Coalition's housing affordability push defies economic sense, former MPs say

Extract from The Guardian

Craig Emerson attacks idea of letting young people access superannuation as John Hewson gives Matt Canavan a ‘fail’ mark

With Malcolm Turnbull travelling in India last week, senior ministers began openly arguing for and against allowing young people to tap into their superannuation to buy their first home. Photograph: Dan Himbrechts/AAP

Gareth Hutchens

Sunday 16 April 2017 18.17 AEST 

Dr Craig Emerson, a former Labor MP and economics professor, has heavily criticised the Turnbull government’s economic credentials, saying he can’t believe some senior ministers now believe young people should be allowed to access their super to buy their first home.
He said the government’s housing policy had become confused in the last 12 months, because it has been saying it wants to make housing more affordable yet senior government ministers were last week arguing for the opposite.
With Malcolm Turnbull travelling in India last week, senior ministers and backbenchers began openly arguing for and against allowing young people to tap into their superannuation to help build a home deposit, which the former federal Liberal leader John Hewson described as an “embarrassing free-for-all”.

Dr Craig Emerson says allowing young people to access their superannuation in order to buy their first home would make housing affordability worse. Photograph: Alan Porritt/AAP

Emerson said it would be a terrible idea, telling Sky News on Sunday it would make housing affordability worse.
“There’s basic laws of economics about supply and demand, [and] the problem is that demand is outstripping supply,” he said on Sunday. “And what do these people want to do? Increase demand. I mean, you wouldn’t read about it really.

“Serious cabinet ministers are running around saying, ‘We’ve got a really good idea, let’s use superannuation to increase the demand for houses so that the price will go up more’.
“How’s that going to affect affordability, other than by pushing affordability beyond the reach of just about everyone?”
The treasurer, Scott Morrison, has made tackling housing affordability a key plank of his second budget on 9 May.
But other than flagging a mechanism to encourage the private sector to invest in cheaper community housing, there are question marks about what else he can do to counter rampant house prices in Sydney and Melbourne.
Morrison has ruled out making changes to tax concessions that favour housing investors, such as negative gearing.

Last week the resources minister, Matt Canavan, argued strongly for allowing access to super.
“It seems strange that you can invest in other people’s assets, in equity, in bonds, but not the most important asset in your life, which is your own home,” he said. “This is a legitimate idea.”
Dr John Hewson, a former Liberal party leader and economics professor, said he would given Canavan a “fail” mark for arguing for super to be used to purchase a home.
“We would have failed him,” Hewson told Sky News on Sunday. “They are really arguing against themselves and their best interests, and in the process they’re raising expectations beyond what they can deliver.
“When you get a Canavan running around, who should know better than to argue for an increase in demand when the problem is excess demand, I mean you’re just compounding the problem.
“He’s creating the impression they can deliver a simple immediate solution, which of course they can’t. It’s taken decades of drift to get us to where we are, it’s going to take many years to trade out of this situation.”
The Liberal Democratic senator David Leyonhjelm said he couldn’t understand why the government had made housing affordability its problem at all, when it was the states that can levy things such as stamp duty and land tax and allow land release.