Interview with Charlie Pickering on ABC Radio Melbourne

‍Subjects: Super for housing PBO costings, negative gearing, ‘Help-to-Buy’

E&OE………

Charlie Pickering

I'm joined now by Senator Andrew Bragg, Shadow Assistant Minister for Home Ownership. Good afternoon, Andrew.

Senator Bragg

Charlie how are you?

Charlie Pickering

Very well, thank you. Tell me how this is going to work. I remember when I was first trying to buy a home, they brought in the First Home Buyers Grant, and I got very excited by, I think it was seven grand at the time that was going to help. I noticed all the houses I was looking at went up by seven grand. Wouldn't this just do the same thing?

Senator Bragg

Well, the housing market in Australia is an $11 trillion system. And so, if people were going to use their own money to get into a house, it won't make a material difference to the house prices. The most important component here is that it's really your housing status, not your superannuation balance, which determines your retirement outcome. That's why we're trying to get people into houses.

Charlie Pickering

And so, how would the system work that you are proposing?

Senator Bragg

Well, I mean, it's all well and good if you’ve got access to the bank of Mum and Dad. Now, the Bank of Mum and Dad is now the sixth biggest lender in Australia. But if you don't have access to that, which I think is a very dangerous position for the country to be in. We've never wanted to promote a system where your parents wealth determines your housing outcomes. So, if you don't have access to that, then super is your biggest pool of capital for the average worker. So, you'll be able to take out up to $50,000 to put it into a first home deposit.

Charlie Pickering

So, the big claim of this policy is that it's going to save the Budget almost $3 billion in 10 years in Commonwealth Rent Assistance. How have you calculated that?

Senator Bragg

Well, the main claim on the policy is that it helps people get into a house. It means that everyone who has superannuation, which is most Australians, could actually use their own savings, their own money to get into home ownership. That's the main claim. The secondary element here is in relation to the Budget, as you say, and the Parliamentary Budget Office has costed this policy as saving the taxpayer almost $3 billion over 10 years because of reduced outlays of Commonwealth Rent Assistance. So, effectively, you have more people living in houses, so, you have fewer people drawing on Rent Assistance.

Charlie Pickering

There are currently 1.3 million users of Commonwealth Rent Assistance. How many of those actually have enough in super for this to help? How many of those are actually in a position to use this to buy a house?

Senator Bragg

The Parliamentary Budget Office has done a costing which has looked at this, and it is based on an assumption that 20% of people would want to do it. And you've got to look at so, me of the average balances here. So, for example, the average 38-year-old Australian has about 90 grand in their super. So, for the older millennials in particular, it's quite an attractive policy. I think it would be, chiefly, about making sure that that Australian dream stays alive for those younger generations.

Charlie Pickering

Is there a sense, though, that we are, in the short term, grabbing this money to solve a current problem, and it will actually add up over time and cost people when they come to retire?

Senator Bragg

Well, the trajectory that the millennials and Gen Zs are on is not too good in terms of home ownership. So, I think it will lock in better long term outcomes. As I say, the key determinant of your success in retirement is not your super balance, it's your housing status. So, that's the key element. And the idea that the only way you can save for your retirement is through super, I think, is very rigid thinking. I mean, the super industry is very good at trying to condition the community into thinking that it's the only game in town. But Australians are quite clever, and they work on how to save their own retirement. So, I think...

Charlie Pickering

The Federal Housing Minister, Clare O'Neil, has responded to the policy saying that the Coalition has quote; less than zero credibility on housing. It's pretty harsh words. What do you say to that? I guess their suggestion would be, as we have a housing crisis now, and that is coming straight after a decade of your party being in government.

Senator Bragg

Well, under our party, we built 230,000 houses in 2017, and this government's built only 160,000 houses last year and this year coming. So, the...

Charlie Pickering

Sorry, how many had you built?

Senator Bragg

220,000 - 230,000 houses.

Charlie Pickering

In more than twice the time?

Senator Bragg

No, in 2017.

Charlie Pickering

2017, sorry I'm just trying to do the maths here. So, over how many years was that?

Senator Bragg

In one year, 2017, there was 220,000 or 230,000 houses built, right?

Charlie Pickering

Okay, sorry. I understand now.

Senator Bragg

That's clear. This year, they've only built 160,000 houses. So, my point to you is it's a massive supply crisis. The government has presided over a system where home building and construction has collapsed, and their policies in Canberra, like 'Help-to-Buy' and the other things they've been debating today in the Senate are very small solutions, which they announced more than 800 days ago. So,, they've had no urgency here on the housing crisis. This is really a crisis of their own making.

Charlie Pickering

At the same time, though, the government is having to negotiate with the Greens because the Coalition aren't trying to work with them to pass this housing policy. If it is as urgent as you say, and we need to get stock built faster, why are you forcing them to deal with the Greens rather than working with them?

Senator Bragg

Because we're against the 'Help-to-Buy' scheme, because it's a government-owned program where the government owns half your house. Frankly, in the scale of the problem we have, it's a tiny, very niche solution with many, many hairs on it. So, that's why we're against it. And we're also, against their 'Build-to-Rent' policies, which would establish a system of corporate home ownership in Australia. And Labor is happy for people to rent forever and happy for the houses to be owned by foreign fund managers and big super funds. So, that's their policy, and we don't agree with that.

Charlie Pickering

I'm speaking with Liberal Senator Andrew Bragg about the possibility of tapping into super to buy your home. The number is 1-300-222-774. I'd like to know what you think. Is it a good idea? Would you tap into your super if it meant buying your home? Or does it not actually help the people who are on Commonwealth Rent Assistance that need the help? Is it possible that those people, maybe they could tap into their super, but they don't have the income to service the mortgage once they have the home? Give us a call, 1-300-222-774. Something that always comes up when we talk about this, Andrew, is negative gearing. I know that there was an election battle fought on that. I personally think because the policy to end negative gearing the way it's done now was a little vague. So let me ask you this, and it's quite specific. I'm not talking about getting rid of all negative gearing, but what if there was a cap on negative gearing? One of the arguments is that for a lot of people, negative gearing helps them retire. It's one of the only ways that they stayed liquid after the GFC. I've got so, me personal experience with that in my family. What if we kept the number of properties that people could have negatively geared so, that it can still work to help people save and build wealth for retirement, but it stops people having tens and hundreds of properties negatively geared, and that could free up stock and make it more affordable for people to buy.

Senator Bragg

Yeah, well, we're in a supply crisis, so, we need to be building more houses, not increasing taxes on houses. And that's what, effectively, but obviously, a change like that would be. That's not our policy. That's why we're very focused on what we can do to help first home buyers through the super system. But also, we're doing an inquiry into lending policy, lending laws, because it's pretty hard to get a first house if you can't get a mortgage. So those are the sort of general direction we're going in. Labor obviously have a different direction...

Charlie Pickering

But if there were fewer houses negatively geared by those with large numbers of these property, wouldn't that free investment property up for sale? And like you say, the best thing someone can do is get into their own home to help them save for their retirement. Wouldn't that reduce the amount of rental and increase the number of sales if there was a cap on negative gearing?

Senator Bragg

I just think anything that's going to shock the supply side right now would be very dangerous, particularly when we're at a decade low in housing construction. So, we don't want to be increasing taxes on housing. And if you look at the economists, they say generally; if you're going to tinker around with these tax settings, it would make a very small change to the overall position of the market anyway. So, the main game here is to build more houses, but also, find ways to tilt the scales in favour of first home buyers, which is why we have the superannuation policy, but also, we're looking at lending policy.

Charlie Pickering

Well, it'll be interesting to see what happens from here. I think everyone would agree that we need lots of ideas to solve this problem. The more that we can get politics out of the way and get to solutions, the sooner we might have enough houses to go around. Senator Andrew Bragg, Shadow Assistant Minister for Home Ownership. Thank you for your time this afternoon.

Senator Bragg

Thanks Charlie.

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[Ends]