Labor’s dodgy deal with Greens will smash the housing market

First published in the Daily Telegraph
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Labor’s dodgy deal with the Greens will stop Australians from borrowing to buy property through their self-managed super funds (SMSFs).

No wonder housing has collapsed by 30,000 a year on Labor’s watch. They are actually chasing away money needed to build homes.

Previously, borrowing by SMSFs was allowed, through so-called ‘limited recourse borrowing arrangements’ (LRBA), oftentimes helping people whose only asset is money in their super.

Why has the government done this? Simply to buy off their mates in the Greens.

This latest change to the budget is the third material change in Jim Chalmers’ “communist manifesto” in just six weeks.

SMSF Association chief executive Peter Burgess has said that “review after review has found LRBAs pose no material risk to the superannuation system.”

The most shocking part in Labor’s latest deal with the Greens is that they will exempt their mates at the union super funds so they can buy more and build more houses.

But they want to keep self-managed super funds (SMSFs) from having these same benefits.

Labor has no idea what impact this change will have on the housing system. They don’t care. They just want to ram their $77 billion in new taxes through the Senate.

Logically it makes no sense. How can some investment in housing be welcomed, as long as it’s union-backed money, but other investments in housing are not?

This U-turn adds another stone to Labor’s long and winding road of broken promises.

Just last year, the Treasurer had “no intention” of caving to the Greens on an SMSF borrowing ban in exchange for their support on his higher tax on superannuation funds worth more than $3 million.

These proposed changes, alongside this year’s federal budget, are another nail in the coffin for ambitious Australians and anyone not an institutional investor.

In fact, for the same investment, say a purchase of an existing investment property, there are now a range of capital gains rates - from 10% for big super funds, even 15% for foreign funds, but up to 47% for individual Australians.

Kicking out SMSFs from the market would be a hit on housing supply and construction.

SMSFs make up some 30 per cent of presales, required for construction funding to get housing projects off the ground.

Colliers says that, in the March quarter, loans for new builds accounted for almost 43 per cent of new investor loan commitments – which includes a proportion of SMSFs – up from 15.1 per cent five years earlier.

Kicking our SMSFs is the last thing we need during a housing supply crisis, while union super funds get the tax breaks.

This is bizarre but very consistent with Labor’s values of helping their vested interests. Labor is a government for vested interests.

Instead, we need all forms of investment to build more houses across the country. We need a housing supply revolution across Australia.

We don’t need more taxes and more restrictions on individual Australians.

We’re going to be lucky to get to have 170,000 houses built this year under Labor, whereas there were 200,000 dwellings built under the Coalition on average.

We need to be doing everything we can to encourage investment, not trying to chase away investment, and saying some investment is good and other investment is bad.

It is completely indefensible that union-backed super funds should have significant tax benefits that are no longer available to individual Australians.

Punters pay but vested interests win.

Andrew Bragg is the Shadow Housing Minister

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