Peter Costello’s latest contribution to public debate makes me wonder once again why it is he is (or was) seen as leadership material by so many of his colleagues. His assertion in The Australian today that the former government never encouraged people to invest extra money into superannuation is quite extraordinary, even by his recent standards.
Asked whether it was a mistake by his government to encourage increased contributions into super, Mr Costello said: “The government didn’t encourage it – anybody who wanted to put money into superannuation was free to do so. It’s their investment decision.”
This is simply nonsense. Measures such as the superannuation co-contribution for lower and middle income earners, where the government adds (at least) an extra dollar for every extra dollar an eligible income earner adds to their superannuation (up to a limit of $1500 a year), were devised specifically to encourage people to invest more in their superannuation. It has cost billions of taxpayer dollars, (and is a reasonably good measure in my view).
You don’t have to take my word for it. Here’s Mr Costello himself, in this media release following his final Budget just last year:
The superannuation co-contribution is a significant commitment by the Government to encourage saving and to improve the retirement income of low to middle income earners. (my emphasis)
It’s also hard to see how the big song and dance the government (and Mr Costello in particular) made about making future superannuation payments tax free – a measure I’m not so keen on – as anything other than a big (taxpayer funded) encouragement for pouring your money into superannuation.
The totality of Costello’s comments seem not only to try to wash his hands of his own efforts to encourage more people to get into superannuation. To me his comments strongly suggest that people are a bit silly to put money into superannuation and perhaps pushy financial advisers are to blame for making them do this. He also seems to be suggesting that it is a bad thing that people are being forced to make compulsory superannuation contributions.
Asked about the big push to lift retirement savings, Mr Costello said: “Big push by whom? Financial advisers? Maybe. I’m sure if you went around to some financial advisers you could find people who did push that. I’m sure you could. I’d make inquiries of financial advisers.”
Mr Costello, asked if he could understand that some Australians might feel they were steered into an investment that lost money, said: “No, because these are voluntary contribution limits. Some people will have put money voluntarily into super and they will have seen a negative return. I don’t feel so bad about that. Of more concern to me is the people who had compulsory money put into super. They had 9 per cent of their money without their choice put into superannuation and most of them will have seen it go backwards.
“My sympathy actually goes to the people at the other end. As I said to you, I wouldn’t worry about people who voluntarily made decisions about superannuation. I would be much more concerned about those who had a compulsory deduction from their wages, generally poorer people who will be in exactly the same position.”
Despite the huge losses in superannuation earnings that the majority of Australians will have suffered as a result of the recent financial crash, I am not sure it’s the best message for a former Treasurer to be inferring that investing in superannuation is a bad idea. Indeed, I would have thought at a time like this it would be more helpful to be reassuring people that it will probably remain a good investment in the long-term.