A Balancing Act !

The Mining tax is now history, but it's demise has led to a re-balancing of the take home pay in workers pockets.   The Superannuation guarantee that was to have increased from 9.5% to  12% from 2019 has been delayed and will not now be implemented until 2025.   As a result, the Superannuation pool will drop by $ 128 billion.

Like most new measures, there will be winners and losers.  With less money going into Superannuation, the vast majority will have more spending power - and we are living in harsher economic times.  This will give more flexibility to manage things like electricity and gas bills but it will make the dream of becoming an affluent self funded retiree more remote.

The main losers will be mid-life people staring retirement in the face.  Fortunately, they can opt to increase their personal Superannuation contributions  but it simply means that we will surely see a continuation of retired people who need a part pension because their Superannuation nest egg is insufficient to cover their retirement costs.   The whole purpose of compulsory Superannuation was to eventually do away with pensions as a drain on the national economy.

These statistics point the finger at another problem that is worrying the economic planners.  This roaring market in ever increasing home prices is shutting out first home buyers.  In August, home loans amounted to $ 3.9 billion in new mortgages- and first home buyers have shrunk to just 9.5%. The delay in the Superannuation rate will certainly put more money in the pockets of young buyers, but these booming house prices show no sign of slackening, and getting a foot on the home ownership ladder is fast receding for the average young buyer.

Home ownership and Superannuation are locked in a mutual embrace.   Owning a home is usually the biggest investment any individual makes and when retirement looms it is the key option in deciding what standard of living is possible.   In many cases, selling a city home and downgrading to either a cheaper home in a remote area - or  remaining in the city but embracing a smaller high rise apartment can free up the money needed for a comfortable retirement.   There is every chance that those locked out of home ownership will eventually become future pensioners.

The obvious answer is more housing density to get more people living in affordable housing - and yet this comes with the threat of a drop in living standards.  There is often a very fine line between reducing regulations to make more affordable housing - and having that freedom produce what amounts to a "  Favella ".

Surprisingly, we are still building homes in the same way as the days of the Pyramids or ancient Rome - putting one brick on top of another - and that is a very labour intensive way of doing things. In this modular age it would seem reasonable to to expect factory built housing to sharply reduce prices and produce that first step to home ownership.

Superannuation and housing seem to be planned in isolation.  One is very contingent on the other and it may be necessary to combine forces - and use the Superannuation pool as the way of financing home ownership - as a necessary step in financing those final years.

Anyone locked out of home ownership has little chance of a comfortable retirement- or avoiding looking to the government for help with a pension !