Dad’s Army’s Alan Kohler is the latest commentator to call out Peter Costello for his questionable Budget management, noting the following today:
As Treasurer during the temporary commodity boom, Peter Costello, halved the capital gains tax rate, froze fuel excise indexation and made the retirement income system permanently much more costly by making super tax-free after age 60, loosening the means tests, removing the superannuation surcharge and implementing generous tax breaks in the years leading up to retirement — the ‘transition to retirement’ rules.
That pretty much sums it up right there. A large reason why the Budget is unsustainable today is because of the short-sighted decisions made by Peter Costello as Treasurer between 1999 and 2006. Combined, these decisions now cost the Budget at least $20 billion per annum in lost revenue, comprised as follows:
- Capital gains tax discount. Worth $5.8 billion in 2014-15, according to The Australia Institute;
- Freezing fuel excise indexation. Worth $5.5 billion in 2013-14, according to The Australia Institute;
- Superannuation tax cuts. Worth $2.5 billion in 2009-10, according to The Australia Institute;
- The decision to convert ‘franking credits’ into cash refunds for shareholder. Worth $4.6 billion in 2012-13, according to The Australia Institute; and
- Reducing the taper rate by which financial assets cut-off eligibility to the part age pension. Worth at least $1 billion, according to The Australian.
The cost of Costello’s Budget blunders will obviously grow over time with inflation and as the population ages, which makes reform all the more imperative.
Unfortunately, the current crop of politicians show little appetite for genuine reform, particularly in the retirement policy space.
Accordingly, Australians will likely face expenditure cuts to important social infrastructure and younger, working, Australians will face never-ending tax increases.
Thanks again Pete.
