Costello: super complexity cutting contributions
Super is too complex says Peter Costello. Photo:AAP
Future Fund chairman and former Federal Treasurer Peter Costello says Australians are baulking at voluntary superannuation contributions because the system has become too complex.
Mr Costello has expressed his concerns almost two months after the government released its revised super reform package for public consultation before it comes before Parliament in a report published in The Australian newspaper.
“With growing complexity, extreme complexity, people will shy away from (the super system). And I think they are right to shy away from it because you never know what the rules will be,’’ he said.
Mr Costello also warned about the dangers for global trade of a Trump or Clinton presidency in the US because of their opposition to the Trans-Pacific Partnership.
The former treasurer also warned of the dangers of Australia being downgraded by global credit ratings agencies over the commonwealth’s intractable budget deficit.
“I think the prospect of a downgrade can and should be used to galvanise public opinion to know that international people outside Australia are registering concern about our financial position,” he said. “This should be taken as a message to the public that we need to change our ways.”
In July, two of the three global ratings agencies warned that the prospect of a deadlocked parliament stymieing budget savings put the nation’s AAA credit rating in danger.
Australia’s credit rating was downgraded twice in the 1980s. It was restored to AAA by Moody’s in 2002 and Standard & Poor’s in 2003 on the back of a string of budget surpluses during the Howard government when Mr Costello was Treasurer.
On the complexity in the super system and voluntary contributions, Mr Costello said: “In the voluntary sector … I think people will take the view that you should be much, much more cautious … This might be what the government wants, we don’t know.”
In August, the nation’s biggest wealth manager, AMP claimed the government’s proposed super shake-up was a major factor in weak retail and corporate super platform cashflows.
The government has acted to water down the proposed changes in its latest reform package with the contribution caps and the reforms to the non-concessional cap less comprehensive than the changes put forward in the May budget. The changes were triggered by wide opposition within coalition ranks and threats to cross the floor by Liberal and National members.
Treasurer Scott Morrison has claimed the revised package would save the budget $180 million over the next four years and $670m in the medium-term despite giving up revenue to please the party.
