Superannuation for house deposit proposal fuels rift within Federal Government.

By political reporter Caitlyn Gribbin.

A controversial proposal to allow young people to use their superannuation to buy a home is causing growing division in the Federal Government, with one MP labelling the proposal “mad,” while a cabinet minister is urging his colleagues to consider the idea.

The proposal, which could see young Australians divert compulsory super payments into a special account, is being discussed in the lead-up to the May budget.

The ABC understands Scott Morrison supports the idea, which has also been backed by former prime minister Tony Abbott.

Resources Minister Matt Canavan has also thrown his support behind the plan and told the ABC while it is ultimately Mr Morrison’s decision, his colleagues should be open-minded and “consider all these elements”.

“This is, I think, a legitimate idea — it’s had support from people like Paul Keating in the past, it’s used in other countries, it’s something we should certainly consider as a government.” Senator Canavan said.

“I agree you shouldn’t be able to touch it for going overseas on a European holiday, but it seems strange that you’re allowed to invest in other people’s assets, in equities, in bonds, but you’re not allowed to invest in your most important asset in your life which is your own home.”

But one of Senator Canavan’s Nationals partyroom colleagues told the ABC the plan was “madness.”

“The purpose of superannuation is for use in retirement or not,” the MP said.

Nationals MP Andrew Broad is also unhappy with the proposal, taking to Twitter to label it a “lazy response”.

Using superannuation to address housing affordability for first home buyers is a lazy response to the problem.

— Andrew Broad MP (@broad4mallee) 11 April 2017

Cabinet divided over plan

The proposal is contentious inside Cabinet and has not been approved amid fears it would drive up house prices.

Other government ministers and MPs have also raised concerns, with some saying they had no idea why the Coalition was buying into the issue of housing affordability.

Some argued it was a state issue that had become the Commonwealth’s problem, to which there was “no solution”.

One MP said while they “didn’t mind” the proposal, they did not understand why the Government was floating budget ideas that were yet to be settled.

Labor has warned the proposal could undermine superannuation and further increase property prices.

But Senator Canavan said there were “ways and means of ensuring that people’s superannuation isn’t affected over time”.

He said the proposal’s impact on property prices needs to be considered in a “broader context”.

“There will be second-round effects of increasing demand but that’s why we’ve got to partner with other measures as well if we’re going to do something like that.”

This post originally appeared on ABC News.