Submission to the Senate Economics References Committee Inquiry into improving consumer

The rationale for compulsory superannuation Changes to the system of compulsory superannuation need to recognise the reasons for that system. [...] A large part of the rationale for using superannuation for housing is that it helps achieve the objectives of the superannuation system, while avoiding some of the disadvantages. [...] The scheme would apply to both new and existing homes, with the invested amount to be returned to their superannuation fund when the house is sold, including a share of any capital gain. [...] Under the Coalition’s scheme, the buyer forgoes the earnings they would otherwise receive on their superannuation, whereas the Government’s scheme is a subsidy.3 Flowing from this, the Coalition scheme offers a moderate amount of assistance to a large number of home buyers, whereas the Government scheme provides large assistance to few buyers. [...] Whereas the Coalition is offering up to 40% of the superannuation balance (which might be $16,000 for a typical borrower), the Government is offering up to 40 per cent of the value of new homes and 30 per cent for existing homes.   The reduction in superannuation balances (by $10,734 in the central case discussed above) is a critical feature of the Coalition’s plan.