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Monday, 30 May 1994
Page: 873

Senator WATSON —I table the transcript of evidence and submissions received by the committee relating to the report just tabled.

  Ordered that the report be printed.

Senator WATSON —by leave—I move:

  That the Senate take note of the report.

The report that was presented to the President on 13 May 1994 by the Senate Select Committee on Superannuation is a comprehensive and thorough coverage of an initiative which both major political parties took to the last election. It is, I believe, the most detailed document yet published on the subject. It is my view that the government should have waited for this report before jettisoning the super for housing scheme proposed in its 1993 election policy.

  On the weight of the evidence presented to the committee, it is convinced that an effectively targeted and administered super for housing scheme could provide significant benefits to certain sections of the community. For this reason the committee recommends that the government give further consideration to the adoption of a super for housing policy.

  There is no doubt that there is a genuine need to assist lower income earners obtain housing finance. There is no need for me to go into great detail about housing statistics, as these are presented in the report. However, the committee was concerned that, while housing costs consumed on average only 12.6 per cent of incomes of Australian households in 1988, many Australian households now have housing costs exceeding 25 to 30 per cent of their income. At the lower income levels, sole parents and couples with or without dependent children in the 35 to 64 age group spend average proportions exceeding 40 per cent in nearly all cases. Such expenditure is, for many, a major financial burden and a source of tremendous stress.

  Of particular interest to the committee was the impact of home ownership on housing affordability in retirement and the correlation between lack of home ownership and the high levels of housing stress experienced by retired people who meet their accommodation need through the private rental market. Statistics from a number of sources indicate that those in retirement who do not own their own home and who are also wholly or partially dependent on the age pension normally live on or below the poverty line despite government rental assistance. Hence, there was much discussion during the hearings on the relative merits of savings in the form of superannuation versus saving in the form of home purchase.

  The committee supports the view expressed by a number of witnesses that home ownership is integral to dignity in retirement, from both a security and an equity point of view. It became evident that adequate retirement planning must take account of major retirement expenses, such as the cost of housing, as well as anticipated income levels. The committee is aware that the ownership of the family home, when combined with superannuation and other investments, will significantly improve the balance of an individual's overall retirement security.

  In making its recommendation, the committee recognised that a different significant fall in interest rates has occurred since the major political parties announced the initiative during the last election which had markedly improved housing affordability. The recently announced National Mutual-ACTU super home loans investment trust may also improve affordability—providing interest rates stay down—for some members of the community. However, while these changes are welcome they are unlikely to resolve the difficulty being experienced by some members of the community whose major obstacle is the accumulation of sufficient finance for the initial deposit.

  I place on record my disappointment that neither National Mutual nor the ACTU appeared before the inquiry to explain their investment trust initiative, a major development which the government used to abandon its super for housing policy. The Life Insurance Federation of Australia appeared before the committee, but the ACTU unfortunately had difficulty in making itself available to appear. It certainly did not apprise the committee of its super for housing initiative. I am sure some union members might be very disappointed to hear that their peak body did not take the opportunity to put before a parliamentary committee their case on the use of super accumulations for housing purposes.

  The committee was also mindful of the potential negative impact of the super for housing proposal on broader government objectives in relation to the superannuation guarantee charge and also national savings. Many who made submissions to the committee expressed concerns that a super for housing scheme could threaten the integrity of superannuation generally and the superannuation guarantee charge in particular. The committee supports that this would certainly be the case should such a scheme be available to all superannuants. So it is the niche market—this particular area—that we are referring to.

  It is for this reason that much of the deliberations were devoted to identifying those sections of the community that would gain significant benefits without impacting adversely on the system as a whole. When considering the restrictions on access spelt out in the report and the one-off and tangible nature of housing purchase, the committee believes that the integrity of a superannuation system as such would not be in jeopardy.

  It must be remembered that those who the committee has suggested should have access to such a scheme would not be accumulating significant superannuation funds and that such a drawdown would have minimal impact on the value of the age pension they would receive from the government.

  This conclusion was drawn upon as a result of figures provided by the retirement income modelling task force, which indicated that a reduction in individual's superannuation accumulations from such a drawdown would result in increasing the amount of age pension received by these superannuants by an average of only $15 per fortnight. When considered against the potential calls for rental assistance of up to $68.40 per fortnight for single recipients without children and $85.85 per fortnight for single recipients with three or more children, it can be seen that the impact on overall government expenditure is likely to be very minimal.

  The retirement income modelling task force is a most professional and competent team. Therefore, I trust that the government will see the wisdom of keeping its membership intact in order to undertake important national projects. In summary, the logic on which the committee bases its recommendation that a tightly targeted super for housing scheme has merit for certain sections of the community and should therefore continue to be considered by the government is as follows: the forced savings for retirement under the superannuation guarantee charge has meant that some employees may be receiving lower take-home pay; this is, in turn, increasingly disadvantaging some sections of the community when they seek to save for a deposit to purchase their own home; the lack of a deposit is often a barrier for low income families in gaining access to owner occupancy; the high cost of rental is a major cause of poverty in old age; and those on low incomes are unlikely to accumulate sufficient superannuation to make a significant difference in the level of age pension support required.

  Should the government agree to further consideration of a super for housing policy, the committee is unanimous in its belief that it must be developed in close cooperation and consultation with the relevant industry bodies to ensure that it is universally available to the targeted groups. It is important to stress that the committee does not see this proposal as the panacea which would alleviate all cases of housing stress experienced in the general community. A super for housing scheme would only ever be one part of a diverse range of policy initiatives.

  Moreover, there are a number of other super and savings issues that need further attention. We commend the government to move in those areas. In preparing its report, the committee has made note of some of these issues and suggested that the solutions proposed by witnesses be considered in more appropriate forums. I take this opportunity to thank all of my colleagues on the committee for a most professional report, and also the members of the secretariat who played a very significant role in preparing this report.