Is early access to super 'robbing Pat to pay Paul?'
THE country's appetite for drawing down their super continues unabated as new figures show more than $30 billion has been drained from retirement funds in less than four months.
The Federal Government began allowing citizens to withdraw up to $10,000 in the 2019/20 financial year, followed by a further $10,000 at the beginning of July as part of their response to the financial crisis brought about by the coronavirus pandemic.
Figures from the Australian Prudential Regulation Authority show 97 per cent of the 4.1 million applications have been paid out, totalling $30.3 billion.
Since its inception there have been a number of reports of people using the money for anything from house deposits to gambling and the scheme has copped criticism from one of the architects of the Australian superannuation system - former Prime Minister Paul Keating.
Mr Keating drew a parrallel between the Government's other economic reponses to the pandemic and highlighted the lack of oversight over eligibility as a major cause for concern.
"Of the income support in Australia to date, in this COVID emergency, $32 billion has been found and paid for by the most vulnerable, lowest-paid people in the country - that's the people who've taken the $20,000 out."
In order to access their super, people must meet just one of a series of eligibility requirements which includes being unemployed, receiving a parenting payment, being made redundant or having their hours reduced by 20 per cent more.
However, Member for Cowper Pat Conaghan stood by the scheme, while acknowledging there would always be some who tried to take advantage of the system.
The Nationals MP was not concerned by the amount of money which had been withdrawn and said it had been an overall success.
"I appreciate that some people have gone out there and bought booze or luxury items with that money - of course that wasn't the intention of the scheme - but the vast majority have used it for the proper reasons and that it why it was rolled out," he said.
"I'll go back to what the Prime Minister said - it's not perfect but under the circumstances it was rolled out quickly so people could basically put food on the table."
Labor Senator Jenny McAllister said Labor had warned "from the outset" it could have negative impacts for individuals and posed substantial risks of fraud, but wouldn't go as far as saying she opposed the scheme.
"Many people are struggling to pay the bills during this pandemic, but accessing your superannuation should be a last resort. People should not have to choose between a secure retirement and paying their rent," she said.
"I am deeply concerned that more than 500,000 Australians have wiped out their retirement savings. Taking just $20,000 from their super could cost a 25 year-old between $80,000-$100,000 in retirement."
But Mr Conaghan said the withdrawals should be "put into perspective" and highlighted a recent report by the Grattan Institute which showed withdrawing $20,000 from a fund now would equate to income of roughly $900 less in each year of retirement.
The report showed the loss in superannuation savings would be largely offset by higher age pension payments, as it was means-tested.
Mr Conaghan added that the amount withdrawn so far was small relative to the total amount Australians held in super accounts overall and there was a genuine need for people to keep on top of expenses.
"(Young people) have another forty years with super going back in there," he said.
"They may not be in the same position they would have been in … but you have to offset that with the hardship they are facing now," he said.
"What's worse, being in a position where the debt increases and you are (paying) 21 per cent on a credit card?"