March 10, 2015 | Graham

Superannuation and home buyers

It’s amazing how many people have leapt in to criticise Hockey’s suggestion that young Australians should be able to tap into their super contributions to buy their first home, including this bad tempered contribution from former PM Paul Keating.

Far from being a class envy attack on retirement savings, it could be the single best idea this decade to making retirement more secure for millions of Australians.

The average Australian home is worth 571,500, but the average superannuation account balance for males aged 60-65 is only $114,000.

The real poverty for those in retirement is experienced by those who do not own their own home.

Owning your own home eliminates rent and reduces occupancy costs to maintenance and rates. It provides an asset that can be parlayed against a nursing home place, or even reverse mortgaged or sold in emergency.

So any policy which makes it easier for Australians to own their own homes is a retirement policy.

If Keating were really worried about retirement, rather than “protecting” his legacy and trying to position the Liberals as “unfair”, he’d be intelligently looking at the real problems faced in retirement and conclude, along with generations of Australians, that owning your own home is the best pathway to security.

It’s a good policy kite from the government and ought to be adopted.


Posted by Graham at 7:30 am | Comments (9) |


  1. Hear hear Graham. Who would want to be a single pensioner in Sydney, where a bedsit may cost more than the single pension. Better we hit retirement with our own home!

    And while we’re in a mood for reform, how about reforming our highly convoluted tax system, which imposes an averaged 7% compliance cost, before a single cent hits government coffers.

    An unavoidable 18% expenditure tax, collected as the only tax needed or taken, would raise around 380 billions from a 1.6 trillion dollar economy.

    And given this vast simplification would no longer add on compliance costs, 11% in real/adjusted terms.

    And with all the other taxes finally jettisoned, business better off by as much as 19% initially?

    And as the avoiders were also forced to pay a fair share, the size of the pot would grow; enabling the rate to be lowered to as low as 5%?

    And given it was collected via the banking fraternity, and transferred electronically overnight.

    The money would become immediately available to consolidated revenue, with few if any collection costs imposed or needing to be reconciled. And therefore, government borrowing against expected revenue could be eliminated, saving billions!

    I mean, the 380 billions would be the net rather than the gross amount.

    A direct funding paradigm for education and health, coupled to much more regional autonomy, would make up for the loss of GST revenue; as well as ending most if not all the costly double handling, and with it, the inevitable double dipping.

    And with all other taxes jettisoned, the average household could be as much as 25% better off; once all the avoiders were rounded up; meaning, a noncontributory 15% super, would be almost immediately doable.

    Pragmatism and practical commonsense, shouldn’t end with allowing young folks to use some of their super to get into their own home.

    And if we are going to encourage that approach, we have to take negative gearing off the table, in order for the first home buyer to get a fair go.

    And getting foreign investors out of our real estate market except as developers, would help as well.

    I mean, we already have the highest median hose prices in the english speaking world, hence the suggestion of allowing young folks to use some of their super!
    Alan B. Goulding

    Comment by Alan B. Goulding — March 10, 2015 @ 11:53 am

  2. Well, at least we agreed on the first sentence.

    Comment by Graham — March 10, 2015 @ 1:12 pm

  3. Excellent idea, for those people who already own real estate or who have vested interests in the housing market, the effect would be to bid up house prices and make entry even more difficult for first home buyers. The most effective way to reduce the growth of house prices is to slow population increase by reducing the immigration intake and eliminate speculators.


    “And as the avoiders were also forced to pay a fair share” Not with the present government. I agree in principle, a tax summit would be useful, particularly a review of revenue and spending, not just spending— subsidies for private school fees, tax concessions to transnational mining companies, soft loans to farmers, and negative gearing for example. That will have to wait for a future progressive government.

    “we already have the highest median hose prices in the english speaking world, hence the suggestion of allowing young folks to use some of their super!”

    Yes, and once the housing bubble bursts and the ‘aspirational middle class’ is unemployed and discovers that their McMansions are worth half their mortgages they will need their super to survive.

    Comment by RussellW — March 10, 2015 @ 4:08 pm

  4. Given that some lucky sods own a house worth a very substantial sum yet still manage to obtain a pension then as long as this suggestion includes the caveat that the house must be reverse mortgaged if worth more than a set amount if a pension is obtainable.

    Comment by Gil Thorncraft — March 10, 2015 @ 6:14 pm

  5. Yes Russell, clearly there are some people wedded to the current status quo on tax; where we pay unproductive parasites to make some sense out of convoluted complexity.

    What we don’t need is another tax summit/expensive talk feast, which is full of good ideas; like say a turnover tax in lieu of most of the current complexity; which Ken Henry talked about as being interesting; only to see the best ideas shelved, due to the fact that some V.I.P’s earn a very healthy living untangling a man made web!?

    Or pollies just to timid to take that particular bone from that junk yard dog?

    Better we just jettison the entire dog’s breakfast of a tax system, in exchange for a simple unavoidable single system.

    And in order to restore equity, when will we include the family home as an asset, for the purpose of collecting a government pension.

    Government welfare is set to massively blow out; as is medicare!

    We need to get back to the idea of means tested welfare for the needy, not the greedy.

    And if a so called pensioner is able to afford to spend days at a time, forcing money down the throat of one armed bandits, and taking an annual overseas holiday?

    Their means need to be retested, and in the presence of space age lie detection, in order to weed out the cheats forcing welfare budget blowouts!

    And if that testing finds out that they have income earning overseas assets, that have never ever been declared?

    Then they should not only be obliged to pay all the money back, but be forever denied any further welfare.

    We seem all gung hoe, when chasing the poor who have taken a few dollars more than they are entitled to, but seem to allow the better off to get away with blue murder?

    We spend billions chasing hundreds, and hundreds chasing literal billions!

    For mine, the best way to reduce the demands on a limited budget, is to completely wind back all middle class welfare, and just not being made available for people who can afford to live in the aforementioned MacMansions!

    And a huge mortgage is self imposed, and therefore ought not be supported in any way by the taxpayer!

    That said, real tax reform would also allow then to keep the fruits of their labor and only pay tax in keeping with their expenditure or turnover? And a far better deal all round!

    And no I’m not talking about something as complex and unwieldy as an expanded GST; the bane of most small business.

    Better to use that valuable time to work on the business, or take back some of the lost valuable, quality family time!

    Besides, there’s no other choice but to embrace real reform, given the destiny of demography.

    And if that reform doesn’t shift the tax burden from the individual to the GNP, then it will have been yet again, the wrong or politically motivated revenue surety; and or, an added layer of more complexity, merely masquerading as genuine and fair reform?

    If the GNP, provides all the tax as described above, then the only thing needed to grow the tax base, is to grow the economy; and just too easy, if you take the snake oil salesmen and or self serving private interest out of essential service; we will be able to turbocharge the general economy, by eliminating all the unproductive practices and or money for nothing parasites? And profit demanding middlemen, who add nothing but their demands.

    And with that change, get energy costs both back under control and effectively halved; as well as the cost of living!

    Nothing wrong with running a highly profitable business, always providing we deal out all the drones!

    And businesses will become far more productive and profitable, when all those on the factory or shop floor, are also shareholders, with a vested interest in maximizing company results.

    And a non contributory 15% super, only available as a proscribed pension.

    Better a generous monthly pay packet, than the money running out when they’ve got years left, and forced to queue for a government funded pension/penury.

    And sadly, some people blow their super, trying to live a millionaire lifestyle, in order to become eligible for a pension.

    I would love to pay over a million a year in tax, and never expect to actually ever claim any of that back as a pension; given the advantages I’d already enjoyed!

    Which for mine is reward enough! And should be, if the age of entitlement is truly over!
    Alan B Goulding.

    Comment by Alan B. Goulding — March 10, 2015 @ 6:57 pm

  6. If the banking system is not properly regulated, super will just over inflate house prices again.

    In the domestic housing market foreign investors should be excluded and buyers must have at least 25% deposit.

    Houses are way over valued in Aust due to bankers money printing and the big correction is not far away.

    Comment by Ross — March 10, 2015 @ 8:05 pm

  7. “we pay unproductive parasites to make some sense out of convoluted complexity.”

    I won’t take that personally Alan, I’ll assume it was a rhetorical flourish.

    We definitely need another tax summit, it’s the only way to get the voters on side. Despite all the verbal diarrhoea from the conservative propagandists who claim reform is virtually impossible, it isn’t, the problem is that many voters recognise a neoliberal agenda when the see it. There’s still a social democratic ethos in this country, let’s use it.

    Comment by RussellW — March 11, 2015 @ 2:17 pm

  8. Yes Russell and please don’t take anything I say personally!

    In fact the only people that should be offended, are the ones who find that that particular cap fits?

    It strikes me, and we’re told the total tax take, measures some 4% of the GNP; and if the GNP, is just a measure of all our combined spending?

    Then it strikes me a 5% unavoidable expenditure tax would raise more tax? All while allowing business to pocket their current tax compliance costs, created out of the man made complexity, we’ve saddled the business world with.

    And believe me, there are many already struggling at the margins, for who the return to the bottom line of this money, (7% averaged) would make the difference between surviving until their intended retirement and going under!

    And who would be hurt by some increase in discretionary spending, or the economic boost that would almost immediately provide/follow.

    And ditto reduced set and forget interest rates, given all inflation/stagnation could be controlled much more effectively; and differently region by region, as microscopic adjustments up or down simultaneously, to the tax rate alone!

    And if we could find a way to eliminate all the double handling/double dipping by various government entities, via say a direct funding model from the tax collecting Government, to the end user/public facility?

    And made more possible by returning complete regional autonomy, in both health and education.

    Simplicity that could add as much as 30% additional funding to government services at the coal face, (an NDIS) without increasing the total outlays; given that’s what fee charging state Authorities; top heavy with over-rewarded Chiefs, may need to extract/take as their “Administration” charges.

    One only need hark back to the multi billion crisis around Q’ld state health employees payrolls, to understand we just don’t need this level of (middleman profit taker) hugely centralized financial control!

    And certainly not conducive to apples for apples comparative bench marking and the overdue emergence of world’s best practice! And exactly the place for our best and brightest financial whiz Kids!?

    We need to get away from the idea that some people are owed a living, or hugely rewarding salaries for adding in yet another layer of entirely unnecessary MAN MADE complexity; or untangling what simply shouldn’t exist.

    A very wise man, republican Senator, guest on Q+A, once said, “at some point complexity always becomes fraud”! Quote unquote.
    Alan B. Goulding.

    Comment by Alan B. Goulding — March 11, 2015 @ 7:14 pm

  9. I’ve been waiting for someone to come out and say, that the GNP, Gross National Product, was a measure of our production or what we own and what that is currently worth or some such?

    Okay, lets look at production and use the easy to understand example of producing some salable wheat.

    Well first the Farmer needs to prepare the (till free) soil and that costs money, fuel, wages and and an application of expensive round up.

    Given all of these processes cost money, even just that amount of preproduction equates to spending/expenditure!

    Then the seed grain must be purchased, transported and planted, all of which costs money or equates to some spending/expenditure, be it out of a healthy bank balance or the overdraft.

    It must make no difference!

    [Otherwise we will continue to prop up under capitalized over committed people who will only ever fail as farmers or business operators/learn how to waste money! I mean the good times when they come, should be used to buy some income earning off farm investments, and not another new million dollar tractor or harvester, that then allows a perfectly serviceable one to rust away in some shed or out in a paddock!]

    Then the farmer needs to monitor the crop, if only to ensure that vermin don’t wipe him out. And if he’s paying himself a wage, this also costs money?

    Or perhaps like some tractor collecting financial illiterate, he does it for free, just so he can pay more tax out of the balance of the harvest cheque?

    In any event, the planting phase should also cost some money or equate to some spending, ditto the harvest, grain transport, and change of ownership, when the buyer buys the grain!

    All of which equates to some unavoidable expenditure, as does every facet of modern life!

    You buy a house, a car, white goods, a big screen TV; money changes hands, and sometimes in many directions simultaneously!

    Ditto the day they bury you, which is when you or anybody finally stops unavoidable/recurrent spending!

    And given we could if we were but intelligently led, impose a very modest tax on this spending as the only tax we would need to take; and collected via the central mainframes of the banking fraternity.

    And transferred electronically overnight; in exchange for a virtual licence to print money, and therefore in a fee free paradigm.

    The gross would then also be the net, which in turn would add as much as 40% of spendable money (former collection costs) to Government coffers, which could be used instead to simply retire debt!

    Which would mean we’d be out of the red and into the black in no time at all!

    We pay extremely clever people to untangle a totally man made web and save us some tax, hopefully, occasionally.

    Eliminating all the other taxes, would improve household disposables by as much as 25%, and therefore make a compulsory non contributory 15% super almost immediately doable! And courtesy of all current tax avoiders, some of who have bigger annual budgets than many sovereign nations

    Now we can expect some folks, seeing their own vicissitude or redundancy writ large before their very eyes, to create all the vicarious reasons why embracing simplicity is a bad idea; given, and what they won’t tell you is; it would deprive them of a sometimes very lucrative living.

    And who would blame them?

    However, if we were to also create a brand new peoples’ bank simultaneously, with the roll-out of this proposed massive simplification, and as a franchised venture capital bank. No one need necessarily be hurt by this proposed (real) reform!

    I mean the same premises and staff could function just a well or better as a franchised venture capital provider. And fees could be earned just for placing some capital in capable hands, and again as an annual fee, with every successful venture that this money kick starts.

    And if the local (former) tax practitioner, i.e, doesn’t know who’s got the business smarts in the community, then who else would!?

    And the risks could be minimized or shared, by preferring family firms/cooperative ventures.

    And all that’s needed are good ideas, and a viable local market, which by the way is the bread and butter of any new start up operation!

    i.e., I have an idea for irrigation crop production, that allows most if not all the diesel pumps to be replaced by gravity, feeding water into the subsoil!

    Which by the way would halve the necessary water applications while doubling production capacity. Take table grapes or cotton or tomatoes as examples.

    Putting water on the topside at the wrong time, simply rots a crop, not given to tolerating very much humidity/over-watering, but tailor made for the outback and currently wasted reliable reusable water; and indeed, turning all the disadvantages into your best advantages!

    And if super is a good idea, then so also is providing the jobs that make it possible! There’s no super in sit down money!

    And it is time for a fundamental change/thinking outside the box, given doing what you’ve always done, only ever gets you what you’ve always got!
    Alan B. Goulding

    Comment by Alan B. Goulding — March 14, 2015 @ 11:05 am

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