but it only reduces his/her taxable income. If I don't work I get no tax benefit. Whereas with NRAS, if I work or not I still get $10k a year for 10 years

Dear Kirby,

As economic experts explain - negative gearing
was a tax break that primarily benefits the
wealthy.

Most houses are sold at auction and about half of those
will be there to buy the house in order to rent it.
Almost all of those would be for the purpose of
negative gearing. Obviously with more people bidding the
price wil go higher.

Rising prices affect first home buyers the most.
They're not in the market. If they're already in the
market and it goes up, the house you're in goes up, so
if you're already in the stream, if you like, and can bid more.

The other reason is that a lot of investment properties
are the kind first home buyers are looking for, hoses that
are a little older or smaller. They are targeted by investors
who want to rent them out.

If negative gearing were removed house prices would either
come down or not increase for an extended period of time.

People have an aversion to selling a house for less than
they bought it. What often happens is rather than the
price collapsing it just doesn't increase for a period
of time until the market catches up.

Negative gearing or negative houses to rent, they will go hand in hand. So go ahead and pull that trigger and see where it gets you, those of you who want NG abolished.

No investor (land lord) in their right mind will invest in a rental property that does not have tax benefits, especially given the lack of control we now have over our rentals.

The rights of rental property owners have been drastically eroded over the years, so with few rights and no tax breaks, there will be plenty of homeless families out there, especially given our rising unemployment and weakening jobs security because banks will be less likely to lend and far less forgiving should you lot get your wish.

Actually , if you abolish negative gearing, house prices would increase.
AS there is no incentive for investors to build homes, Demand for properties would increase. Landlords would increase rent and first home buyers would have to compete with cashed up investors who would buy existing properties as the yield would increase.

As we saw in 1985 to 1987, the demand for public housing increased by 40% as no new homes were being built (when Paul Keating abolished neg gearing), rents increased by 27% and house prices by 25% (BIS Shrapnel / Real Estate Institute of South Australia (REISA)

So, instead of helping renters and first home buyers, it made it more expensive to buy and more expensive to rent.

The population is increasing therefore the demand
for housing has to increase as well.

Of course there are overseas buyers who buy property to
take advantage of NG and they hold the proprties empty
until a substantial profit can be made.

I still believe that if negative gearing were removed altogether
house prices would either come down or not increase for an
extended period of time.

if there is no incentive for investors to build new homes (that is neg gearing) and our population is increasing, house prices will increase. Simple supply and demand.

One in 6 Aussies are employed in the building industry, stop neg gearing and very few new houses will be built and that means unemployed builders, carpenters, brick layers etc etc.

The government benefits from neg gearing, instead of government building houses (say $300k each) it is better for private enterprise to build the house and the government give $15k in tax deductions a year.

The state government collects Stamp duty, councils collect rates and fed government gets GST.

So, federal government pays $300k or allow negative gearing and all governments collect GST, Stamp duty, income tax and rates and levies.

Pay $300k or collect $100k plus and pay out $15k.

Both sides of politics understand the Government makes more out of Neg gearing than Mr and Mrs Smith buying an investment property.

So, it will never be abolished

A Labour government did remove Neg Gearing many years back but there
was a rush to sell investment houses and rents went well up so the
government had to do a backflip.

Government is relying on the private sector to fund, develop and manage the welfare housing that government itself refuses to provide.

I suppose you can't really blame government for wanting to shed the catastrophically expensive and impossible to manage government housing. Unfortunately for those who would 'invest' in rental housing it is a people management game and leftist governments, who would not provide the housing themselves, have set up structures and regulations to ensure that the most 'vulnerable' person on welfare has his 'rights' protected.

The bar is set very low indeed. Tenants know that and there is plenty of legal advocacy freely available to them to take advantage of those 'well-off', 'greedy landlords'(sic). -Which dramatically increases the overheads and repairs and vacancy costs. Few intending mums and dads investors are aware that rental tribunals depreciate the value of carpets, cabinetry and white goods much faster than the ATO. Repair costs can be crippling.

The risks and consequences for the landlord of the manufacture or use of certain drugs in the rental property? Drug busts are not unusual.

Intending investors in rental housing should look very carefully before they leap. Home owners should be very reticent too to lease out their pride and joy while on work postings or on extended holidays. It should be a sobering thought that few tenants would ever buy a rental property themselves if they had a windfall.

Most rental housing is owned by mums and dads 'investors' who have been sternly encouraged by government to forego lifestyle in order to provide for their old age. However the risks, especially regulatory risks and the hidden overheads are such that the goal of getting a reasonable return relative to the high risks is a kangaroo that continually hops away from them.

to be continued..

continued

Government has returned to the rental 'investment' cake many times (Howard too) to take bites out of the paltry returns. I would say that any more fiddling could easily lead a sustained and permanent flight away from it as a form of investment.

That would suit the idealism of Marxists who wage Class warfare.

It would suit the sharebrokers, investment advice and investment product industry too, who can see money going into shelter that should be going into their pockets.

I believe that many small investors, mums and dads, are skittish already about rental property. The motivational stuff from the white shoe brigade wanes after the first few contacts with the 'professional' tenants who know their way around the system and regularly make a meal out of seasoned property managers.

The only way ahead is for larger institutions like insurance companies to move into rental property. They have the clout and professional legal support. Of course the product will have to be more simple, compact and durable, and the rental returns much better to enable it to be run as an ongoing business.

With the greatest of respect Foxy, it appears you are il advised with regards to property investment.

Firstly, in order to negatively gear a property, one must first earn an income, or at the very least be preparing the property for rent. Holding it until the market increases is not what's happening. In fact, what is happening is that a fair portion of Chineese money being invested in property here, is dirty money.

They purchase a property for say $2 million, sell it later for $1.4 million which then makes the $1.4 million clean.

The other thing many forget with NG is that it was responsible for keeping rents lower than they would have been.

You see investors invest for two reasons, returns, and capital growth. The capital growth has been strong, but the returns have been much lower than they were pre negative gearing days however, negative gearing made up the gap. 4% return, 6% growth and a nice tax break. Besides, NG is only really beneficial when rates are high, as it's only the interest, costs and up keep that's a right off.

As for auctions, the clearance rates for auctions rarely exceeds 65%, and even than many of those sales end up being by private treaty as the properties were passed in, then a sale negotiated, with conditions, on the day.

Finally, auctions often see properties under sold, as to buy at an auction, one must only out bid the others, not pay their maximum price as very few buy with their upmost final affordable dollar. Buyers usually go in with a top end figure, yet rarely pay that full amount.

OK so they use their super to get into a house.
What happens when they sell the house for a big profit
and buy another for less?

Do they put the 'borrowed' super back or get a 'pension'
subsidy from the taxpayer when they retire.

My answer is
Pool all superannuation under one bank...Medibank already exists.
Sack all those thousands of blood sucking fund managers and their cronies.
Use the super to build low cost housing (sill a salable asset)
That way you
1 save money on administration costs.
2 Stimulate the building industry
3 Get people into low cost housing anyway.
4 Kill off the increasing ( to bursting point) house prices by increasing supply.

Owning a house as your super leaves too many eggs in one basket. If you are realizing your asset in its entirety (you can't just sell a room or two) what will you live on during a protracted selling period in a weak market? You'll have to stay working or accept the market price at the time. Listen to Peter Costello.

Re negative gearing, if it's taken it off rental housing it'll have to be taken it off all other asset classes to keep the investment playing field level and maintain housing supply.

Luciferase, the way of the future as I see it will either be a huge increase in reverse mortages, or the upcoming inheritors will start contributing to what will essentially be their asset.

As for your eggs in one basket comment, I think you're missing the point as the idea of using super is not to buy a house, but to provide a deposit.

My thoughts are that to qualify one can only use super to the value of 10% of the home (capped at $70,000) and the remaining 10% plus all associated costs must be provided by the buyers. This way there is no mortage insurance which means less risk. Then, if the home is either sold or leveraged against (car, boat, holiday as is too often the case) then the super component must be repaid to the fund, plus interest at CPI capitalized and can only ever be used once.

As for combined super, it's a great idea and one I have wanted since the inception of super back in the 90's. Not so much for housing but rather for infrastructure because had we done that we would have retained the likes of the CBA, Testra and Qantas to name just a few. Plus, we would now have trillions working for us and our former hard working retirerees would be on a decent pension rather than the insult of a pension they have to jump through hoops to justify because we would own everything and couldn't possibly spend the income. I would suggest that the way super has been managed has been our biggest missed opportunity in my life time.

If $14k first home owners grant can inflate house prices in Sydney, imagine what letting people use super would do. The Real estate agents and the State Governments will love this!

If you make the argument that property is a sound investment choice, so is educating yourself, so why not HECs Debt?

Eventually this all leads to buying sneakers, and homeopathy and massage out of your super. Health fund extras allow these.

BTW does anyone know if the extras part of policies in private health insurance qualify for the government 30% rebate? ie are we all paying for the mystic powers of homeopathy with our tax dollars? Or does the 30% subsidy only cover the main premium?