Hands off super: Costello

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Chairman of the Future Fund and former national Treasurer Peter Costello, has urged politicians to stop interfering with the country’s $1.9 trillion superannuation system.

Mr Costello has warned the government that considering the superannuation system as a way to improve the Budget’s bottom line will have long-term detrimental effects on the Age Pension and will increase the burden on younger Australians to cover the cost of “tinkering”.

“Increasing taxes on superannuation, which is a long-term savings vehicle, usually involves taking now at a cost to be borne sometime in the future,” said Mr Costello on Wednesday. “Governments are interested in the here and now – they don’t worry too much about what’s outside the forward estimates.”

“If taxes are on the rise, it means people will have lower retirement incomes, some especially those who live long longer will be back on the pension,” Mr Costello added.

The Intergenerational Report has highlighted the need for improved retirement planning. And with Australia’s population ageing rapidly, the onus to pay more taxes may fall on younger Australians meaning “future generations will have to pay our debts,” as stated by Mr Costello.

The former federal treasurer also endorsed the Financial System Inquiry’s (FSI) recommendation to legislate the objectives of Australia’s superannuation system. According to FSI chairperson David Murray, the purpose of superannuation should be to “provide income in retirement to substitute or supplement the age pension”.

“The idea of an objective is a good one – it might be helpful. It will make it clear the objective is not to provide a pool of money for the government to tax when it needs revenue,” Mr Costello said. “It will make it clear that changes should be assessed according to whether they help or hinder the long term ability to substitute or supplement the pension.”

Read more at Sydney Morning Herald.

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Written by Leon Della Bosca

Leon Della Bosca is a voracious reader who loves words. You'll often find him spending time in galleries, writing, designing, painting, drawing, or photographing and documenting street art. He has a publishing and graphic design background and loves movies and music, but then, who doesn’t?

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131 Comments

Total Comments: 131
  1. 0
    0

    We need Costello back!

    • 0
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      Frank,
      Good, you’re still there – I thought we’d lost you!
      Look, in relation to yesterdays subject (this morning’s Post) I really could do with the money that seemingly has gone lost.
      Could you – PLEASE – just put me in the right direction to prove WHERE the hansard confirms that the Original Pension Scheme was cancelled and the money invested/collected in this SCAM was returned or put into a Super Account).
      I’ll get back onto my Fed Member (shame I saw him yesterday and could have raised it with him then) and sought this out!
      Please give me “A Leg UP” as the money is needed !!!
      Just be a HUMANITARIAN (which I know you really are as you continuously POINT people in the appropriate direction) and not like so many others who refuse to help pensioners these days !?!?!?
      I beg you Frank – JUST SHOW SOME COMPASSION.

    • 0
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      AKA… ‘The worlds greatest Treasurer’

    • 0
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      Pat you are a riot he he he, I have absolutely no idea what you are talking about? You seem wound up about something though? What money has gone lost? What hansard report? So the original pension scheme was cancelled? And the money invested in a scam? Just show some compassion? I suggest you take it up with your Federal Member whoever that is.

    • 0
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      Frank,
      I would do that gladly & intend to if you would/could only provide the reference to your claims!?!?.
      I cannot do that IF what you claim CANNOT be supported and, therefore, I am asking you to help me in order to support what you have claimed!
      Without that, he’ll just consider it Bull!!! And so he should.
      This must occur with ALL info that is QUICKLY sprucked but has ZERO Substance.

      If what you’re claiming is true the money accumulated before they cancelled the SCAM must be considered to be stolen and our governments would NEVER do such a thing – or would they?

      Anyway, I accept that you CANNOT support your claims in ANY WAY!!!!!

    • 0
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      And which claim would that be Patriot? The claim that there is no fund that we taxpayers pay into which distributes the aged pensions? It’s common knowledge.

  2. 0
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    Costello and Co have the future fund, to fund their retirement and are outside of any new super rules.
    Pitty the future fund wasn’t setup to meet the treasury sortfull for all not just the
    Choosen Ones.

    • 0
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      Spot on Chris

    • 0
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      Chris,
      Same with us
      Our retirement was “set Up’ and should be OutSide ANY NEW RULES!

    • 0
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      Patriot is correct – for over three quarters of a century levies have been included in income tax for pensions and unemployment benefits and so forth. That IS a future fund that should have been adhered to, but it seems government want to make those things an optional privilege(Entitlement ™) and not a Right, simply because it suits their ideology and their Budget schemes.

      Sorry lads – promises on core subjects by Government, irrespective of Party, are to be kept. Parties speak on behalf of government.. government does not speak on behalf of parties…… and when government makes a promise sealed with cash – it keeps them regardless of party in the hot seat.

      Thank you for coming….

    • 0
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      TREBOR
      Love the logic!

    • 0
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      The “Future Fund” I’m referring to was setup with Bipartisan support when
      Costello was Treasurer. This fund is exclusively for Federal Politicans.
      The general revenue tax collection and distrubition is entirely different.
      As I Stated The CHOOSEN ONES.!!!!!!!

    • 0
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      That is incorrect the future fund is for federal civil servants , who’s super was unfunded .
      Federal politicians have their own duper scheme…

    • 0
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      What unfunded just like all other pensions.
      The 45% of non tax payers. The money for ANY GOVERNMENT comes from Taxes or selling PUBLIC ASSETTS, my oversight in excluding the other CHOOSEN ONES.

    • 0
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      I would much rather we had the future fund than have some labor government 10 years from now pushing up taxes to cover the shortfall.

  3. 0
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    Every day someone is on TV or radio and in the paper asking for more money. Many of the demands warrant support but nobody is prepared to contribute more tax so the demands can be met. The government does not have any money unless it gets it from the taxpayers. So wake up, either some existing outlays are going to have to be cut or abandoned unless we are prepared to contribute more tax. You know money does not grow on trees!!

  4. 0
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    Only thing that government needs to do is include one’s house in the assets test and then pensioners would be able to access its’ worth and have more spending money in retirement. It seems just silly to me to go without so that one can leave the house to those who really don’t need it in most cases.

  5. 0
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    Superannuation, as I understand it, is to benefit the workers who made their contributions to it. Any benefit the government would get would be indirect as superannuants would be living on what they had invested. This meant that the government would have to spend as pensions.

    It would be undermining the original purpose of the superannuation scheme if the government decided to “raid the piggy bank” for short term gain. It would also be irresponsible and create precedent allowing future governments to do the same.

    It would bring to mind stories of corrupt union officials helping themselves to the union retirement funds that the union members contribute to. So leave Superannuation alone. You might get some short term financial gain, but you would also be getting more long term political pain for your trouble.

    • 0
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      correction: Last sentence in paragraph 1 should end “spend less on pensions”.

    • 0
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      But the Greens aren’t proposing to ”raid the piggy bank for short term gain” or to be irresponsible, Wally. They are proposing to remove a massive inequity that is costing taxpayers billions and only boosting the already fat retirement nest-eggs of the very wealthy, while battlers are actually punished for saving and denied the chance to accumulate a decent retirement nest egg. It’s past time to fix this absurd anomaly, and introduce a common-sense, equitable system. And happily doing so would also fix the budget deficit. Everyone should be supporting this proposal! It has NO downside. It’s all benefit – every inch of the way, for everyone.

    • 0
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      Hi Rainey. I just re read my above post. I found no mention of the Greens or any other political party. Evidently, from your post, You say you saw that I did. I don’t know what you are in the habit of smoking, but it is not doing your eyesight, or your analytical ability, any good.

  6. 0
    0

    Using the ‘Super Pool’ to invest in infrastructure I believe would be a good thing,
    however I’m extremely tired of the ‘under 50’s’ continually referring to retirees as ‘the chosen ones’.
    a. most retirees worked very hard all their lives and are lucky to be alive to enjoy it, and
    b. hopefully, they will be retired one day also and would also deserve to retire to a life they worked hard for.
    LEAVE SUPER ALONE

    • 0
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      If investing in infrastructure is such a good thing don’t you think the Multi National companies would be doing so. The only infrastructure the government would be investing your super in would be anything that wouldn’t provide a reasonable return.

  7. 0
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    leave the super alone, i worked and paid for my super and my 4 children and i went without because it was compulary for me to pay. instead of penalizing those who have worked and paid taxes, find jobs for the younger generation instead of them sitting at home playing video games on my taxes. and as far a people living longer possibly till 90+ rubbish not that many live til that age, my son died 26, father 58 brother 60. god states its 30score and 10 average thats 70 he knows better

    • 0
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      On the other hand my Aunt lived to 104, my Grandmothers to 94 and 89, my mother is currently 84 and going strong. Not too big a leap to see that people are in fact going to live well into their 90s in the very near future, although there will always be those who don’t.

    • 0
      0

      Well maybe the Government can do genetic testing and if your parents lived a long life you can’t get your super until you are 75. Both my parents died in their late 60s very early seventies so maybe I should be able to access my super now so I can enjoy it with the Government safe with the knowledge that if they ever do have to pay me the super it won’t be for very long 🙂

  8. 0
    0

    Costello is only protecting the incredible additional benefits he bestowed on the already wealthy when he fiddled with superannuation when he was Treasurer.
    If those benefits are changed it will prove he was wrong in what he did and what politician will ever admit that.

    • 0
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      TT..You seem to suffer from a bad case of Wealth Envy. I know a considerable amount of people from my generation who own more than one property, who live in middle class suburbs and living a good lifestyle. The one obvious similarity between them all is that they worked hard all their lives and made better decisions than the “forever needy”.

    • 0
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      Perhaps you should have a good hard look at the generous arrangements put into place by Costello and Howard that greatly favoured those who didn’t need any assistance at all but those arrangements did not extend to the hard working people of average means.
      I am not envious of those who have more than me, good on them for having worked so hard what I do object to is the unfairness that exists that has led to the ever increasing gap between those who have and those who have not.
      It is a simple application of common sense to realise that if most of the wealth of a country is concentrated in a few hands there is less disposable income possessed by the vast majority of the population and hence the economy slows down. Look at what is happening around the world as the wealth gap increases.

    • 0
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      Did anyone watch the program on ABC TV last night – The Super-Rich and Us? Seems that the trickle down theory has turned out to be trickle up reality, with the very rich buying up all the property, making getting into the housing market much more difficult for the rest of us. This program is from the UK, but has lessons for us in this country.

  9. 0
    0

    Common sense
    David Leyonhjelm guest post: Pensions are charity
    Posted on 11:20 am, February 17, 2015 by Rafe Champion
    From The Fin Review

    To my fellow mature Australians, I’d like to explain something. We are not entitled to an age pension merely because we have paid taxes all our life. Pensions are not for everyone; fundamentally they are welfare, reserved for the poor.

    Like many others, I have been in continuous employment since 1974 and paid my taxes each year, increasingly fairly considerable sums. But governments have not saved my taxes to pay for my retirement. Instead, those sums were spent each year. In fact, our taxes haven’t even covered each year’s government spending. Over the past forty years, budget deficits have been the norm, with the country now in debt to the tune of $245 billion. If anything, I and my fellow baby boomers should pay the rest of Australia a lump sum when we retire, to cover the debt we are leaving.

    http://catallaxyfiles.com/2015/02/17/david-leyonhjelm-guest-post-pensions-are-charity/

    • 0
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      That’s the way it works Pete. Responsible people make lifelong contributions to fund their retirement…then the drunken sailors come to power…Labor…and spend like there is no tomorrow. They don’t get the blame for their indulgent wastefullness as it was..remember…a stimulus package. The spotlight is then turned onto greedy unconscionable people who made sacrifices in their lives…yes they have all the money and must be the only reason why others are poor.

    • 0
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      David Leyonjelm obviously has no respect for those who battled to save a little for retirement and are now being told they must forego all the comforts they worked and sacrificed to achieve because of politicians’ irresponsible handling of money they took from us in tax. It’s NOT our fault the country is in debt. It’s the fault of the selfish, self-serving and irresponsible. And Sum1, it wasn’t Labor’s spending that caused the problem. It was Howard and Costello’s massive tax cuts to the rich. And now Costello is screaming to maintain the grossly unfair superannuation tax concessions that, if remedied fairly, would result in eliminating the debt. There is no need to hurt retirees. Just fix the ridiculously inequitable system of concessions on super contributions and earnings so that the battlers get a fair benefit and the rich don’t get an obscene and unfair handout. We can fix this nation – quite easily – if we stop the greedy and self-serving looking after their own interests at the expense of the majority.

    • 0
      0

      I’d say that because pensions were originally funded by a levy, and this was never taken away, just incorporated into consolidated revenue, that the pension is an entitlement. But I really don’t think it should be non means tested. I actually think that the assets test is about right now, apart from the double dipping of Super as part of an income stream, which was started on 1st January this year.

      Apparently, current workers in Germany pay for the pensions of those now retired. This sounds simple and logical, and of course this also happens in Australia in reality. To my mind, it is better than all this superannuation business. Super has flaws, one is called inflation, the other is corruption. You or your employer pay the money, and it has to be invested to keep up or ahead of inflation. Sometimes ‘opt – out insurance’ payments are automatically deducted, which could see your super dwindle down to practically zero. I have seen this happen.

      Also, who said that there were lies, damn lies and statistics? It maybe true that the male life expectancy at birth in 1909 was 55, but this does not mean that the average man was born, grew up, worked and dropped dead at 55 (thus obviating the need for a pension). It just means that a lot of people died from childhood diseases that are now irradicated, and that men went to war and many of them were cut down in their prime, long before 55 years of age. Smoking also played a huge part, of course. I know that one of my grandfathers lived to 82 or 83 (despite smoking a pipe) his wife, my grandmother, lived to 94 and my other grandmother lived to about 80. One of my uncles, born around 1916, lived until about 92 (he also smoked a pipe). A better statistic would be the proportion of men, working at say 40 years of age, who lived to, and beyond, pension age.

      (I also wrote this in “Because we paid taxes we are entitled to the pension.”)

    • 0
      0

      Justsane
      You’re not “Just Sane” you are “Very Sane”.
      The only remark object to is your “Unquantified” remark about means testing.
      If they are castles (Family Investment Mansions) YES Meanstest.
      Otherwise NO MeansTest Please.
      For the rest, a VERY SANE presentation – in my opinion that is!

    • 0
      0

      Thanks, Patriot. I think the home that a pensioner lives in should not be included in the assets test. All other properties owned by the pensioner are fair game. This is the status quo at the moment.

    • 0
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      Justsane
      Sorry – must have missunderstood

    • 0
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      David Leyonjelm obviously has no idea of what a levy or three on income tax to fund pensions actually means…

      Let me lay it out for you Davie……

      > Income tax contains a significant portion levied since around 1920 to fund pensions and other ‘social security’

      > Everyone alive now has paid into that future fund

      > All of us paid our taxes, and I can recall not one person being so filthy low as to complain that the old and infirm and the out of work should not receive payment out of our taxes.

      > Since the levies were taken as income tax on taxable income, the benefits therefrom are fully paid for in advance – unlike super which enjoys tax havens.

      > Pension etc is therefore a Right fully funded in advance by the very people who receive it.

      Good day to you, sir….. I trust you are shown the door at the next election never to return… one so incompetent and lacking in knowledge has no place in government in my country.

    • 0
      0

      IN BEGINING
      Pensions were introduced for males 65, females 60.
      Life expectency average male 51 & 67 for average female. This would have excluded most the more labouious workers as they would die before retirement (Worked To Death) was the phrase.
      Present days those working conditons & labourious jobs have all but gone.
      Noteably some of the jobs & conditons have manage to be still around but in the main gone.
      The Problem Is Not Collecting Taxes but people surving.
      SORRY FOR LIVING LONGER and the Pete’s of the world need to wakeup to that.
      The pension wasn’t intended for most male’s but the few who rode through thire working life without the pyshically challenging work of the time in worst conditons possible.

    • 0
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      David L’s contention that pensions are a form of charity and should be removed for those who have worked and paid taxes all their working lives sounds like something out of 19th Century England. Does David propose that work houses be created to “park” the elderly unemployed to work at repetitious and menial tasks for their upkeep? Or would they be cast out in the street to make their own way and eke out an existence in the time they have left??

      I am not sure what plans David has for the aged unemployed in the future, but it seems that the proposal would kill off any incentive for today’s workers to pay taxes to support a system that would cast them off, abandon and ignore them when their economic usefulness is at an end.

  10. 0
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    The Leave Super alone Cry is a ill-informed bunch!!
    The Changes proposed to Super are all to do with the currently allowed exorbitant excesses for people on high incomes to STASH large amounts into it ….and thus AVOID paying their normal rate of tax…..by only paying 15% if they STASH it in Super!!!
    This is being abused by the Middle to Higher Income group to avoid paying tax….why not change the Threshold back to a reasonable Limit??? This happens to be part of the reason why the Government cannot balance the budget….far to many have simply used it as a tax avoidance scheme…..leaving a shortfall in Tax Revenue….which has to be made up by SCREWING the Pensioners and trying to retrieve the lost revenue!!!!
    Costello and Company are among those who have used this loophole to build retirement wealth…..and they do not want to loose their unfair advantage!!!
    As for Taxing it……He was the mongrel that brought in the original 15% tax saving for those who can Salary Package/and can afford to put more in than the average worker.
    Taxing Super…in any way….was never part of the Original Plan!!!
    It was supposed to remain Tax Free if you left it their for your retirement……but NO!…..the Governments interfered with it time and time again……even adding severe tax penalties for those who accessed it early…..even though most had to be defined as ill and unable to work to access it!!!
    The Mass exodus to SMF was directly caused by all the limitations placed upon Super Funds and their members as to How they can access it and when. The Hardship provision is inadequate….requiring 6 months on unemployment…..before one can access it!!! Most people with a Mortgage & Family who are unable to work are Bankrupt before they access it on Hardship grounds due to illness etc.!!! Yet it is their Money on which they have already paid Tax BEFORE it went into Super!!!
    As for the whinge about not being able to afford to pay a Pension to ALL the Baby Boomers……well wait just a minute!!!
    Who paid their taxes at a higher rate from 1950 till 1990 on the basis that the Government would pay a Pension on retirement???
    And out of that tax…put aside till 1990….who accessed the fund and spent the Lot??? Not the Baby Boomers…oh No…it was BOTH Parties who agreed to spend the Pension Piggy Bank!!!
    Just who paid for all the Bridges, Roads, Power Poles, Hospitals, Schools, and most of the Infrastructure that everyone enjoys access to today???? Oh hell yeah…by enlarge it was the Baby Boomers!!!!
    As to why they are broke….by their own admission they have granted far too many exemptions/loop holes to the Middle and Upper Class to avoid the NORMAL taxation rate for their incomes!!
    Salary Sacrificing should be ABOLISHED COMPLETELY!!
    ALL SUPER should be Not Taxed at all!!!
    All Super Rules should apply to all Super Funds regardless of whether they are Industry, Self Managed Funds or even MP’s Super Fund!! So often, the Government has called for a Level Playing Field for everyone…Yet it is the Government who continually grants exemptions for some and not for others!!!
    As for Mr.Costello and his Hands Off Appeal….that was not his opinion when he was treasurer…so what has changed????
    I would be very interested in seeing just how much he has STASHED into his Super to avoid paying the Proper tax rate on his Income.
    I believe it would be so substantial he would be unwilling to publish it!!! And that is without his $2 for $1 Parliamentry Super Scheme at our expense or his Golden Handshake and accessibility allowed in his Super Scheme that is denied to the rest of us.
    Super was never meant to be Taxed….simply because your tax is based on your Gross Income…..so therefore your Super Contributions have already been taxed before it goes in!!!!
    But not so if you can Salary Sacrifice….then it is taken off your Gross before tax is applied!!! One rule for some…another rule for others!!!!

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