Experts deride ‘super for housing’ at their peril

One of the golden rules of politics is to never let a crisis go to waste. And the previous Morrison government adhered to it with gusto, when at the height of the Covid-19 pandemic’s first wave, it spotted an opportunity to put a dent in the compulsory, default superannuation system seen as a landmark Labor achievement. 

As part of its stimulus response, the government extended the longstanding ‘early release’ scheme allowing those in serious financial hardship to tap their super to pretty much anyone feeling the punch during the pandemic. The measure was fiercely opposed by the super industry and many experts and led to a flurry of headlines about superannuants frittering their retirement savings away on the pokies or day-trading meme stocks in the feverish coronavirus bull market. 

But for many other recipients, the cash injection was a welcome salve in an uncertain time. And more importantly for the Coalition, three million working Australians, for the first time, held their super savings in their hands in the form of cold, hard cash, reminding them that it is, indeed, their money. 

Multiple Coalition MPs have publicly denied there was any political strategy behind the move, swearing it was nothing more than a prudent pandemic response. But political observers widely suspect there was a deeper motivation and possible benefit: to test the idea of a more flexible super system in which individuals, and not trade unions, employers or governments, have sovereignty over their super. 

If true, then clearly the Coalition feels ‘early release’ passed that test, because it is doubling down on flexibility with its contentious ‘super for housing’ policy, which, as Glenda Korporaal recently reflected on in this publication, has gone from being a hare-brained scheme from then-backbencher Andrew Bragg to being official party policy and a central plank of the Coalition’s election pitch.   

Thus far, the super industry have attempted to respond with facts, with the Super Members Council rolling out modelling suggesting it would counter-productively push up house prices, while many others have attempted to explain the long-term detriments that even relatively minor withdrawals may have on a nest egg at retirement. 

Most economists and experts seemingly agree. But while these arguments may well be evidence-based and accurate, they appear somewhat weak in the midst of such an emotive campaign. 

And moreover, it cannot be denied that the industry – though its pushback may be well-intentioned – is incentivised to keep its assets under management large and growing. Any opposition to a policy that potentially diminishes the size of that pool of assets will at least be perceived as, if not actually be, self-interested. 

Plus, let’s be honest, many of the experts and industry executives pushing back against ‘super for housing’ are statistically very likely to own their own homes – and in relatively swanky suburbs at that! 

As a professional journalist covering the space, I am more than familiar with the arguments and the modelling. I understand the magic of compounding. But I am also in the target demographic, and frankly, as a father of two young children (and another on the way), all of these long-term projections and evidence-based reasoning are secondary to the deep and visceral desire to put a roof over their heads. 

As shadow finance minister Jane Hume told us at a Conexus Financial Political Series event last year when asked about expert criticism of the policy: “You know who likes it? Australians trying to get on the property ladder, that’s who.” 

Research from CoreData suggests there is a growing cohort that probably fits this bill. Its ‘canary in the coalmine tracker’ estimates just 43 per cent of 30-39-year-olds feel financially secure, compared to 67 per cent of Australians aged 50-plus. 

And even beyond the cohort who has most to gain from the policy, there are signs the broader voting public is getting behind it too. A Guardian Essential poll in April found 57 per cent of voters backed the Coalition’s ‘super for housing’ plan, giving it majority support.  

To be clear, Investment Magazine is not endorsing the policy. Nor are we suggesting that it will be enough to necessarily confine the Albanese government to a single term.  

But insofar as it, and the early release scheme that preceded it, are aimed at putting a question mark around the ‘sacred cow’ of compulsory super, they are arguably achieving some success to that end. 

The compulsory, default super system is a landmark achievement for the nation, and it is envied by policymakers and think-tanks (not to mention finance industries) in many other nations. Conexus Financial, publisher of this website, wholeheartedly supports it.  

But it should still be up for democratic debate, and should enjoy its privileged position only so long as it enjoys the support of the voting and retirement saving public. 

Equally, the Coalition would be unwise to read too much into the current popularity of its proposal. The poll numbers are almost certainly more a response to the specific and pressing problem of housing affordability than an endorsement of a more flexible super system. 

But the industry must acknowledge the emotive nature of this debate and try to understand the reasons it may be deeply resonating (even with those of us who understand and sympathise with the empirical data underpinning its complaints). 

To win this argument, facts alone will not be sufficient. If anything, responding with economic theory and numerical projections smack a little of “we know best” – a dangerous line to run in this Trumpian age. 

Instead, opponents need to fight fire with fire and make the emotional case for preservation. Either that, or be willing to accept a more flexible system if that is what the people ultimately decide.