Interview with Sarah Morice on ABC News Radio

‍Subjects Superannuation and housing 

E&OE....

Sarah Morice

Today, the federal Opposition's Housing spokesman, Andrew Bragg, is going to be speaking to the Financial Services Council with a pitch to rethink our super system again. One of the ideas he's raising is that we use superannuation as collateral for a mortgage or to increase the size of a loan.

Let's get some more on this. We're joined now by Senator Bragg. Senator, good morning.

Senator Bragg

Sarah, how are you?

Sarah Morice

Look, I'm well. Let's be clear, none of the ideas you're talking about today are official Coalition policy yet, but run us through your idea here. How would we use super as collateral to buy a house?

Senator Bragg

Well, that's right. The general idea here is we want to have a country where more people are retired home owners, and one of the most worrying trends we have is the growth in retired renters. Now, there's nothing wrong with renting of course, but for a lot of people, they would rather live in their own house in retirement. And so we want to make sure that we're properly calibrating all the options people might like to have in their working life to use their own savings to promote home ownership.

Sarah Morice

Okay, so how would this work? How would you go to the bank and say, "I've got, what, 50 grand, 100 grand in my super, can you include that when you're considering how much I can borrow?"

Senator Bragg

There's a whole of different ways you could do it, but that would be one option. It is effectively looking at, well, now we have 32% of lump sums out of super being used to pay off mortgages at preservation age, which is 60. So surely it's worth us looking at whether you could effectively calibrate that earlier. Because if people are looking at paying very hefty interest costs, particularly in an environment where we have stubbornly high inflation and high interest rates under this government, for some people, it might make sense for them to try and reduce their interest costs and pay off their mortgage earlier.

Sarah Morice

Just to be clear, so are you saying we should extract the money out of our super and put it towards a home, or is it being used as collateral, or a guarantee so to speak?

Senator Bragg

Well, that's a good question. I mean, you could effectively do it in a range of ways. You could keep the money in the system and it could operate as collateral or an offset. You could take it out to pay off a mortgage or to pull together a first-home loan. These are all options that have been canvassed before in prior Senate reports. I think it's a discussion worthy of a country like Australia, which has always been able to have big debates. I think in the last few years it seems that it's been harder. When this was first raised, I think Jim Chalmers, the Treasurer, ran off to try and raise donations for the Labor Party on the back of this debate. The main point is, look, we don't want to become a nation where renting in retirement becomes mandatory. We want to have a country where people can live in their own house, and I think if their superannuation can help them do that, then we should look at the options.

Sarah Morice

Is this risky, though? Because could this lead to some people taking out larger loans than they have the ability to service, or if they default on their mortgage, then their bank can go in and take out this super that they were using as collateral?

Senator Bragg

I think the risk we're sitting on now is that the trajectory is very bad in terms of the projected amount of retired renters...

Sarah Morice

I do hear where you're going on that, but just back to my question there. I'm talking here specifically about taking superannuation out to pay for a house. There are risks associated with that. Are you worried about that?

Senator Bragg

Well, what are the risks?

Sarah Morice

Well, that you might end the rest of your life with less super in there that could have been compounding. I'm just trying to get my head around...

Senator Bragg

You get compounding through a house.

Sarah Morice

Well, and you pay less interest if you've got more down, I do understand that. I get where you're going, but I guess what I'm trying to get at is how is this different at all to that Coalition plan that you took to the last election, which was allowing first-home buyers to take $50,000 out of their super for a home purchase?

Senator Bragg

Today's address is about setting out the rationale for having a more sophisticated debate. When Paul Keating set up superannuation for the Labor Party, he initially proposed allowing housing to be part of that. That obviously later changed. And when we had the big debates in the 80s and 90s about national savings, this was part of the debate. I think that we should be able to look at the best way to give people choices. I'm not advocating any particular solutions today, but I think it's important that we look to ensure that we do all we can to drive up home ownership rates. Because we are becoming a country which is going to have a lot more retired renters, but also people potentially with quite high superannuation balances. That doesn't seem to be the best outcome for all people, which is why we're having this debate, because we want to be a nation of home owners.

Sarah Morice

Okay, I'm wondering, going forward, this appears to be a floating of ideas today. Would that be fair to say? You're throwing something out, running it up the flagpole, seeing who salutes. I'm just wondering why the Coalition is taking so long to come to its housing policy here? You know, One Nation streaks ahead in the polling at the moment, but also coming out with some housing policy. What's taking the Coalition so long?

Senator Bragg

The One Nation policy is a relatively modest policy. We're talking about the broader issues here, the big macro trends that you're seeing in the IGR yesterday, that we are going to have more retired renters. That's going to be a problem for Australia, and I don't think using 3% of super is going to solve that structural issue. And so the important point here is that we believe that home ownership is the bedrock of your retirement. In fact, it is the key determinant of your success in retirement, as the IGR said yesterday as well. Making sure we have more home owners and being creative about how we think about that is really the point of today's address. We're going to keep on working on this because it's an important debate for the country to have. The alternative here is Jim Chalmers' Labor approach, where they're too afraid to have the debate and they'd rather run off and raise donations for the Labor Party.

Sarah Morice

Although you say they're too afraid to have the debate, I guess you keep talking about how important it is for people to help fund their own retirement by having their houses, and this is such an important issue for so many Australians. There are so many Australians, particularly young ones, who can't get into a home. They're struggling with these rising rents, then there are other Australians struggling to pay their mortgages. When can we expect a policy from the Coalition on this, because people are waiting for this?

Senator Bragg

We already announced a number of housing supply policies, and housing supply is going to be the key to fixing the housing crisis, there's no doubt about that. But there is also a case for targeted demand-side solutions and a case for people to use their own money to support their own objectives. Ultimately, the housing issue is a wicked issue because the government have presided over a corruption of the housing system, they've presided over a corruption of the migration system, they won't allow you to build a cheap house, and their supply programs have completely collapsed. They've built 30,000 fewer houses a year compared to the last government, and they've more than doubled the migration intake. It's going to take some time to fix the housing disaster they've created, and we think that's a supply-side recovery mainly, but there is also a case for some targeted demand-side models here.

Sarah Morice

Okay, well talking of these targeted models, how much support within the Coalition is there for this idea of using your super as collateral?

Senator Bragg

As I said, this is a speech today that's looking at the broader contours of this debate. I think it's very important that we are able to have a debate about calibrating housing and retirement policy, and I think most people would want their well-paid politicians to be pushing out the boat on some ideas that might be able to help them achieve their goal of home ownership.

Sarah Morice

All right, well I appreciate you coming on air with us today, even perhaps if this is somewhat of a taking the temperature of a policy for your party, but I appreciate your time. Thank you very much.

Senator Bragg

Thanks, Sarah. See you.

Sarah Morice

Thanks, bye. That's the federal Opposition's Housing spokesman, Andrew Bragg, with us there this morning. He'll be giving that speech a little later today to the Financial Services Council.

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