Interview with Heidi Murphy on 3AW Drive

Heidi Murphy

We'll come back to that. But I mentioned superannuation: should young people, such as millennials or Gen Z, be able to access super early in order to have a deposit together for a house? Obviously, buying at the moment is tough: an extremely hard market combined with a soaring cost of living. If you're a first-home home buyer or a would-be home buyer, love to hear from you. How long have you been saving? How long have you been looking? Would you use your super for it if you were allowed to? Self-managed super funds are allowed to invest in residential properties as investments. Is it time that young people are allowed to dip in, in a similar way, but for properties that they live in? On the line is Senator Andrew Bragg, the Coalition's Home Ownership Spokesman. Senator, thanks for your time this afternoon.

Senator Bragg

G'day Heidi, how are you?

Heidi Murphy

Yeah, good, good. Obviously, there's a bit of a difference between self-managed super funds buying into the residential property space and Gen Z or millennials hoping to use a deposit. Do you think they should be treated the same?

Senator Bragg

Well, I think it highlights the perversity of the situation where you, as a younger generation, don't see people getting into houses as readily as older generations, but then you see SMSFs holding increasingly large amounts of Australian real estate. So effectively, the rules at the moment are that you can invest in any house except for your own. And I think that's ridiculous.

Heidi Murphy

Self-managed super funds can be invested in?

Senator Bragg

If you invest your super at a major industry fund or a bank fund or you're invested in an SMSF, your fund can then invest in any Australian property except for the person's own property in the case of an SMSF. So I just think that's a perverse situation.

Heidi Murphy

And is there any interest in changing it?

Senator Bragg

Well, our policy is that people should be able to use their super to get onto this first home ownership ladder. And the reason for that is because the key determinant of your success in retirement is not your super balance. It's your high ownership status, and for millennials and Gen Z, we want to make sure that they can get into a home because that's going to provide more shelter and more security than a superannuation fund.

Heidi Murphy

Do many Gen Z or millennials have enough in their super to have a housing deposit?

Senator Bragg

Yeah, so it's a good question. And obviously, there's a lot of vested interest against this policy because, of course, the super funds earned $30 billion in fees each year, and so they love the status quo where everyone's money is locked up for 40 years and they can charge high fees on it like Dracula and the blood bank. But the reality is that for an older millennial, let's say, 38-year-old millennial, they have an average balance of about $90,000. In a market like Melbourne, that would do a lot of the heavy lifting towards a deposit.

Heidi Murphy

Do you reckon many Gen Z or millennials want to draw that money out to use it for something like this?

Senator Bragg

I think where you have people that have no access to the bank of Mum and Dad, which is now one of the largest lenders in Australia, you do find people that are interested in doing it because that's their biggest pool of capital. And for example, if you're in your 20s, you've done a university degree, you've got to pay a huge HECS debt, you've got to pay now 12% of your salary off to a super fund for 40 years, it's not easy to get a deposit together.

Heidi Murphy

What do you say to the argument that it would, if this were to go ahead and you could access your superannuation to put a house deposit down for your own primary place of residence, what do you say to the argument that it would keep inflating the price of houses even more than they are currently?

Senator Bragg

The Coalition will develop a policy across the board, which, of course, includes building more houses, because we need to build more houses on the supply side: that's critical. But there's no reason why we shouldn't help people pull together a deposit. Now, the super funds are against this, so they've commissioned dodgy modelling which says that it will massively inflate the prices, but [for] most of the independent economists, they would have a marginal impact or no impact at all.

Heidi Murphy

You say there's a major generational clash. Is it a clash that's looming? Is it a disconnect that's looming or it's here now?

Senator Bragg

I think it's looming Heidi, because I think for a lot of younger people facing a huge HECS debt and sending a huge amount of money off to a super fund, because 12% of your income is a lot of cash, right? I think it's going to be increasingly difficult for these people to get the deposit required given the housing market dynamics at the moment. So that's where I think we're at. And I think that there will be more pushback on this perverse situation that super can invest in any house except for your own. And that is a perverse rule in a country which believes in first home ownership or believes in home ownership. We've always had a system where people could have a house of their own, and the super system was introduced at a time when people mainly did own their own house, but now we're seeing a decline in home ownership amongst millennials and younger people.

Heidi Murphy

I mean, it may well then add to the drain on the pension later if they take this amount of money out early days, wouldn't it?

Senator Bragg

Well, the modelling shows that if people invest into a house, you're actually better off over the long term than leaving it in super. But of course, the super system doesn't do a huge amount of heavy lifting on pension or on reducing pension payments. And in fact, most Australians...

Heidi Murphy

I thought that's what we set it up for.

Senator Bragg

Yeah, but it hasn't been very effective. I mean, the Super funds have pulled too much money out of it through their high fees. And the reality is it will never replace the pension. It could augment the pension for many people, but it won't do a huge amount of heavy lifting over the long term. So, in fact by mid-century or even into the last half of this century, most Australians will still be on the pension after 50 or 60 years of compulsory super.

Heidi Murphy

Well, that's not what it was intended to do. How prevalent is the dream of still owning your own home? Is it something we just like to cling to as something we've always heard so it must be true? Is it a truism that doesn't necessarily have a grounding anymore?

Senator Bragg

No, I think it's very important for all Australians because the tax system and the social security system are based around home ownership. If you're a retired renter, you're going to have a very difficult retirement on the pensions. And so with so many of our other laws geared around home ownership, I think people understand how important it is, which is why there's a huge amount of frustration with people who are getting into their 40s now and they're not getting onto the ladder. So that's why it's not going away, and it shouldn't go away, because there is a cultural desire for Australians to own houses. And I think that's something to be encouraged. And that's why we're putting it at the centre of our policy offering for the next election.

Heidi Murphy

We will watch your policy development with interest. Thank you for your time this afternoon.

Senator Bragg

Thanks, Heidi. See you.

Heidi Murphy

Senator Andrew Bragg there.

[Ends]