At a time when household debt levels are very high and rising, superannuation and retirement savings are too low as highlighted in the Intergenerational Report last week, and when house prices are growing at an uncomfortably rapid rate, Treasurer Joe Hockey has pulled out a plan that would boost household debt, erode retirement income savings and underpin house price gains.
Such is the absolute absurdity of the suggestion from Mr Hockey that potential first home owners be given access to their superannuation savings to help them buy their first house.
The last thing the housing sector needs right now is another factor to fuel demand. So troubling is the house price problem and a point spectacularly missed by Mr Hockey, is that the RBA is willing to let the rest of the economy flounder into its third straight year of sub-trend GDP growth and rising unemployment because house prices are too high.
If implemented, Mr Hockey’s would be a disaster for the structural integrity of the economy and raise further questions about the risks building as house prices and household debt keep rising.
Dumb and misguided policy needs to be called out and Mr Hockey’s plan is best left to Year 12 HSC economics students to critique in an example of where policy makers can get things wrong, even when they seemingly mean well.
Mr Hockey was and remains silent on the issue vital if house prices are to moderate to levels that first home buyers can more easily afford – new supply. If he can come up with an idea to address house price pressures through the supply side, that is more houses, he will be doing something to help housing affordability without destroying the retirement incomes of young people.