Coalition's housing policy could cut Commonwealth Rent Assistance costs

Senator Andrew Bragg requested a costing analysis on savings in Commonwealth Rent Assistance (CRA) anticipated from the Coalition's proposed super for housing policy.

This policy would allow individuals to withdraw up to $50,000, up to a maximum 40% of their balance, from their superannuation fund account to purchase their first home.

The analysis focused on 38-year-olds and assumed that 20% of renters would purchase a home under the scheme.

The Parliamentary Budget Office (PBO) estimated that the proposal could decrease the cost of the CRA by $35.4 million over the 2023-24 Budget forward estimates period, and by $86.4 million through to 2034-35.

However, the PBO said that individuals receiving CRA typically have low superannuation balances, so uptake from this cohort is expected to be limited. Individuals would need at least $125,000 in their superannuation balance to withdraw the maximum allowable amount of $50,000.

"As many 38-year-old CRA renters have low or zero superannuation account balances, the 20% sample was taken from the individuals with the highest superannuation balances. This composition was chosen as they would be the group most able to take full advantage of the policy," the PBO said.

It was also assumed that without the policy around 45% of this cohort would have purchased a home by the end of the medium term.

The PBO added that the proposed policy would have further implications for government taxation revenue, particularly for superannuation tax, which wasn't included in the analysis.