The Centre for Economic Development of Australia (CEDA) has called for an overhaul of retirement income policy to help future generations buy their own home and avoid slipping into poverty.
The organisation has released a report that recommends young people be allowed to access their super to buy their first home.
CEDA chief Stephen Martin told AAP that the aging population of Australia and how it relates to housing affordability was being increasingly recognised.
“Talk about our ageing population and the impact on retirement policy has been part of national debate for many years, but the impact of sustained housing affordability issues is only just beginning to be recognised as a significant issue for retirement policy,” he said.
“We already know … that between 1 and 1.5 million Australians live in poverty and the elderly, particularly those who do not own their home, are an at-risk group. In fact, the overall poverty rate of older people in Australia is three times the OECD average, and one of the highest.”
“Without a significant policy overhaul, that number is likely to significantly rise over the next 40 years.”
“There has been a lot of talk and tweaking of retirement policy aimed at reducing the burden on government, but what Australia needs is a robust discussion on all the options to ensure long-term Australians can retire comfortably.”
Australians seem split on whether young people should be allowed to access their super for their first home, Treasurer Joe Hockey was supported by some but criticised by others, including colleagues in his own party, after he floated the idea earlier this year.
The critics say it will drive house prices up even more by spiking demand.
The report from CEDA, called The Super Challenge of Retirement Income Policy, agrees this may happen, but says it can be negated by incorporating better housing policies.
The CEDA report also;
argues for tax arrangements to be reviewed so they don’t benefit the rich and stop being used as tax mitigation measures
calls for the family home to be included as part of the assets test for the age pension
calls for changes to super payments to an after-income-tax payment
says all other superannuation tax concessions should be scrapped
John Flavell from Mortgage Choice is a supporter of the move to allow young people to access super for their first home.
“The reality is, it is becoming harder for first home buyers to purchase property, especially in some of the capital cities where property values are rising at a significant rate,” he said.
“As such, any measures that seek to help first home buyers get their foot onto the property ladder sooner rather than later should be applauded.
“We have long supported the idea of allowing first home buyers to use their super as a way to fund their first home purchase. Super helps Australians get financially ready for retirement, so why shouldn’t we allow first home buyers to use their super to buy an asset that will make them money and ultimately help them in retirement?” he told AAP.
“Older Australians are allowed to use their super to invest in property, so shouldn’t younger Australians, particularly first home buyers be able to do the same?”
The shadow treasurer Chris Bowen’s opinion on the matter shows just how divided people are on the issue.
“Allowing access to superannuation savings for first home buyers would drive up prices at the same time as eating away at retirement incomes, a highly regretful double-whammy,” Mr Bowen said.
Mr Bowen said 40 per cent of all super concessions flowed to the top 10 per cent of income earners.
“Tax concessions for superannuation are the fastest growing tax concession in the federal budget…they are unsustainable and unfair,” he said.