Interview with Chris O’Keefe on 2GB

Subjects: Super/Mortgage Offset Accounts

E&OE………

Chris O'Keefe

Senator Andrew Bragg is on the line for us. Senator, thank you for your time.

Senator Bragg

Chris, how are you?

Chris O'Keefe

I'm well. Will it mean that I'll pay less interest if this becomes reality?

Senator Bragg

Well, if you had a million dollar mortgage in Sydney and you had a couple of hundred grand in your super, you would definitely pay less interest and you would own your house much faster than you otherwise would. And so I think it's crazy that we're forcing some people to pay high interest costs to a bank on the one hand, but also high fees to the super fund on the other hand.

Chris O'Keefe

How would it work if I foreclosed? If I started missing my mortgage payments, would the banks then be able to grab some of my super?

Senator Bragg

Well, at the moment, you couldn't do that. But obviously, in this In case if you foreclosed and you had a delinquency, you would obviously lose your money. But there are very few delinquencies in Australia. The bank take very little risk these days because of the responsible lending laws. So in the main, I don't think it's a big risk. The big risk that people are facing is paying duplicate sets of fees in very high interest when they don't actually have to.

Chris O'Keefe

What's in it for the banks, though, to be cool with this?

Senator Bragg

Well, I don't really know what their view is. There's a lot of conflicts of interest in the financial sector. I mean, the super funds own large parts of the bank. If you look at the share holdings of the major banks, I mean, the super funds are amongst the biggest owners these days. So I suspect a lot of the banks probably don't actually support this idea for potentially nefarious reasons. But I think we should be in the business of giving Australia's choice here.

Chris O'Keefe

What's the likelihood of this becoming Liberal Party policy?

Senator Bragg

As you said before, our policy at the moment is to help first home buyers with a deposit hurdle, with a 50K removal of super. This policy would be about helping people who've already got a big mortgage and want to pay it off faster. And we're currently doing an investigation in the Senate as to how viable it is. So it's not guaranteed, but it's in with a chance.

Chris O'Keefe

I like the idea. It makes sense to me. Would I still earn compounding interest on my superannuation, though?

Senator Bragg

No. So you would obviously... You couldn't double-dip. If your money is reducing your interest, then that's what you're getting. It's a big benefit. If you're paying more principal, that means that you're going to own the house faster.

Chris O'Keefe

So the idea is have the superannuation, put the balance across as an offset, pay off my house quicker, and then put it back into superannuation, if I wish.

Senator Bragg

Yeah, or whatever you want to do. The idea that super is the only way to get a safe retirement, I think, is pretty narrow thinking. That obviously suits our political opponents because they like to be members of Parliament and also collect directors' fees from super funds that seem simultaneously.

Chris O'Keefe

So if you allow this to happen, will that mean that my superannuation, so the $200 grand or whatever it is, will then be mine in cash?

Senator Bragg

Well, it's yours in cash for this purpose. We're not proposing a massive opening up of the whole scheme. What we're proposing so far is some help for people with the deposit, and now we're investigating whether this offset idea is a goer.

Chris O'Keefe

And if I get to 65, Sorry, if I pay my house off before I'm 65, that money in the superannuation offset, what happens to it?

Senator Bragg

Well, that's something that we'll consider during the inquiry. My view would be that you might want to use every additional money you have above and beyond paying off the loan for investing in other things.

Chris O'Keefe

They don't like you mucking around with super, do they, Labor?

Senator Bragg

Well, as you've seen today, there's, unfortunately, people sitting in State of Parliament collecting directors' fees while they're members of Parliament. So that's probably the best example you can find of the close proximity between the super funds, the unions, and the Labor Party.

Chris O'Keefe

Senator Bragg, I appreciate your time. I'll tell you what, whether or not this gets up is who knows, but at least you're coming up with some ideas. Well done.

Senator Bragg

Thanks, Chris. See you.

Chris O'Keefe

That's the Liberal Senator, Andrew Bragg.

[Ends]