The idea by Anthony Roberts – State Member for Lane Cove saying that he wants first home owners to be able to access their superannuation to purchase their first homes (North Shore Times – Thursday 23rd February) is yet another example of the Liberals undermining the superannuation system in Australia. Once again they are not tackling the real problems contribution to making housing unaffordable for many Australians.
The superannuation system is designed to help Australian’s prepare for retirement. Today’s first home buyers will have fewer Australian’s in the workforce compared to non-working senior Australians when they retire. Thus, superannuation is a critical savings vehicle to help prepare Australians for retirement. The Liberals have already reduced millions of working Australians superannuation balances by deferring the superannuation guarantee increase to 12% to the year 2025/2025 – seven years later than Labor’s original schedule.
Here is why Anthony Roberts should not dip into the future retirement savings of first home buyers. There are many other policies that the Liberals can use to help young people buy their first home.
1) Reforms to negative gearing will help making housing more affordable:
The elephant in the room that the Liberals ignore is the need to reform negative gearing on investment properties.
An individual investor who earns an income of $120,000 per annum who buys an investment property today valued at $700,000 will receive a tax refund of $12,685. It will cost that investor $21/week to own that investment property after rent, expenses and tax benefits.
If that same $700,000 property was purchased by a first home buyer who paid a 10% deposit, the weekly home loan principle and interest repayments would be $1,050 (Or $810 based on an interest only loan).
This is the number one reason why the property market and tax policy is working against new first home buyers. Not reforming negative gearing rules in Australia is akin to washing your dirty car by only cleaning the windscreen.
Labor’s proposed reform to negative gearing would incentivise investors to focus on building new housing, whilst reducing the competition from investors for first home buyers when buying an already establishing housing.
2) Deferring or reducing stamp duty for first home buyers will help housing affordability:
The stamp duty on a new home of $700,000 is around $27,000. Stamp duty concessions do help to make first homes more affordable for first home buyers. At the moment stamp duty concessions only apply on brand new properties in NSW up to the value of $650,000.
Labor proposed a stamp duty deferral scheme during the 2015 State Election. Under this scheme it would allow first home buyers to defer up-front stamp duty costs, instead paying stamp duty costs in affordable monthly instalments over five years.
3) Bring back First Home Saver Accounts:
The Liberals canned the First Home Saver Accounts (FHSA) in 2015. Under this scheme introduced by Labor, young people could open an FHSA and earn a 17% contribution on savings up to $5,000 - $6,000 each year.
How did the Liberals think that canning a policy to help young Australian save for a deposit would help them buy a first home?
Before Anthony Roberts destroys the future retirement savings of millions of young Australians, he would be well placed to encourage his State and Federal colleagues to look at some of the above sensible policies that would help young Australian buy their first home.
 Based on a $700,000 investment property in NSW. Salary = $120,000, 10% deposit of $70,000, rental income = $620/week, interest only loan at 5.50%, rental expenses = $8,727, building depreciation and fixtures and fitting depreciation claimed,
 Based on a $700,000 home purchase. 10% deposit of $70,000. Principle and interest and interest only repayments calculated at a 5.50% interest rate.