ANDREW BRAGG: Super funds are trying to block Aussies from accessing money for their first home

The super funds are at it again trying to block Australians from using their own money for a first home.

Big Super is circulating research that claims that New Zealand opening up KiwiSaver (similar to super) for housing was a disaster.

The lobby group for Big Super, the self-styled Super Members Council say: “New Zealand’s super for a house scheme is a cautionary tale for Australia, with new research confirming Kiwi house prices spiked and homeownership rates fell after the policy was introduced.”

Doesn’t this all sound terrible!

There are three major problems with this research.

Firstly, what it doesn’t say, because the super funds have a strong vested interest, is that it helped almost 400,000 Kiwis into homes during a housing crisis.

Of course, home ownership isn’t important to the super funds because they cannot charge fees for it.

All too often, the super funds have been busted for double charging members or even charging dead people.

The reality is that home ownership is the cornerstone of retirement.

As the 2020 Retirement Income Inquiry found: “Home ownership is an important influence on a person’s standard of living in retirement. Housing costs are generally lower in retirement and the house is an asset that can be drawn on to boost retirement income.”

People understand this fact economically and psychologically, which is why 379,000 Kiwis have withdrawn a total of just over NZD$9.7 billion from the KiwiSaver accounts over the past decade or so.

The SMC report, using Deloitte data, fails to consider the financial impact of home ownership on a person’s retirement. It simply models what would happen if the money removed from super disappeared from the economy, rather than being used to build wealth through home ownership.

Secondly, no link has been established between Big Super’s central claim that house prices are higher because of KiwiSaver withdrawals. No data is presented to link the two factors.

In fact the New Zealand Infrastructure Commission explained the price growth. “Between 2010 and 2018, we built new homes at a slower rate than population growth, and prices accelerated.”

NZ Housing Minister Chris Bishop says constrained supply boosted prices and it had nothing to do with KiwiSaver.

“Report after report and inquiry after inquiry has found that our planning system, particularly restrictions on the supply of urban land, are at the heart of our housing affordability challenge,” he said.

There is also similarly little evidence to support another claim of a budget blowout. No fiscal modelling is offered.

The claims are intellectually dishonest.

They have not shown any statistical correlation, let alone causation, to support their claims. If anything, they have shown how popular and effective Super for Housing is in NZ, and that it has helped 379,000 people into home ownership during a housing crisis.

It’s practical and effective. The NZ scheme, like the Singapore and Canadian programs, is explicitly designed as a savings vehicle to support home ownership. Citizens of these countries don’t have to beg their Parliament to allow access to their own money for their first home. It is guaranteed.

Thirdly, the withdrawals from KiwiSaver would be immaterial.

The New Zealand housing market is worth $1.62 trillion in 2024. The KiwiSaver withdrawals were $9.7 billion over more than a decade.

KiwiSaver withdrawals would be vastly less than 1 per cent of the total housing market and laughably immaterial.

In Australia, we have an $11 trillion housing market.

The average annual number of owner-occupier first home buyer loans in the five years from 2020-2024 was 130,000.

Assuming that number doubles to 260,000 under the Coalition’s Super for Housing policy, if everyone were to access the full $50,000, it would only impact 0.12 per cent of the entire housing market in Australia.

In other words, if first home loans doubled in Australia, the impact on the market would be next to nothing. Even if it tripled it would be immaterial.

What that means is that super for housing will not make any serious price difference. The market is simply too big.

These numbers show the scare campaign for what it is: a campaign by vested interests to lock up your money forever.

For Australians without access to the Bank of mum and dad, super is likely to be your best shot at bridging the deposit cliff.

With the average 38-year-old having $90,000 on average in super, it is a serious prospect for making good on the first home deposit.

It’s the best shot many Australians will have. It mustn’t be lost in a dodgy scare campaign pushed by desperate vested interests.

We will never give up on getting this option for the Australian people. We know it will help so many people into their first home and that is our priority.

Andrew Bragg is Coalition spokesman on home ownership