The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
Picture of Peter Costello

Peter Costello

Treasurer

11 March 1996 - 3 December 2007

Transcript of 11/05/2007

Press Conference
Treasury Place, Melbourne

Friday, 11 May 2007
9.50 am

SUBJECTS: Better Super, Labors Budget-In-Reply speech

TREASURER:

The Australian Government is going to begin a communication campaign to inform Australians about the superannuation changes which take place on the 1st of July.  A campaign known as ‘Better Super.’  The Assistant Treasurer, Peter Dutton, has been in charge of this campaign and I invite him to make some opening remarks.

MINISTER DUTTON:

Well Treasurer, thanks very much.  Ladies and gentlemen, today is the launch of a campaign to inform Australians about the biggest changes to superannuation.  For people who are over the age of 60, post 1 July this year, they can draw down their superannuation from a taxed superannuation fund.  It doesn’t matter if it is in a lump sum or if it is in a pension, it is tax free.  And when we have an ageing of the population, we need to deal with that, we need to make sure that wherever possible people can save for their own retirements and this superannuation policy really adds to the future and to set up the next generation and continue the economic success that we have been able to establish over the last 10 years.

It is also very important today that we say to people in small business that changes to superannuation are a particular benefit to you as well and they recognise the effort that you put in along with your family in many cases, to secure your own future.  And we need all Australians to seek independent financial advice, wherever possible, to talk to their financial advisers about the opportunities that superannuation now presents.  Much of the complication has been withdrawn and simpler super is now with us and it is a better superannuation system for the decade ahead.  So I will hand over the Treasurer now, he will talk a little a bit more about it and we can show you the ad which we think will provide a great opportunity for people to understand the changes that have been made. 

TREASURER:

Thanks Peter.  On the 1st of July this year the biggest changes ever to superannuation will take place.  What they mean is if you are over 60 and your superannuation is in a taxed fund, which most people’s superannuation is, you can take your superannuation tax free.  Tax free for a lump sum, tax free for a pension.  It means that superannuation is very attractive for people to save for their retirement and it means that people should, if they can, look at putting some money into superannuation from their own money.  We want to encourage Australians to do that and to save for their retirement.  These changes start on 1 July this year.  A communications campaign will start more or less immediately.  It will be in three bursts, one shortly before the 1st of July; one shortly after the 1st of July and a third in April of next year. 

The message that we are trying to get to Australians is superannuation just got a whole lot more attractive, and if you can, look at putting some money into your superannuation account.  It will be good for you and it will be good for the country.  As we face the ageing of the population, we need to encourage people to save.  This campaign will also involve a 20 page booklet going out to 10 million households to explain the way in which the new system works.  And in addition to that the Government will be launching television advertisements which will get to the Australian public.  And I will now roll those television advertisements. 

[PLAYS AD]

TREASURER:

All right, are there any questions?

JOURNALIST:

How much is it going to cost?

TREASURER:

We expect that the overall communications cost will be $69 million over two financial years, which includes advertising, information and education activities and updating and changing over 400 publications. 

JOURNALIST:

Given that the information is on the website, wouldn’t it be a lot cheaper, a lot smarter to send every household a page of information, and if they want more information they can go to the website or they could apply to get the book?  I mean the cost of a 20 page booklet going to every household just seems ridiculous.

TREASURER:

You are talking about the largest financial decision people will make apart from buying houses.  And a financial decision which will govern their standard of living for 30 years once they retire.  Now, we think it is very important that they make good financial decisions.  And it is good for our country. And that is why they need to know about the benefits of investing in superannuation, that is why we need to get to as many people as possible.  

JOURNALIST:

Well couldn’t you do that with one page rather than…?

TREASURER:

I don’t think so.  You are talking about the biggest financial decision outside of buying a house.  The rules, which have up until now been extremely complicated, have just got a lot simpler and you are asking people to begin an investment which will govern the quality of their life for decades.  And I think they need as much information as they possibly can. 

JOURNALIST:

So why do you think we need changes to super?

TREASURER:

We needed changes to the super because superannuation was too complicated and it was taxed too highly.  You used to have reasonable benefits limits, you use to have contributions limits, you use to have different taxation – and that has got a lot simpler.  Now, for most Australians it is this simple:  No tax on pensions; no tax on superannuation after you are 60.  And because it got a lot simpler and a lot more attractive as an investment, we want people to make voluntary contributions.  That is what we are asking.  People to put in their own money as an investment for their retirement.  If you are self-employed, you will get a tax deduction to do it, the money will accumulate and when you are 60 it will come back without exit taxes.

JOURNALIST:

Treasurer, just in response to the Budget Reply of Mr Rudd last night, are you surprised that it was less of a reply, more of a setting out for the future?  Like he didn’t exactly address the tax cut proposals of yours.

TREASURER:

No, it was very strange.  He didn’t really address the Budget at all and I think that is because he didn’t really have, he hadn’t really thought about the Budget.  I was very surprised that he didn’t address the Budget and it said to me that he hadn’t thought about it, he hadn’t really been able to come to grips with it.  I don’t think he has thought enough about policy, I don’t think he understand the numbers and so the speech that he gave really didn’t address the Budget.  And it didn’t address the forward looking initiatives of the Budget.  He had nothing to say about the Higher Education Endowment Fund, he had nothing to say about tertiary education, he had nothing to say about tax cuts and childcare assistance for families.  And that is why I was surprised that having said nothing about helping Australian families.  He came up with this idea of cutting tax for foreigners.  The only tax cut that Kevin Rudd proposed was one for non-Australians.  Nothing for Australians but a tax cut for non-Australians and I was very surprised by that and I think people that were listening in last night to get an idea as to whether he had come to grips with economic policy, would have been surprised at how lightweight that was. 

JOURNALIST:

He did address the issue though, slightly, of tertiary education, in saying that university is not for every person coming out of school.  Isn’t that right though, that there needs to be more investment in the trades and skilled areas of the community?

TREASURER:

Yes, the Government has been saying for years that university is not for everybody.  That is why we are establishing Australian Technical Colleges around Australia for students that want to go into trades.  The Government wants to encourage people into apprenticeships, that is why we announced an additional $1,000 tax free as a wage supplement for each person in second year apprentice in skill shortage trades.  This has been government policy for a long time and I hope that the Labor Party supports that policy.  But I don’t think he had anything new to say about it. 

JOURNALIST:

(Inaudible) to fund schools (inaudible)?

TREASURER:

Well, here in Victoria the reason we don’t have tech schools is that the Labor Government under Joan Kirner abolished them.  So after the State Labor Government abolished them, do you think they will bring them back again?  I would love it if they did, but I don’t think they will.  They abolished them.  Labor State Government under Joan Kirner abolished all of Victoria’s tech schools.  That is why the Australian Government had to begin building Australia’s technical colleges which we are now doing. 

JOURNALIST:

Mr Costello, the Labour Force figures yesterday and also with the budgetary measures, do you think the case is mounting for an interest rate rise before the next election? 

TREASURER:

Well the Labour Force figures yesterday were good news.  Unemployment fell to 4.4 per cent, the lowest in 32 years, the lowest since 1974 and that is good news.  That is good news for Australians.  We used to think that full employment in this country would be about 6 per cent.  Now we are down to 4.4.  Let’s see how far it can go.  But I have said that it is important in this climate, where employment is strong and unemployment is so low, that we make sure that wages outcomes are consistent with our inflation target.  We want to keep inflation low too and that is why we need an industrial relations system that doesn’t work on a centralised basis and feed wage claims right throughout the whole economy.  And that is why we need individual wage setting to make sure we can have strong employment, real wage growth but we don’t set off inflation. 

JOURNALIST:

Mr Costello, Mr Rudd said that productivity will fall to zero when you look at the Budget papers, do you agree?  Is he correct?

TREASURER:

No, again you see, he hasn’t done his homework.  It is a nonsense to say that productivity will fall to zero. 

JOURNALIST:

Why?

TREASURER:

Well, you can look all the way through the Budget papers and you won’t find any figure like that.  If he says that, then again it is a nonsense. 

JOURNALIST:

Where do you think he would get that idea from?

TREASURER:

Who knows?  All right, thanks.