I have always regarded Peter Costello as one of Australia’s luckiest and worst treasurers.
While his GST reform was unquestionably good, Costello’s time as Treasurer was littered with a raft of short-sighted and damaging spending/taxation decisions, including:
- Halving the rate of capital gains taxes in 1999, which pushed up house prices, overwhelming benefiting the rich, and now costs the Budget some $4 billion in revenue foregone;
- Freezing fuel excise indexation in 2001 (now reversed), which still costs the Budget more than $5 billion annually today;
- Loosening the assets test to qualify for the part Aged Pension and the Commonwealth Health Card (now reversed);
- Implementing tax free superannuation for those aged over-60, a move dubbed by Saul Eslake as “one of the worst taxation policy decisions of the past 20 years”;
- Removing the superannuation surcharge on high income earners;
- Implementing generous “transition-to-retirement” superannuation rules, assisting those approaching retirement to avoid paying tax;
- Allowing the conversion of franking credits into cash refunds for shareholders in 2000, which costs the Budget around $6 billion today; and
- The overall expansion of middle-class welfare.
