Sloppy Joe - 101 Fail

You would expect someone who is supposed to be leading the country as the Treasurer to give careful and considered comments that are insightful, educated and thoughtful. You would presume that the Treasurer would explore the fundamental issues and receive expert council from specialists to develop an informed opinion based on robust evidence.

And what does our Treasurer do? He makes cheap and populist comments that are simplistic and damaging (but guaranteed to grab the headlines).

The recent Murray Financial enquiry made it clear that there should be bi partisan support for superannuation to support what the purpose of it should be - to fund retirement. The enquiry recognised that any potential changes to the rules undermine public confidence and continued tinkering should stop. Most people have a serious funding shortfall and we are all living longer. But let’s disregard the issue of adequacy of retirement funding for a moment and only consider the “assistance” to use super as a deposit to buy a home.

Dumb, Dumber and Dumbest!

There are a few reasons why housing in the major capitals in Australia is one of the most expensive in the world and affordability is so poor. Governments over the past 25 years have increased the demand for housing through a range of legislative, taxation and structural changes (deregulation, low interest rates, first home owner grants, halving of CGT tax, etc). So what would happen if all first home buyers could access say $30k as a deposit? This would simply increase demand further and would likely increase prices as well. Great for the older seller, but not so good for the buyer.

I have been trying to figure out why on earth Smokin’ Joe would make such a suggestion knowing that it would simply put more fuel on the housing fire. Surely he can’t really think that it is a good idea? It would be scary if he did think that, but he would have smart advisers explaining that the idea was flawed. But it is also worrying if the Treasurer is saying something simplistic and populist that he knows is nonsense.

So, a fool or a fibber?

I suspect it is just a shallow, political distraction to take the heat off the multitude of other issues and to give the illusion of trying to assist housing affordability … and of course to get in the headlines.

So please ignore all the noise at the moment about this. Save and invest outside super for a home deposit and invest inside super to help fund that 30 year holiday!


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