Reading time: 2 minutes
As the Federal election draws ever closer both major parties have outlined a series of policies and intentions for superannuation and the nation’s retirement savings.
Potentially the most controversial so far has been Scott Morrison’s announcement on 15 May of a Super Home Buyer Scheme. That scheme will enable first home buyers to use up to 40% of their superannuation – to a maximum of $50,000, to assist in the purchase of a new home. If re-elected, the Morrison Government would implement the scheme by 1 July 2023.
The scheme was cautiously welcomed by the Property Council of Australia. “While targeted demand-side policies to support aspiring homebuyers are welcome, a supply crunch is coming and this needs be the focus for whoever wins government next Saturday,” Property Council chief executive, Ken Morrison, said on Sunday.
But the scheme was widely panned by Labor (including former Prime Minister and a major architect of the current superannuation system Paul Keating) and the Financial Services Council (FSC).
“The FSC is concerned the Government’s proposal weakens the sole purpose of superannuation, which is to provide higher standards of living in retirement… Australians should not have to choose between a home and their retirement savings,” FSC chief executive officer, Blake Briggs, said.
The Property Council, and Labor, were more welcoming of the proposals by Morrison to extend tax breaks for older Australians downsizing their homes and seeking to invest the proceeds into superannuation.
Under the Downsizer scheme, the age over which Australians can downsize their home and make a non-concessional contribution of up to $300,000 into their superannuation, without effecting their contribution limits, will be lowered from 60 to 55 from 1 July 2022. The proceeds from the home sale will be exempt from the Age Pension assets test for two years instead of the current one.
“We know many older Australians face barriers to ‘right-sizing’ their housing and these announcements will help people move to a home or a purpose-built age-friendly community that serves their needs better,” the Property Council’s Ken Morrison said.
Labor has pledged to match the scheme. Labor has also said it will match the Coalition’s policies of freezing deeming rates and raising the income levels for eligibility for the Commonwealth Seniors Health Card to $90,000 from $58,000 on 1 July 2022.
Also during the election campaign, Prime Minister Scott Morrison said there would be no new taxes on superannuation if he were re-elected.
“Under our plan there will be no new taxes on Australian workers, no new taxes on small business, no new taxes on retirees, no new taxes on superannuation, no new taxes on housing, no new taxes on emissions and electricity,” the Prime Minister told a Leadership Matters lunch in Perth on 6 May 2022.
Earlier in April, Labor’s shadow minister for superannuation, Stephen Jones, told the Responsible Investing 2022 Conference that what Labor would be offering the sector would be “stability and certainty”. He also said that Labor would review the benchmarking tests of the Your Future Your Super legislation.
“In the area of superannuation, the Your Future Your Super legislation, particularly its benchmarking tests, they’re going to need to be reviewed because we’re quite certain they’re already having some unintended and negative consequences,” he told the conference on 7 April 2022.
“We want to ensure that the quite proper objective of holding funds to account for their investment returns and their costs doesn’t interfere with the equally quite proper objective of funds to drive both economic and social outcome.”.
Labor will also look to address an anomaly in the benchmarks which could essentially drive faith-based investing funds out of the market.
“[That] is a perverse outcome for a government which purports to champion the role of choice in superannuation and investment,” Jones said.