Despite its vastness, living space in Australia is among the most expensive in the world. The solution to this problem proposed by the Federal Treasurer, Joe Hockey, is that those without houses access their superannuation in advance of retirement to fund a deposit.
What would be the immediate effects of this? First-home buyers, perhaps in their 20s or 30s, would access tens of thousands earned in superannuation and combine it with existing savings to form a deposit. Let’s suppose the first-home buyer withdraws $10k from super to add to their deposit. At fairly typical loan-to-valuation ratios, this would enable them to access an extra $50-$100k in loan from the bank, and there is no reason to believe that these additional borrowings would not go directly to the vendor.
In other words, Hockey’s scheme would reduce affordability. Not only that, it would literally meet the definition of a Ponzi scheme. At the level of political economy, it would constitute a transfer of wealth from the relatively young and less well-off to relatively wealthy, older owners and investors.
Hockey’s sympathisers are quick to dismiss his proposal as a ‘brain fart’. Yet it is entirely of a piece with his other economic proposals (abolition of carbon tax and mitigation of environmental disaster, forced partial privatisation of Medicare services, slashing benefits to the unemployed, etc), in terms of diminishing overall economic conditions, operating in the manner of a Ponzi scheme, and functioning as a wealth transfer to wealthy baby boomers in terms of political economy. In short, it is no more an accidental ‘brain fart’ than taxation based on the Laffer Curve, or cuts to the industrial conditions of workers. The many ‘gaffes’ of Hockey and his colleagues – racist, sexist or otherwise – are not really ‘accidents’, as such.These are calculated political decisions – in this case, a kind of theft across classes and generations – for one group at the expense of another, and urgently need to be recognised as such.
As Hockey himself says, ‘We need to have these conversations’.