Australia’s prime minister Scott Morrison has launched a last-ditch attempt to woo voters by pledging to allow first-time homebuyers to raid their retirement savings for a house deposit, as his government trails the opposition Labor party in the polls less than a week before an election.
The Super Home Buyer Scheme, which will be introduced in 2023 if Morrison is re-elected, would allow first-time buyers to tap their savings to raise 40 per cent of a deposit up to A$50,000 ($34,000) per person. A separate incentive would also be introduced to tempt those the age of 55 to sell their homes for smaller properties.
But the proposal was condemned by superannuation funds and economists, who said the policy would fuel a surge in prices in an already overheated housing market.
Morrison trails Labor leader Anthony Albanese, with 54 per cent of voters backing the opposition compared with 46 per cent for the government, according to the latest Newspoll survey.
The election campaign has been split between issues including national security, climate change and a sharp rise in the cost of living. Morrison has also had to confront his personal unpopularity with the public and pledged to change his “bulldozer” approach in recent days.
The decision by the Reserve Bank of Australia to raise interest rates to curb inflation ahead of the election also challenged Morrison’s claims that his government was a better custodian of the economy than Labor.
The rate decision highlighted the difficulties that younger and lower-earning people face in buying a house, an issue Labor has tried to emphasise with a shared equity scheme that offers subsidies for low-income households looking to buy.
Morrison argued that savers should be allowed to use their pension money as they saw fit.
“The evidence shows that the best thing we can do to help Australians achieve financial security in their retirement is help them own their own home,” Morrison said. “This will be a game-changer for thousands of Australian families who sit and look at that money on their balance and go, if only I had that to help me now.”
But the government conceded the plan would probably drive up house prices in the short term, as higher interest rates have briefly cooled the property market. Superannuation minister Jane Hume said the scheme could temporarily “bump” prices higher.
Saul Eslake, an economist and founder of consultancy Corinna Economic Advisory, described the proposal as “a contender for one of the worst housing policy decisions of the last 30 years”, adding that it would trigger “reckless” inflation in house prices.
Greg Combet, a former Labor government minister and chair of IFM Investors, an asset manager owned by Australian superannuation funds, said the policy was a “terrible idea that will push housing prices up and undermine the superannuation saving system”.
“I wouldn’t be surprised if it was drawn up over the past few days by a desperate team that looks like losing government,” he said, adding that the industry had not been consulted.
The Financial Services Council, the industry association, also opposed the measure. “Australians should not have to choose between a home and their retirement savings,” it said.
Paul Keating, the former Labor prime minister whose reforms helped establish the modern superannuation system, said Morrison’s move was an attempt to “puncture the pool of money” that working-class people have grown for their retirement, which needed to be preserved.