Election 2022: how the parties will change superannuation
17 May 2022

While superannuation was barely mentioned in the first five weeks of the election campaign, it became the most talked about issue as the final week began, with the Liberal Party proposing two significant policies.

Under its ‘super home buyer scheme’, first home buyers could use their super to put toward buying a home.

The Liberals also plan to lower the age for ‘downsizer contributions’ into super from the sale of the family home – a policy that was agreed to and accepted by the Labor Party.

If returned to government, the Coalition plans to allow first home buyers to use a substantial portion of their superannuation to buy a home.

First home buyers could withdraw $50,000 or 40% of their super balance – whichever is lower, to put toward the purchase of a home. (This applies to individuals, so a couple could potentially take out $100,000 from super under this scheme.)

First home buyers that want to use their super must first save 5% of the home purchase price for a deposit.

They can only sell that home after living in it for 12 months and then must return the funds they took from their super back into their superannuation account, plus a share of any capital gain or loss.

At the policy launch on the weekend, Prime Minister Scott Morrison said the scheme would be “a game changer for thousands of Australian families who sit and look at that money on their balance and go, ‘if only I had that to help me now’”.

The policy was welcomed by property and real estate groups, but criticised by the Labor Party and superannuation and finance bodies such as the Financial Services Council.

The Association of Superannuation Funds of Australia deputy chief executive officer Glen McCrea said it would undermine the purpose of superannuation and push up housing prices.

If elected, the Liberal Party would lower its downsizer contribution age limit to 55. Currently, the eligible age is 65 years or older. (This policy has been adopted by the Labor Party also.)

Under the downsizing rule:

• those who sell their home can use the proceeds to contribute up to $300,000 into their super

• such a contribution can only be made once

• the home to be sold must be in Australia and owned for 10 years or more

• the proceeds of the sale would be exempt from the pension assets test for two years.

At the launch of the policy Morrison said “this will increase opportunity for people to downsize and increase the supply of family housing stock in the market”.

He explained that the first home buyer scheme and the expanded downsizer rules would work against each other to not affect housing prices – an explanation that has been met with lively debate in the last week of the election campaign.

These announcements follow some smaller superannuation measures outlined in March's federal budget.

Given there's a few days before the federal election is held on Saturday, May 21, it's possible, but unlikely, that further superannuation changes could be announced.