This is a super scary story that ends up warning taxpayers that if young people can access their superannuation to get a deposit to buy a home, then in the future taxpayers will have to find an extra $1.4 billion a year to cover the pensions that will be needed because these homebuyers raided their super.

The second-rate argument goes like this: as these people have less in super because they bought a house or home unit, they’ll have a smaller super balance when they retire and so they’ll get a pension.

If we said ‘No’ to allowing young people or deserted mums or dads to access their super so their kids can have a home the family eventually owns, then their super in 30 or so years’ time when they retire will be bigger and they won’t need a pension.

This story has come about because Peter Dutton is promising a super-for-housing policy where first-home buyers could withdraw $50,000 from their super for a deposit to buy a home.

Someone, probably a Labor politician, got the independent Parliamentary Budget Office (PBO) to look at a 40-year old who withdrew $50,000 out of super to buy a home, who then goes on to retire at age 67.

That’s where the $1.4 billion slug to taxpayers in 2050 comes from. But, like all economic calculations, it depends on what you assume.

As an economist who’s also a financial planner, let me tell you why this could be a ‘bull dust’ argument.

1. It’s better for someone to have super and own a property going into retirement.
2. Super takes 11.5% of a young person’s wage, which makes it near impossible to build up a deposit for a home.
3. If you own a property in retirement, you can borrow against it.
4. If you own a property in retirement, you can get a reverse mortgage or equity release product to build up your cash reserves or super balance.
5. If you own a property, you can sell it to downsize, and a couple could put $300,000 each into their super from the proceeds.

Labor’s Daniel Mulino told The Daily Telegraph that relying on super for housing would cost “first home buyers more in the short term and taxpayers more in the long term.”

Mulino is saying that if the money out of super to buy a home brings more buyers, then house prices will rise. While that’s true it’s because politicians like him haven’t helped increase the supply of homes and they’ve allowed immigration to be too high.

His long-run argument (that taxpayers will have to pay $1.4 billion a year for more people on pensions because they have less super) assumes the rules to get a pension remain exactly the same for 25 years, which is a stretch.

While I’m a great believer in super and industry super funds, too much of a young person’s wage is going into super making it impossible for young people to get into the property market. Because industry super funds are closely connected to the union movement and the Labor Party, they love that after June 30 this year they’ll get 12% of workers’ salaries to invest on their behalf.

I think there should be balance between super and property.

I received an email from a couple last week who had $1.4 million in super but owned no home. Luckily, someone has given them a rent-free apartment, but they were worried their nest egg would whittle down over time and feared a stock market crash. Remember, the 2008 crash saw the market dive 50%, so they couldn’t stand to lose $700,000 over a couple of weeks or even days!

Properties won’t collapse by 50% unless they were built by a dodgy builder!

By the way, if this couple had a home, they could have downsized and put $600,000 into super, and they’d never have had a worry in retirement. Because they don’t own a property, virtually no lender would now give them a loan at a reasonable rate of interest to buy one.

By the way, if the stock market crashes before 2050, there’ll be a lot more super fund members applying for the pension and the slug to taxpayers will be way over $1.4 billion! I wonder if the PBO calculations put that in their figuring?