FHB super access would blow hole in federal budget

Allowing young buyers to withdraw their superannuation savings to buy their first home would trigger a $31 billion federal budget hole by mid-century, according to indicative modelling by PwC.

Changing super rules to fund housing would cost the government between $500 million and $1.1 billion a year in lost revenue.

Treasurer Joe Hockey has triggered debate since last weekend's reported comments about making super more "flexible" in the wake of the intergenerational report.

The analysis by PwC was provided to The Australian Financial Review based loosely on a similar scheme in Canada, which allows a withdrawal of $25,000 for a first home.

PwC partner Paul Abbey said he assumed that an Australian scheme would be limited to people below 35 years, with around half of those eligible choosing to withdraw $25,000 for a 10-year period.

The loss to government – which taxes earnings on super balances at 15% – would be $1.1 billion in 2016-17, and fluctuate between $611 million and $993 million over the next nine years.

By 2049-50, the figure would hit $2.1 billion, taking the accumulated hit to government to $31 billion, according to the PwC estimate.