The introduction of the First Home Super Savers Scheme could be the beginning of allowing other withdrawals from superannuation which would be a disastrous approach, according to the Labor’s Shadow Minister for Small Business and Financial Services, Katy Gallagher.
Speaking at Super Review’s Future of Super conference on Thursday, Gallagher said the scheme severely undermined the super system and that it would not do anything to resolve the housing affordability issue.
Gallagher also said that the policy could have unintended impacts on super fund members and that there were details that were still unclear.
“The Government’s policy is that the amount of earnings that will be released to the first home buyer will be calculated using a deemed rate of return based on the 90 day Bank Bill rate plus three percentage points. It is not clear what would happen in the event that the prescribed earnings rate for housing deposits differs from the earnings of the super fund,” she said.
“For example, if the housing deposit earnings rate is higher than what the super fund earns, will other members cross subsidise those who withdraw their super for housing? Or will the super fund need to draw from the member’s compulsory super savings?”
She noted that the policy would be difficult to implement as while the Australian Taxation Office (ATO) would be primarily responsible for administering the scheme, there were significant gaps in data and reporting of super to the ATO that would make it difficult.
“These data gaps may make it difficult for the ATO to implement the first home super saver policy effectively and with job losses and other pressures on the ATO, which are well known and documented, it’s difficult to see how they would prioritise or manage this scheme,” she said.