Diverting super into wages is a pay rise that ends up in the landlord's pocket

There is no new money in this

The proposal does not create a dollar that did not already exist. It moves dollars forward in time. A worker who opts in gets a fatter pay packet for up to three years and a thinner retirement account for the rest of their life. On its own that is an unremarkable trade — people make it every time they borrow. What makes this different is that the trade is offered to everybody at once, and everybody would spend the proceeds on the same thing.

Superannuation is a slice of pay that an employer must put into a retirement account instead of into wages. It is compulsory precisely because it is a commitment device: it takes the decision out of the hands of a person under pressure this month. One Nation’s plan is to switch that device off, on request, for the group under the most pressure — renters and mortgage holders.

The part that is not optional

Individually, opting in is voluntary. Collectively, it is not. Rents are set by what tenants at the front of the queue can pay. Sale prices are set by what the second-highest bidder can borrow. If a meaningful share of a cohort suddenly has more monthly cash, that cash arrives on the demand side of a market whose supply cannot respond in three years. The person who declines the offer still pays the resulting rent.

The mortgage side is worse, because take-home pay is not spent one dollar at a time in a housing market. It is capitalised. Lenders assess what a borrower can service and then multiply it out over a loan term. An extra hundred dollars a month of assessable income does not buy a hundred dollars of housing; it buys tens of thousands of dollars of additional loan, and therefore tens of thousands of dollars of additional bid. Hand that capacity to a whole queue of first-time buyers simultaneously and you have not improved their position relative to each other by a cent. You have improved the position of the person selling.

“Australians are not stupid” is the mechanism, not the rebuttal

Asked about the inflationary consequences, One Nation’s Treasury spokesperson said Australians are not stupid and can manage their own money. The first half is true and it is exactly the problem. Because people are not stupid, they will take the option whenever it makes them more competitive against other bidders. Widespread take-up is not a risk of the policy; it is the policy working as designed. And widespread take-up is what pushes the price.

This is the oldest distinction in economic policy and it keeps getting waved away. Competence is a claim about individuals. Inflation is a claim about aggregates. A sound decision by every household in a queue can still leave the whole queue worse off, which is why the question that was asked deserved an answer with numbers in it.

Three years is not a small window

The cap sounds like a safety valve, and for the individual balance it partly is. But the contributions being surrendered are the earliest ones, made at the youngest and most cash-constrained stage of a working life — the ones with the longest run to compound. They are the most expensive years to give away, which is why the three-year limit protects less than it appears to.

And it protects nothing at all on the price side. A cap on how long an individual can divert is not a cap on how far prices move. Rents and sale prices that reset upward on three years of extra bidding capacity do not obligingly reset back down when the window closes and the pay packet shrinks again. The debt taken on at the higher price stays.

The strongest case for the other side

It is a real case, and it is this. Compulsory super forces a renter to accumulate an asset they cannot touch while paying down someone else’s mortgage. An owner-occupier’s savings work twice, as shelter and as wealth. A renter’s work once, decades away, behind a locked door. Telling a person shut out of housing that their own deferred pay must stay untouchable is paternalism, and paternalism is easier to defend from inside a house. Three years of higher cash flow is genuine relief for someone struggling with rent right now, and the money is unambiguously theirs.

All of that stands. The lock really is paternalistic and the unfairness to renters really is structural. But diverting contributions does not unlock one person’s door. It hands every person in the queue the same key at the same moment, and the queue does not get shorter. If the objection is that renters are rationed out of housing, the answer has to change the ration — supply, or a targeted release with conditions and eligibility narrow enough that it does not move the market — not give everyone in the auction room more to bid with.

There is a second bill, too. A retirement account run down in the highest-compounding years is not a purely private matter in a country with a public pension floor. Whatever is saved in take-home pay now is partly borrowed from a future budget.