Introduced back in 2017 and boosted in this year’s federal budget, the First Home Super Saver Scheme allows eligible first home buyers to withdraw up to $50,000 in voluntary super contributions early for the purpose of raising a deposit for a property.

According to Property Council chief executive Ken Morrison, while these schemes may be targeted at helping first home buyers bridge the deposit gap, the material reality is that they're asking the next generation of Australian homeowners to make a choice that previous generations didn’t have to consider.

On a fundamental level, this federal policy asks Australians to decide between having a stake in the property market now and reaping the benefits of their superannuation later.

According to Jim Stanford, an economist and director of the Centre for Future Work, the government has shown “a worrisome tendency" to treat Australians’ super accounts as an “all-purpose piggy bank which can be raided for any important reason”.

Mr Stanford also drew attention to the early release scheme, which allowed 3 million Australians to pull $36 billion from their retirement savings to help get through the hardship of the COVID lockdowns.

“They have now expanded the First Home scheme to allow $50,000 withdrawals. They even proposed allowing abused women to pull money from their super to help finance their escape from violent spouses.”

The latter was abandoned in March after public outrage.

The problems being addressed, Dr Stanford argued, are something the government should tackle through other measures, including adequate income support in the event of a pandemic, effective support for victims of domestic violence, and measures to make home ownership more affordable.

“Those are all legitimate public policy goals which government cannot shirk by simply suggesting that workers tap their own super accounts,” he said. 

The First Home Super Saver Scheme is often portrayed as a crowd-pleasing fix to a thorny problem, but choosing between property and superannuation is no small ask. 

Moreover, according to Mr Stanford, there is little evidence to suggest that allowing super withdrawal will fix the housing affordability problem. In fact, he opined, the funds being withdrawn “are trivial” compared to the escalation of property prices in Australia.

If anything, he said that having more liquid finance around could accelerate the rise in housing costs – making buying a home even less affordable.

“There are many things that government should be doing to address housing affordability, including removing the huge tax subsidies for property speculation in the current tax system, reforming land development policies to get more affordable housing units under construction, and financing the badly needed expansion of affordable non-market housing.

“Forcing Australians to choose between putting a roof over their heads and having a decent retirement is truly a devil’s choice. Australians shouldn’t be forced to make it,” Mr Stanford said, adding that early-release schemes are “a lifetime penalty”.

About the author

Fergus is a journalist for Momentum Media's nestegg and Smart Property Investment. He likes to write about money, markets, how innovation is changing the financial landscape and how younger consumers can achieve their goals in unpredictable times. 

About the author

Fergus is a journalist for Momentum Media's nestegg and Smart Property Investment. He likes to write about money, markets, how innovation is changing the financial landscape and how younger consumers can achieve their goals in unpredictable times. 

Fergus is a journalist for Momentum Media's nestegg and Smart Property Investment. He likes to write about money, markets, how innovation is changing the financial landscape and how younger consumers can achieve their goals in unpredictable times. 

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