Raiding superannuation: Housing, the debt trap and parasitic capitalism

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Allowing people to raid their superannuation to buy overpriced homes is more evidence the system is rigged to favour profit gougers, writes Dr Adam Henry.

IN THE political discussions about housing and the property market there is much talk of economic trends, and making it easier for citizens to access so called benefits of the “free” market.

The idea of allowing first home buyers access to their own superannuation in order to help them save a deposit is one such thought bubble. But there is a darker reality not addressed by the debate – a reality  that, in many respects, is representative of the economic priorities of both major parties – neoliberalism. The system, as it stands, shackles the clear majority with often unsustainable debt while enriching speculators and investors who collect rents, dividends and interest.

This is what American economist Michael Hudson (among others) has highlighted for many years: "parasitic capitalism". This has been enshrined at the core of economic practices enabling vast wealth to be accumulated, private speculative losses underwritten by taxpayer’s money, and huge profits siphoned off by individuals and corporations. Any debate around negative gearing merely dances around a far more significant issue: should the clear majority of people come first, or should those able to rig the system at whatever level be protected from paying proper tax on their investment speculation?

We are living in an economic system (which arose from the 1970s). It is not surprising that the first to embrace these ideas internationally – exported from the United States, largely via the Chicago school of economics – includes a rouges gallery of authoritarian regimes whose short-term gains became long term disasters. Therefore, the way the professional and political classes have embraced parasitic capitalism (casualisation of the workforce, the attack on working hours and benefits, the exploitation of zero hour contracts, the exploitation of debt interest for profit) is enormously telling. At its core, it requires most citizens to go into debt so that the speculators can continue to accumulate wealth (and rort the system where they can).

In an era of casual employment, under employment, unaffordable housing, expensive rents, exploitative debts through which the speculators use to make vast profits, the housing market reveals the two ludicrous notions underpinning mainstream debate about "raiding" superannuation:

  1. keep superannuation as it is, with no nuanced changes, no flexibility, no option to use any of your money when it would be incredibly useful to do so in an economic environment devouring job security, so it can remain the play money of the superannuation industry; or
  2. allow people to raid their superannuation but only for the purpose of having a deposit to enter the housing market and take a long-term loan from a bank.

Both exhibit a total lack of any social justice; in either scenario, parasitical capitalism "wins". It can maintain privileged power over your super money to invest in pretty much anything outside of your basic stipulations, or you use this money for a housing deposit and seek loans from other speculative financers, such as the banks.

Is this housing deposit concept not a blatant admission by government that super is not expected to provide enough money for many citizens to survive retirement? Is it not an admission that their preferred way for us to provide for our retirement is by gambling on the property market? Is it not an admission that the vast greedy profits of speculating finance (in the super, banking or property industries) should be privileged over the needs of the majority?

The losers in any economic meltdown will never be the major players of speculative finance. Barring the exposure of corruption and malpractice (and sometimes even then), the system is almost always a win win situation for them. The system is rigged so that those able to seek maximum profit extraction (debt, interest, investment, speculation, tax minimisation and so on) are able to minimise tax and then to accumulate wealth.

Such is the ideological power of neoliberalism that it appears almost personally irresponsible (or even radical) not to want every ounce of profit. However, if we are serious about providing housing, rather than it being only a vehicle for profit extraction, then we would discuss providing opportunities and incentives for citizens to build innovative low cost (high quality) energy efficient houses and dwellings for themselves and their families, along with the opportunity to purchase designated low-cost land from government (either individually or as a collective). Not only would citizens suddenly have home and land ownership, they could do so at a fraction of the current costs and without incurring crippling debts. Why is the rental industry able to extract vast profits with minimum effort? Should the government not begin to cap rents (outside of luxury properties) by providing incentives for landlords to keep rents much lower? Should tenants forced to pay over 20 per cent (and in many cases much higher) of their fortnightly or monthly incomes not be automatically compensated in some way for their endless payments?  

Without the crippling burden of huge mortgage payments (and some compensation/reward for paying endless rents) would there not be financial savings made which could help transform many lives enabling all manner of opportunities (better educational, economic, health outcomes and more) currently denied (or undermined) by the rigged system. Would it not be possible that citizens would have the opportunity to not be shackled by debt and could spend their money improving their own lives and not merely as cogs making others filthy rich?

The exact details of how things like this could work would not be difficult to develop in an Australian context. It merely requires that the economic system serve the interests of the clear majority and that people not profits come first. At present, the eyes of our political masters can only lift high enough to consider a raid on superannuation. This is another means of enshrining parasitical capitalism and debt as somehow being sacrosanct. Such thinking is, in my view, gravely out of step with the legitimate aspirations of most Australians.

Dr Adam Hughes Henry is a visiting fellow at the School of Culture, History and Language at the Australian National University. ou can read more from Adam Henry on his website

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