Home ownership is a “fundamental determinant of living standards in retirement”, said Committee for Sustainable Retirement Incomes (CSRI) managing director Patricia Pascuzzo, and declining rates of home ownership should be a significant concern for policy makers.
Allowing young Australians access to their super prior to retirement to finance the purchase of a house would go towards fixing this problem, and could potentially improve young people’s engagement with the super system, Ms Pascuzzo said, however the proposal carried “one major flaw”.
“It was the wrong solution for the problem at hand, namely housing affordability. Moreover, in the absence of other measures, it had the potential to exacerbate the problem of housing affordability,” Ms Pascuzzo said.
A number of other solutions, such as the reassessment of tax breaks proposed by Financial System Inquiry head David Murray, would be far better suited to addressing housing affordability issues, Ms Pascuzzo said.
“A number of other policy measures could be actively considered as part of an integrated retirement incomes policy agenda that would also indirectly improve the environment for first home buyers,” she said.
“These include reconsidering the extent of the tax-preferred status of the home and/or including housing in the age pension means test, so long as the exemption limit is set sufficiently high to ensure no pensioner suffers a loss of cash income.”
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