Peter Collins, former NSW treasurer and former leader of the NSW Liberal Party, has also questioned why Australia's major banks have stayed out of this debate, claiming their refusal to support the integrity of compulsory superannuation "is driven by their commercial assessment" that they could make greater profits from home loans if the idea was adopted.

Mr Collins, who is chairman of Industry Super Australia, says he is deliberately adding his voice to the "chorus" of critical voices that were heard last week, when former prime minister Paul Keating, former treasurer Peter Costello, financial system inquiry head David Murray, and Communications Minister Malcolm Turnbull all panned the idea.

It comes after Prime Minister Tony Abbott said the suggestion that super savings could be used to help young people buy their first home was "a perfectly good and respectable idea" and he wanted people to debate it.

Mr Collins has told Fairfax Media that compulsory super is one of Australia's "greatest economic achievements" and the Abbott government should not be creating uncertainty among investors or reducing confidence in the super system.

The proposal would inflate house prices, reduce super nest eggs and run counter to the government's strategy to reduce pressure on the age pension, he says.

But he has also slammed Australia's major banks – and the industry bodies that represent them – for staying silent in the current debate.

"What has been staggering is the silence of the banks. This is surprising because the banks and bank-owned super funds have been vocal supporters of change to superannuation in recent years," Mr Collins said.

"They have lobbied and campaigned for removal of consumer protections for people who need financial advice. They are lobbying the government to remove the default super safety net for people who do not choose their own super fund. They support raising the pension age and the age at which people can access their super," he said.

But each of the policy changes they have been lobbying for can be easily identifiable through the prism of their commercial interest, he says, and their current silence follows that logic.

"Their refusal to support the integrity of compulsory superannuation on this occasion is driven by their commercial assessment that they can make greater profits from home loans, where the four banks share more than 80 per cent market share, than superannuation, where they share less than 20 per cent market share," Mr Collins said.

"Their failure to engage in this debate publicly brings into question their legitimacy in other public debates about superannuation, particularly where they are pursuing changes which are evidently in their commercial interest but serve little public interest, and clearly targeted at enhancing their commercial advantage at the expense of their competitors."

Steven Munchenberg, chief executive of the Australian Bankers' Association, says the ABA has chosen to stay out of the debate because no major bank supports the idea and they all agree that super should be used for retirement income.

"This just looks like the latest cheap shot from Industry Super Australia," Mr Munchenberg told Fairfax Media.

"I have nothing against Mr Collins but the ISA has been taking every opportunity they can to run their anti-bank agenda."

The Financial Services Council, Australia's biggest financial lobby group, could not be contacted.