SUNDAY, 15 MAY 2022
SUBJECTS: Government’s superannuation on housing announcement; Help to Buy; Labor’s plan for housing.
JASON CLARE, SHADOW MINISTER FOR HOUSING AND HOMELESSNESS: Well, thanks for coming along on a Sunday afternoon. If Labor wins the election in six days time, your super will be safe. And we’ll help you to buy a home. You shouldn’t have to choose and you won’t have to choose under Labor. What we saw today was the last desperate act of a dying government. Every heavy hitter in the Liberal Party of the last generation that has looked at this issue have knocked it on the head, whether it’s John Howard, Peter Costello, Malcolm Turnbull, or Mathias Corman. Malcolm Turnbull described this as ‘the craziest idea I’ve ever heard’. John Howard said ‘super is for retirement’ and he’s right. Peter Costello said: “Well, look, this idea has been around for a long time. Every generation thinks it’s invented the wheel”. But it was Mathias Cormann who was the most searing in his criticism of this idea. He said back in 2014: “Access to super savings pre-retirement will not improve housing affordability”. He said: “It would actually drive up house prices by more. That is it would reduce housing affordability, including for first home buyers, and that the only effective way to tackle housing affordability is by boosting housing supply, not boosting demand.” That last great generation of Liberal leaders who could count – Howard, Costello, Turnbull, Cormann – have all reached the conclusion that this policy won’t work; that it would only push up prices, and mean that Australians retire with less, not more.
You shouldn’t have to raid your super to buy a home and you won’t under Labor. There are at least three obvious problems with what Scott Morrison has proposed today. The first is this, it’s not going to help the Aussies who really need help to buy a home. The typical Australian in their twenties only has about twenty grand in their super. For many, they’ve got a lot less. Some had to rip it all out just to survive in the teeth of the pandemic. The Grattan Institute did a study on this idea of superannuation and housing last year, and they found this: The poorest twenty per cent of households headed by a 35- to 44-year-old, precisely the group for whom homeownership is falling fast, typically have no super. The next poorest twenty per cent typically only have $15,000 in superannuation. The Grattan Institute reached the conclusion that a policy like this would mainly help wealthier people to buy more expensive homes. That’s the analysis of the Grattan Institute.
So problem number one, it doesn’t help the Aussies who need help. I ask you just to cast your minds back a week or so when we released our Help to Buy policy that’s designed precisely to help Aussies who need help to buy a home. Why? Because people in their 20’s and their 30’s on low and modest incomes 40 ago were able to buy a home. Sixty per cent of Aussies in their 20’s or their 30’s on low incomes 40 years ago, own their own home. Now it’s down to 28 percent. Our Help to Buy policy is designed to help them by providing government support. Without that support, they’d be left to rent for the rest of their life. A policy like the one Scott Morrison is talking about today doesn’t help them because they don’t have any superannuation.
Problem number two. As Mathias Cormann pointed out, this would just be like adding kerosene to a fire. Industry Super did an analysis of this idea a year or so ago, and they reached the conclusion that if you put in place a policy like this, average house prices in Sydney would jump by $134,000. That’s the view of Industry Super. So number one, it doesn’t help the people who need help. Number two, it adds fuel to the fire. It makes it harder to buy, not easier to buy. Just think about the scenario: two young Aussie couples off to an auction, both bidding with their superannuation. And their superannuation is supercharging the bidding war – they’re bidding against each other using their superannuation to do it. And at the end of it, the only people that win are the people that are selling them the house, because they end up spending more. They end up spending more, with a bigger mortgage and less superannuation. The people that really win out of this are the people selling the home because the prices go up and the banks who get to lend more money.
And there’s one final problem with this, that the same report identified that’s worthy of mention here today. And that’s that it’s not just the first homebuyer that’s worse off. It’s you, the Australian taxpayer. Because their analysis shows that for every dollar that a 30-year-old pulls out of their superannuation, you, the taxpayer, have to put another $2.50 into paying their pension in the years ahead. So this is a bad idea, ill thought out. Big brains in the Liberal party like John Howard, Peter Costello, Malcolm Turnbull, and Mathias Cormann, who have all looked at this, have knocked it on the head. And I think the Australian people can see through this cellophane Prime Minister. They’ve worked him out. They know that if this was really a good idea, they would have done it 10 years ago, not six days before an election. Happy to take a few questions.
JOURNALIST: Those criticisms that you talk about – that was seven or eight years ago. Isn’t the housing market much more inequitable now and so isn’t this cause for this to be now?
CLARE: No doubt it is harder to buy a house today than ever before. We’ve got a – it’s not melodramatic to call this a housing crisis. It’s harder to buy than ever before. It’s also harder to rent than ever before. There are more homeless Aussies today than ever before. And it requires a serious government with a comprehensive plan to tackle it. Now, some of those quotes are from a couple of years ago. These reports are barely 12 months old. The Grattan Institute has looked at it, said it won’t work. Industry Super has looked at it, said it would actually add fuel to the fire and make things worse. The analysis we’ve done shows that the Australians who need the help the most to buy are people who are on low and modest incomes. People who have thrown their hands up in the air and given up because it’s not just hard to buy, to save a deposit. They don’t earn enough to be able to pay off that $900,000 mortgage. So Help to Buy is about helping them. The government providing equity of up to 30 or 40 per cent, it’s the difference for a lot of Australians between whether they live in a home that they own, or whether they rent for the rest of their life.
Let me give you an example of a woman I met on the Central Coast last year. Her name’s Angela. She worked at a school canteen, she now works in disability services. Her husband Aaron is a carpenter they got three kids, they’re renting. Their combined income is less than 100 grand. They want to buy a house, cost about $900,000. They can’t afford to buy it but the bank says they’ll lend them $500,00 or $600,000. That’s why our Help to Buy policy will really help them. A policy like the one Scott Morrison’s announced today will just make the cost of that house even more expensive. That’s why this is a bad idea.
JOURNALIST: But you still need that deposit, which for many is impossible to save without help. So doesn’t this still help them get into the market? You say people may have only 20 grand in super, that’s not gonna go very far. Wouldn’t it be more useful to rip it out and spend it on a deposit?
CLARE: I’m glad you asked that question because one of the design features of this policy they announced today is you still have to save a five per cent deposit. So you have to save a five percent deposit before they let you drain your superannuation. I looked at that and I thought ‘these blokes aren’t thinking.’ They’ve already got a policy in place, a home guarantee scheme which we support, which says if you’ve got a five per cent deposit, we will guarantee the next 15 per cent so you don’t pay mortgage insurance. Now for Australians watching this at home who were thinking ‘okay, well, I’ll need a five per cent deposit if I can access this, why would I drain my superannuation when I can use that existing scheme? As long as I can save the five percent deposit, I’ll get the government to provide a guarantee over the next 15 per cent and then I’ll be able to get the mortgage that I want. Why would you drain your superannuation when you didn’t have to? I just don’t think they’ve thought this through.
JOURNALIST: Cold you just recap some of the features of Labor’s policies in contrast to the Liberal policy?
CLARE: There are four main features of what we’re proposing. We’ve got to make it easier for Aussies to buy a home. Our Help to Buy policy will do that by making sure that you can buy a home with a smaller deposit, with a much smaller mortgage and significantly smaller mortgage repayments. And we do that using a model which we know works because it’s working in WA, it’s working in Victoria and it’s now being set up in Tasmania and in New South Wales. It’s not a Labor idea. It’s not a Liberal idea. It’s being set up by Labor and Liberal governments right across the country. And it’s helping people like Angela and Aaron that I mentioned before, people who would otherwise rent for the rest of their life.
I told the story at a press conference the other day about my grandfather. He was in intensive care for three weeks. He had rented all his life. The only reason that there was enough money in his bank account to pay for the coffin and the funeral was the fact that he was in intensive care for three weeks. Policy, like the one that we’re proposing, is going to help people who would otherwise rent for their entire life, to create wealth and pass it on to their children. It’s a good policy. That’s why it’s been proposed and implemented by Labor and Liberal governments across the country. And if Scott Morrison was honest, he would say that and admit it, because for the last 10 years he’s been telling the Australian people that these schemes are good ideas. So that’s Help to Buy.
The government’s existing guarantee schemes that mean if you’ve got a five per cent deposit they will guarantee the next 15 per cent so you don’t pay mortgage insurance, that’s a good idea and we back that. Unlike Scott Morrison, we don’t say no to everything. If they come up with a good idea, we’ll back it. That is a good idea. And we back that. And we’ve actually recommended that there should be a carve out for people in regional Australia, where we’ve seen prices skyrocket in the last 12 months, as people have moved from cities to the bush because you can work from home, you can work remotely.
But that’s not the only thing that we need to do. There’s more that we need to do. Supply is a big part of the problem. These are demand side proposals that the government’s talking about today. Even Jason Falinski, the Liberal Member for Mackellar who headed up an inquiry into housing affordability recently and recommended something like this, said the government shouldn’t do it unless they do something about housing supply because it would increase prices.
JOURNALIST: Do what about housing supply? What do you want done about housing supply?
CLARE: Unless you do something to release more land, working with state governments and local governments, it would just increase prices. That’s what that report from Jason Falinski said. We agree with him. And that’s why last week, two weeks ago today, we announced that we would establish a National Housing Supply and Affordability Council. It might astonish people watching now that the Housing Minister of Australia doesn’t actually meet with housing ministers across the country. It blows my brain that an issue that is so complex, where you need the federal government, the state government and local governments all talking to each other and working together, don’t sit down and talk about this. We’ll set up this council that will set supply targets for states and territories across the country, make sure that we’re collecting uniform data, so we know what we’re talking about and know what we’re working with, and it will report regularly to national cabinet to set out a plan to improve the release of land and improve planning processes. If you get that right, then you can do something about housing affordability, and you actually can do something pretty good about productivity and economic growth. So that’s number three
JOURNALIST: But that’s not going to bring down house prices, that’s just gonna make – developers are gonna make more money.
CLARE: No, I disagree with that. Whether you’re talking to the Property Council on one side, or you’re talking to National Shelter, and ACOSS on the other, they all say this is the Gordian knot that needs to be undone if you’re going to do something serious about housing affordability. It’s not the only thing, but it’s a big part of it. So you need policies that help people who would otherwise rent for the rest of their life, that’s what Help to Buy does. You need guarantee schemes like the ones that the government does have, because they help avoid that mortgage insurance bill which can sometimes be 30 grand. You’ve got to do something about supply, and that’s got worse not better over the last few years.
You’ve also got to do something about social housing and affordable housing. If we got in a time machine and went back to the end of World War Two – 14 per cent of housing in Australia was social housing. Now it’s about four per cent, and it’s going down. Now, there’s only one party at this election that says we get it. We understand you need federal leadership here. And we’re proposing a $10 billion Housing Australia Future Fund that will build 30,000 affordable and social housing dwellings in its first five years, including and in particular for women and kids fleeing domestic violence. Last year 10,000 women and kids knocked on the door of a refuge, sometimes in the middle of the night, and were turned away because the inn was full. Now, where do you think women go when they can’t get into a refuge at night? They sleep in the car with the kids. Or they sleep on a friend’s couch. Or they go back to where the violence was happening. We need to invest more in those urgent immediate refuges. But we’ve got to do so much more than that. You talk to anybody in this area that knows what they’re talking about. What they tell us is you need to build more transitional and permanent housing. And that’s what we’ll do if we win the election, at least 4000 of those homes will be for women and kids fleeing domestic violence. And that would be the biggest investment in permanent housing for women and kids fleeing domestic violence by the Commonwealth Government ever. Ever.
JOURNALIST: Doesn’t the money remain within the retirement envelope? Why is it wrong to use your own money when the proceeds from the sale of the property run back into…
CLARE: What if it never sells? What if you live in that house for the rest of your life? Then it never goes back. Any more questions?
JOURNALIST: Is this a little bit academic? A lot of young people, it’s a bit of a dream to ever think of owning a home. They’ve rented for so many years and live in a sharehouse, for example.
JOURNALIST: It’s just kind of like, that will never be me. So I’m going, who cares? So is Labor going to address that? A lot of young people just think I could never own a home anyway.
CLARE: For a lot of Australians, they are giving up. They think it’s all too hard. But for a lot of other Australians, they’re still out there trying. A lot of Australians are making the plunge and want to buy a home because they know how important it is. This was something that was drummed into me by my dad when I was a kid. He saw what happened to his dad – I just told you the story of my grandfather. And the lesson that he gave me when I was a kid was: when you can, buy a home. And boy oh boy it was a lot easier for me when I was in my 20s than what it is for young people today. But this will just make it harder. This will just put fuel on the fire and make prices even worse. Lots of young people are finding it tough. And I really worry, not just that young people give up now. But what does that mean in 20 or 30 years or 40 years when they retire, and they’re still renting in retirement?
JOURNALIST: But doesn’t that back up the argument that this sort of help now given that – obviously they borrow more than they can than they can service – but doesn’t it doesn’t show that it’s more important for them to get into the market now when they need that help now? A lot of the homeowners schemes are capped –
CLARE: What this means is we need serious people in Canberra coming up with serious policies that will help people to buy not make it harder to buy. And that’s the fundamental problem here with what the government is proposing in the dying days of this election. That it will make it harder to buy. Our Help to Buy policy is about tackling the problem I just described of people giving up on the Great Australian Dream. We will keep Australian’s super safe and help people to buy a home. You should not have to choose and this government is asking Australians to choose.
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