Pauline Hanson has insisted One Nation’s proposed superannuation early access policy would have a “neutral” impact on inflation, despite warnings it would create a sugar hit for Australians while making the cost-of-living crisis worse in the long term.
Under the proposal, Australians who pay rent or a mortgage would be given a choice to divert a portion of their superannuation to their take-home pay for up to three years.
The full 12 per cent compulsory super contribution would still be paid by employers, but 3 per cent would be paid directly to the person by the super fund if they opted in.
The payments would also remain subject to the concessional tax rate of 15 per cent, rather than the higher personal income tax rate.
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Senator Hanson said the average full-time worker earning about $90,500 would get an extra $2,300 in their pocket each year.
That works out to about $44 a week, which she said would provide “breathing room”.
“For a working couple earning $168,000 between them, it is about $4,300 a year after tax, or $82 a week, back in the family budget,” she said.
Judo Bank chief economic advisor Warren Hogan said the proposal would provide short-term relief for Australians, but raise the cost of living over the long term.
“There is no example in recorded history of us effectively getting our cost-of-living issues under control with more spending,” he said.
“It ultimately makes the problem worse. We need to bring demand in the economy down to take pressure off the supply side in our economy to allow price pressures to ease.”
The Reserve Bank has increased interest rates three consecutive times this year in an attempt to curb inflation.
Industry peak body Association of Superannuation Funds of Australia (ASFA) labelled the proposal “economically disastrous” and said it would push up inflation while making people poorer in retirement.
“This proposal would not alleviate the cost of living. It would drive the cost of living higher,” CEO Mary Delahunty said.
“Allowing people to take out three per cent is the thin end of the wedge that could erode one of the greatest policy success stories this country has.”
One Nation has insisted the policy will not increase inflation. (ABC News: Callum Flinn)
One Nation insists policy will not be inflationary
Mr Joyce insisted the inflationary impact would be “incredibly small”.
“If someone was paying, for instance, $600 a week for rent and they get assistance, guess what? They are still paying $600 a week in rent,” he said.
Asked what people would do with the additional cash in that scenario, he indicated they would invest it, similar to how it is treated within a super fund.
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He also pushed back on suggestions people would immediately spend the extra cash as it came into their accounts.
“It’s like saying, well, if you’ve got all this money in the bank, you just go out and spend it that evening. People don’t do that,” he said.
But Mr Hogan said under the guardrails set out by One Nation, the policy would stimulate spending.
“An initiative like this will put money in people’s pockets at an average of $50 or $60 a week, and that money multiplied over half the population, probably, will be a significant stimulus and make the inflation problem worse,” he said.
Mr Joyce argued although the scheme would be open to anyone paying a mortgage or rent, which is about 7 million people, it was likely only those experiencing hardship would access it.
“We’re not going to have 7 million people in rental stress or housing stress,” he said.
One Nation says Australians should get to decide how and when they access their super. (ABC News: Callum Flinn)
Plan would erode retirement nest egg
Health Minister Mark Butler labelled the proposal an “absolutely terrible plan” and pointed to the Morrison government’s experiment allowing people to access more of their super during the COVID-19 pandemic, which left some with a depleted nest egg.
“It’s going to make a huge difference, a bad difference to their retirement decades down the track,” he said.
Analysis from the Super Members Council showed a typical 30-year-old full-time worker who withdraws superannuation under the early access policy would be about $25,000 worse off at retirement.
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Over the full three years, that person would get about $6,900 in their pocket, but miss out on more than $18,000 in compounding interest.
Senator Hanson said she would prefer Australians to access their super early if they were “on the cusp of losing their home” or “out on the street”.
“I would rather see them get that help and assistance they need now, not later in life,” she said.
Australians are already allowed to access their superannuation before retirement for several reasons, including financial or medical hardship.
Deputy Liberal leader Jane Hume dismissed the proposal as nothing more than a “headline” and said One Nation had questions to answer about how the policy would interact with a person’s super balance or their concessional caps.
“This so far is nothing more than a headline. It hasn’t really been explained,” she said.
“Are we turning our superannuation funds into banks?”
Asked whether One Nation should spell out to people that taking money out of their super now would affect their balance in the future, Mr Joyce said, “people are competent enough to work that out for themselves”.
“People aren’t stupid,” he said.
“There’s no point telling a family they’ll be better off in retirement if they can’t afford the mortgage or their rent payment today.
“A good retirement starts with keeping a roof over your head.”
Social Services Minister Tanya Plibersek said One Nation was attempting to “raid” Australians’ super instead of facilitating a real pay increase.
She said people who opted in to the plan would be “thousands of dollars worse off in retirement”.