A Super Solution?

Last week I raised concerns that loading our future generations with debt to prevent current discomfort was a short-sighted policy. Today I’d like to offer some suggestions about how dealing with the current financial crisis could have been better handled.

Firstly, the immediate concern for many people is keeping their job. Work is not only important from a self-esteem perspective; it provides a means to sustain the key building block of society – the family.

Fortunately, we have income support for the unemployed but this is modest and wouldn’t sustain someone who has even a modest amount of long-term debt (like a mortgage) and their family.

This is where the difficulties arise. Losing your job is very tough. But losing your home as a consequence quite often leads to family breakdown and a host of associated problems.

These problems are not isolated to the individuals concerned; many of them (like public housing, income support, societal breakdown, legal services etc) often become the responsibility of government.

If this is a logical association to make (you decide that), then surely one of the best investments we can make is in keeping families facing employment difficulties in their own home for as long as possible.

The question then is ‘How should we do this and at what cost?’ One approach could be to allow individuals who have become unemployed through the current economic downturn to access a limited amount from their superannuation account to assist with mortgage payments.

Imagine if, say, an amount of ten or twenty thousand dollars could be drawn for this purpose. It would provide some relief and offer families the best chance of remaining in their own home while seeking employment.

Now policy purists will reject the access to super idea as a crack in the long-term savings interests of individuals and the nation. Normally, I would agree.

However, in circumstances where government is loading us all with intergenerational debt, the long-term interests of many families (and our nation) is in keeping them in the family home.

Of course, there would have to be conditions attached and plenty of details to be worked out but as I see it, the benefits to us all would be far greater than the negatives.

There would be less immediate requirement for government support. The family stress associated with unemployment would be somewhat reduced and it would reinforce the concept that people should be able to help themselves first, before asking the government to do the heavy lifting for them.