The debate over whether Australians should be able to use superannuation to pay for housing is ultimately a battle for power over the country's $4.8tn savings pool, a contest that dates back to the scheme's inception.
One Nation has recently suggested that people should be able to take money out of their super to pay for housing, and Liberal senator Andrew Bragg has also revived the idea. Treasurer Jim Chalmers has said the Coalition and One Nation are “coming after super” and want to “vandalise” the retirement savings scheme, and has predicted the next federal election will be a referendum on super.
With a national cost of living crisis and housing shortage, it seems reasonable to ask about the balance between how much money is being saved for retirement and how much is available to use now. It also seems uncontroversial to discuss whether altering that balance will help with cost-of-living pressures or add to them. Yet the idea of using super for housing is hotly contested.
Roots in the 1992 legislation
The answer to why this is the case lies in the history of Australia's private retirement saving system, the battles over its design, and ultimately, for power over the $4.8tn savings pool. The national system of compulsory superannuation was legislated in 1992 by the Keating Labor government. Paul Keating and former ACTU secretary Bill Kelty are regarded as the founders of the system and remain active voices in the debate more than 30 years after superannuation was introduced.
The 1992 legislation grew out of industrial campaigns by trade unions for a “right” to superannuation. Before the reforms, most workers received only the government age pension in retirement. Those who also had superannuation were limited to some white-collar workers and government employees, and mostly to men.
As Kelty put it in an interview for a book by Emily Millane, “before superannuation, when you got the sack, you got nothing”. When super was introduced, Kelty recalled there was a sense that “never again can you leave workers in a position where they've got nothing.” For these reasons, the Labor party and the broader labour movement regard themselves as proprietors and custodians of superannuation as a social justice measure.
Liberal opposition and choice-of-fund changes
The Liberal party originally opposed universal superannuation for ideological and political reasons. Forcing workers to hand over a portion of their wages was anathema to a party of free enterprise. Hence the reminder today by people like Liberal MP Tim Wilson that superannuation is “your money”, compulsorily acquired by government mandate. There was – and still remains – a deep suspicion within the Coalition about the links between industry superannuation funds, the unions and Labor.
In the late 1980s, then shadow treasurer John Howard characterised the industrial precursor to the superannuation legislation as the “Keating/Kelty accord”, creating a “union slush fund which would be controlled by union bosses”. He later labelled national superannuation legislation as “nothing short of parliamentary confiscation of the assets of employers”.
After the Superannuation Guarantee was legislated, the Liberal party came to accept that superannuation was here to stay, but sought to refashion the policy in their philosophical mould. In 2005, Howard and then treasurer Peter Costello introduced choice-of-fund legislation. The choice changes meant employees would no longer be defaulted into a superannuation fund because of their industrial award or agreement but instead have the option of choosing where their savings went. This was an effort to divert savings away from industry superannuation funds with union ties and an attempt to open superannuation to the private market.
Previous super-for-housing proposals
There have been earlier proposals by the Liberal party to use super for housing. The Turnbull government introduced the First Home Super Saver Scheme in 2017, allowing individuals to make up to $15,000 in voluntary superannuation contributions per year, to a maximum of $30,000 in total, which could be withdrawn to help fund a first home deposit.
Labor opposed the scheme, then shadow treasurer Chris Bowen characterising it as a “fundamental undermining of Australia's superannuation system” and one that will “make housing affordability worse, not better, by pushing up demand and overinflating prices”. Keating described the earlier proposal for the scheme as “not responsible enough even to be considered a thought bubble”.
The Morrison government went to the 2022 election with the Super Home Buyer policy, under which first home buyers would be able to use 40% of their super, up to $50,000, towards buying a home.
Current debate and impact
These same arguments have been used to advance the current proposals by politicians as well as superannuation interest groups who have their own links to different actors in the system. Some groups have ties to not-for-profit and industry funds, which have equal representatives of employers and employees on their boards. Others have members from the for-profit retail sector.
The Super Members Council (SMC) was created after a merger of two former peak bodies, including Industry Super Australia. SMC found that the Morrison government's Covid-19 early release scheme saw about 725,000 Australians effectively wipe out their superannuation accounts. This was a measure legislated in the early days of the pandemic to allow people to access 'their own money' when many lost their incomes. It was only afterwards that the jobkeeper reforms took place.
Recently, Senator Bragg re-ignited the super-for-housing debate in an address to the retail fund-aligned Financial Services Council. He pointed out that Keating himself floated the idea of using up to $10,000 for housing in 1993.
Housing is an unofficial pillar of the retirement system. Those who rent in retirement, especially single people, are more likely to be living in poverty. There are other measures to address this issue, namely the tax and transfer system or potentially boosting Commonwealth Rent Assistance to retirees.
Superannuation is a complex system that many find hard to understand, especially with so many actors who have a dog in the fight over how the savings pool should be used. Super was created to address a genuine social problem: ensuring Australians could retire with more than the age pension and avoid poverty in old age. But housing is also a social problem, and for many younger Australians, the prospect of ever owning a home is becoming increasingly remote. Considering the history of superannuation and the scale of Australia's housing crisis helps explain why proposals such as using super for housing have arisen and why the debate over their merits is ongoing.
