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Report says young people should be able to access super to buy first home -

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ELEANOR HALL: The housing affordability crisis across large parts of the country is putting many Australians at risk of poverty in retirement.

That's the warning from the Committee for Economic Development of Australia or CEDA, which is calling for an overhaul of the country's retirement policy.

It says home ownership is the key and it's recommending a range of options to help young people break into the housing market.

But as Lindy Kerin reports, its proposals have some critics worried.

LINDY KERIN: Twenty-two per cent of Australians over 65 don't own their own home.

The Committee for Economic Development of Australia says that puts many at risk of disadvantage in retirement.

The think tank's chief executive is professor Stephen Martin.

STEPHEN MARTIN: So they're subject to the vagaries of rental markets, but importantly as well, subject to, in many cases, the provision of public housing by governments. So there's a cost for government already.

Importantly however it is, at the lower end, the younger people coming through now - yes it's true, Australia's population is ageing - but younger people trying to get access into the market, into the housing market, is almost proving to be an impossibility because affordability is just going through the roof.

LINDY KERIN: And you're warning that from that point they're putting themselves at risk later in retirement?

STEPHEN MARTIN: Well what we've suggested in our report is that of course is that housing is an asset, that it will be there right through your working life at the end of your life, and if you've got that as an asset, well you're halfway there to having a decent retirement.

On the other hand, if you're a younger person now, doesn't matter how well paid you are, housing affordability is impacting on you, your ability to access that housing market is being diminished significantly, so as you go through life you're going to be subject even more so to the vagaries of the rental market.

LINDY KERIN: The CEDA report offers a range of options to help young people break into the increasingly unaffordable housing market.

It's calling for pre-tax mortgage payments and for young people to be allowed to use their superannuation to buy their first home.

Professor Martin says, without significant changes to retirement policies, an increasing number of people will end up living in poverty.

STEPHEN MARTIN: Our view is that you've gotta approach this whole question of retirement, looking at it from the very first day you start work, to the day that you finally do leave, so that you actually have that leisure time where you can live in retirement in a degree of comfort.

LINDY KERIN: One of the other suggestions that you've made is changing the tax concessions on superannuation. Why do you think, as the report says, that they unfairly benefit the rich?

STEPHEN MARTIN: Well they do unfairly benefit those that are able to sustain a higher income level, simply because concessions that are offered are at the higher end of the market, some 30 per cent of concessions go to those 30 per cent at the higher end of the market. And the consequence of that means that those that are simply salary and wages earners where you've got nine per cent, 10 per cent going in to superannuation accounts, it's going to take a long time to accumulate the same sorts of assets that these people use, some of the tax benefits at the higher end for a form of tax saving if you like, and our view is these issues need to be reviewed as well.

LINDY KERIN: The idea to allow young people to access their super was flagged by Treasurer Joe Hockey earlier this year, but was quickly dropped after it was widely criticised.

At the time, the former Howard government treasurer Peter Costello raised doubts about the idea.

PETER COSTELLO (archive sound): We went through all of this back in the mid-90s. We had a look at it, we decided, because we thought superannuation should be for retirement savings, we decided not to allow superannuation to be available for housing.

This Government's going to look at it again; fair enough, things may have changed, but I think they'll come to the same conclusion as we did that, if you want it to top up people's retirement, if you want it to save the Government money - and it has that dual purpose - then you probably won't allow people to draw down on it for housing.

LINDY KERIN: The Association of Superannuation Funds of Australia also has its concerns.

The CEO is Pauline Vamos.

PAULINE VAMOS: We've been through this debate before and whilst we welcome any conversation about the retirement income system, we need to be careful to not cannibalise one system to help another system. Now we know that access to the home buyers for homes is mainly a supply issue, so let's fix that issue.

If we start raiding our superannuation system, what they will mean is that people may have a first home, but they certainly will not have a comfortable retirement.

LINDY KERIN: Twenty-six-year-old Josh Cubillo is looking to buy his first home in Melbourne and is struggling to find something suitable and affordable.

But he says tapping into his super to buy his first property isn't something he'd consider.

JOSH CUBILLO: Probably not, as I'd want to make sure that I'm secure later on in life. You know I do understand the economics about securing your home loan, but I think for me, the best way to do that is through savings, through some good hard work early. And then more so leaving that superannuation.

ELEANOR HALL: That's home hunter Josh Cubillo speaking to Lindy Kerin.