The report reveals 11 per cent of the additional spending by those accessing super was on gambling.
As part of its response to the pandemic, the Morrison government is allowing people to withdraw up to $10,000 from their super accounts tax-free now and up to $10,000 next financial year.
When the scheme was announced in March Treasurer Josh Frydenberg said: “this is the people’s money and this is the time they need it most.”
The analysis shows recipients have accessed an average of around $8000 and spent an extra $2855 in the first fortnight after receiving the withdrawal compared with the same group’s average spending in a normal fortnight before receiving the money.
Around two thirds (64 per cent) of the additional purchases were on discretionary items such as leisure, entertainment, cafes and personal care. Spending on essentials such as groceries accounted for 22 per cent and 14 per cent was used to repay personal debts including credit cards.
AlphaBeta director, economist Andrew Charlton, said the data showed the super withdrawals policy had been poorly conceived and poorly administered.
“People who access their superannuation have made one of the most expensive spending decisions of their lives,” he said.
“While this policy was aimed as a lifeline, what we can see is a strong likelihood of people accessing their super, who really could have kept it working away until their retirement.”
Around 1.4 million applications have so far been approved worth more than $1.3 billion, the most recent Tax Office figures show. Over 460,000 of those making withdrawals were under the age of 30.
Angus Dockrill, a financial planner and co-founder of financial advisory firm IMFG, warned that accessing superannuation prior to retirement could be very costly.
“It should be very much a last resort,” he said. “If you’re a young person withdrawing $10,000, which was probably $12,000 back in January, you are foregoing about $40,000 or $50,000 of your retirement nest egg.”
To qualify for early release of super you must be unemployed, have been made redundant or had working hours reduced by at least 20 per cent since January 1 (sole traders qualify if their business was suspended or turnover has fallen by 20 per cent or more).
Simon Bligh, the chief executive of illion, said the next round of withdrawals should be more tightly managed.
“Tools are readily available to do this digitally,” he said.
Brendan Coates, the Grattan Institute’s Household Finances program director, said it would be disappointing if 40 per cent of those able to access the withdrawal scheme had not seen any drop in their income.
“It suggests the need for the ATO to better police the scheme and make applicants aware that penalties will apply if they have used the scheme inappropriately,” he said.
The findings of the spending analysis contrasts with the results of a Bureau of Statistics household survey released last week which asked those who had applied for early access to their superannuation about the “ways they used or planned to use the money”. More than half the respondents said they had used or planned to use it to pay household bills, mortgage, rent and other debts while 36 per cent said they had added, or planned to add it, to savings.
Matt Wade is a senior economics writer at The Sydney Morning Herald.