There is far more at stake in a federal election than just monetary policy. Infrastructure support, defence, a clear vision, and social cohesiveness are all on the table. However, after a significant announcement made over the weekend, the Coalition has responded to the needs of first-time home buyers and retirees alike.
The Liberal Party have announced that first home buyers will be able to withdraw up to 40% of their superannuation, to a maximum of $50,000. That’s a significant financial hit to the average super fund in order to buy a house, and not all experts agree it’s a good idea.
Alex Cook from Wealth with Purpose joined us 20Twenty to share his concerns about the policy. If the government follows through on this proposal, he thinks the present housing affordability crisis will only worsen.
“For young people it sounds very attractive,” says Alex. “But you must also have a separate 5% deposit, and if you’re married you both have to be eligible. You also have to live in the home for the first 12 months, so you can’t buy it as an investment property.”
As far as public policy is concerned, Alex believes it’s a terrible idea. The reality is, all this is going to do is keep house prices high. The money will all go into the hands of sellers, and it won’t be of any benefit to young people buying into the market.
“The other problem is that young people will be destroying the base of their super fund,” Alex says. “It will probably set them back a good 10 to 15 years in terms of saving for their retirement. We need house prices to go down. But no politician in either of the mainstream parties is going to do anything about that issue.”
Lower housing prices threaten the broader economy, but Alex thinks it’s going to happen anyway with interest rates rising. The real issue is we need housing to be affordable so people don’t become economic slaves to outrageous loans.
“Young people value owning a home over superannuation,” says Alex. “We can see from the engagement statistics that most of them aren’t interested in their super. Its poor long term policy, but I think it’ll be a vote winner and that’s the point.”
On the flip side, the Labor Party policy is to be in joint ownership for up to 40% of the value in a home. However Alex doesn’t think this is necessarily good policy either. Both sides are trying to appeal to first home buyers, but there are serious ramifications.
“The real issue that we have to deal with in Australia is a willingness to see house prices fall,” says Alex. “It won’t be pleasant on the broader economy because when people buy homes it has a positive flow on effect. They buy other things like a fridge and furniture.”
Both sides of government want to keep the economy as strong as they can, and these policies will ultimately keep everything propped up. What we actually need are leaders who are willing to have a vision for the future and create policies that are sustainable.
“Short term pain is not such a bad thing,” says Alex, “if it cleans up the economy and gets us on a stronger footing. We really need to pray for great leaders who care about Australia enough to focus on policies for long term benefit. Because I don’t see how this policy benefits young people at all.”
“The big responsibility we have as believers is to get to know the candidates. We need to know what it is that they believe. Now is the time for us to be alert to what’s really going on and to take an active involvement in supporting parties that represent the best possible Christian way of thinking.”