Interview with Annelise Nielsen Sky News AM Agenda
16th May 2022
ANNELISE NIELSON: Joining us live is the Superannuation and Financial Services Minister Jane Hume. Jane, thank you for your time. Now we just had your colleague, Michael Sukkar, saying that the impact on the housing market from this policy is going to be immaterial. Is that a concession, though, that this actual policy won't impact that many buyers, especially when we're talking about such a small amount that they'll be able to access to put forward to their deposit?
JANE HUME: No, not at all, Annelise. And it's, in fact, the objective of this policy is to ensure that homeowners, that first home buyers, get that first rung on the ladder of the property market. We know that there are lots of people out there that have a steady job, that have a good income, that have great credit history, that want to be able to get into the housing market. But they can't break that nexus. They can't save for that deposit, that will get them over the line. This breaks the nexus between the savings that you already have in superannuation.
You're already saving $1 in ten of everything that you earn for your superannuation. It allows people to access their superannuation, a small amount of either 40% or up to $50,000 of your super to help make that home deposit. And then once you sell your house, then you put the money back into superannuation plus proportionally any profit that you make on that money when you sell your house. So there's winners all round. You've got the opportunity to get into your first home, but at the same time you put that money back into your superannuation to allow you to have a high standard of living in retirement as well.
NIELSON: Look, there's a few things I want to talk through there. Firstly, when we talk about the amount that people would actually be able to access. If we look at the data compiled by ASFA, the superannuation association, they say that about $25,000 is what most males between 25 to 29 have in their super accounts. For females, it’s $21,000.
Realistically, if that's when a lot of first home buyers are looking to get into the market, if you can access up to 40% of that, we're looking at about $10,000. How much of a difference is that going to make in a market like Sydney, where the median house price is $1.1 million, Melbourne $806,000. That's a very small amount of money that we're talking about that's going to extrapolate over a long period of time when it's not in your super account.
HUME: Well, people do accumulate superannuation over time. We know that people in their thirties, for instance, have much higher superannuation balances in their late thirties, even higher. Again, the good thing about this policy, of course, is it doesn't discriminate on the basis of how much you earn, what the property price costs, it doesn't matter what age you are. You could be 25 or you could be 60 and buy.
NIELSON: We're talking about first home buyers.
HUME: That's exactly right. But there are plenty of people out there that still don't own their first home, that are stuck onthat rental cycle. This is a way to help those people break that rental cycle, break the nexus between the savings they already have and buying their first home. So it will appeal to a lot of people. We want to make sure that people have already saved a proportion of their deposit. Five per cent, they need to have saved already. Plus, they then can only take out up to 40% or up to $50,000 from their superannuation. And then put it back into superannuation after they've sold that first house.
NIELSON: So that's my other question. So you have to put it back into your superannuation after you sell your first home. That includes the amount that it would have accumulated if it were in your super fund. That makes it a lot harder than if you are looking to upgrade, which most people are. They've had kids. They want a bigger home. They want to add more space.That doesn't help when you're looking to buy a better place, if you have to take out that additional money. And also, aren't we talking about the possibility that your house value might have actually gone down in that time? This is all working on the assumption that the property values will go up, that doesn't help anyone who's in an inner city apartment that has a cladding issue or has been devalued because people are moving out because of the pandemic. It's not a safe assumption to say that property prices will continue to just go up indefinitely.
HUME: Well, on average, house prices go up around 4.5% per year. That's what they've done in the last 17 years. But just in the last couple of years, we've seen them go up much, much more than that. So we believe that this is a way that people can essentially invest their superannuation money in their own home. You can already invest your superannuation into a rental property, into an investment property. This just allows people to invest their superannuation into their own home too.
NIELSON: Is this just a last minute policy pitch, a shot in the air to say, we're coming after you industry super. Is this the Liberal Party saying that you just don't agree with superannuation, fundamentally?
HUME: This is the Liberal Party listening to the concerns of Australians. What they've said to us is that they want to get into the housing market. They want to be part of that great Australian dream. The hard part is saving that money for a deposit. It used to be, 20 or 30 years ago, that interest rates were higher, but the amount you need for a deposit was lower. Well, now the interest rates are manageable. The principal and interest repayments are manageable. The hard part is saving for a deposit. So this allows more Australians to get into the housing market at the time they need it the most.
The most important thing here, of course, is that housing itself is an indicator of economic security. It gives you a better quality of life while you're in your working life. It gives stability and security to your family. But also owning your own home is one of the best indicators of economic security in retirement. So it allows people to not just have an opportunity to get into their first home now, but have a more secure retirement in the future.
NIELSON: Many of the most vocal critics of this policy announcement this morning have said that this does nothing to address the actual issue with supply. This is all about looking at the demand side of the equation. Why isn't the Liberal Party doing more to try and get more houses on the market, to increase turnover and so people have a better chance to get into the property market.
HUME: Well, actually yesterday's announcement did include some supply side measures by decreasing the age of the downsizers contribution, from 65 then to 60 we announced in budget, now to 55. That will encourage people, the empty nesters, that have decided to get rid of the big family home and maybe move to something a bit smaller to make sure that they can contribute that money into superannuation in a very tax effective way.
We've also extended the asset test exemption for those people that are downsizing their home. Plus all the Coalition city deals have a component that isabout releasing more land, more supply for building and for housing and building the infrastructure around it. So the Federal Government is delivering on its supply side measures as well as the demand side. We really need the states and territories now to step up and local councils to step up too on their responsibilities on the supply side.
NIELSON: Minister, million dollar question. Who's going to win this Saturday?
HUME: I think the Coalition is going to win. The quiet Australians haven't spoken yet, Annelise. And we know that last time around, the quiet Australians didn't just speak, they roared. And I wouldn't be surprised if you see that again on Saturday. I take nothing for granted. Take nothing for granted. It's a seat by seat, and it's a voter by voter proposition. We will be out there working hard right up until Saturday.
NIELSON: I suspect it's going to be a tight race. But Minister Hume, thank you for your time.