OPINION: by Brian PeacheyNews Weekly
Legislative change could help first home-buyers
, February 7, 2009
The solution to the inability of many young Australians to purchase their first home is in the hands of the Federal Government, says Brian Peachey.The solution to the inability of many young Australians to purchase their first home is in the hands of the Federal Government.
With the exception of those from wealthy families, young people have found it exceedingly difficult, and for many young people impossible, to purchase their first home at the time of marriage.
Because of the pressure of the media, commercial advertising and peer pressure, many young people do not save sufficient funds to enable them to have a deposit to purchase a home. There are exceptions where parents have inculcated a discipline of saving a determined percentage of what they earn.
The government could start by amending the Superannuation Guarantee (Administration) Act 1993
for those who have been consistently employed (but not for those who have suffered sustained unemployment because of poor education or lack of skills).
The act currently requires all employers to pay nine per cent of the wages of most employees into an approved superannuation fund. This means that, by the time a relatively low-income employee who joins the workforce at, say, age 18 and earns an average wage of $40,000 a year, he or she would have $25,000 invested in their name by the time they were 25 years.
An amendment to the act could give all people at a prescribed age (say, 25 years), or at the time of marriage, the right to withdraw what has been invested on their behalf for the sole purpose of purchasing a home. The funds would only be released for the purchase of a home or of land and a building contract.
A caveat would be lodged on the property title restricting the resale within a prescribed time. The caveat could be lifted when a person had to move as a condition of employment, but only on condition that another home was purchased or the original amount withdrawn was returned to the fund.
In the case of family breakdown or when a person was experiencing financial difficulties, the property could be sold and the original amount withdrawn should be returned to the fund.
The superannuation fund is primarily for the benefit of the employee on reaching retirement age. A family home is, however, part of retirement needs. A home purchased at the time of marriage could appreciate in value faster than the value of money in a managed superannuation fund.
The ownership of a home would give greater security and stability to young families, and this in turn would reduce the number of family breakdowns.
The injection of funds into circulation would also stimulate the economy and provide increased employment opportunities in the building industry.— Brian Peachey was WA state secretary of the Democratic Labor Party 1957-1964, and author of The Burkes of Western Australia (1992).