Peter Costello declared yesterday that his big tax cuts broke the cycle of cynicism because it was a hip-pocket budget straight after a federal election. It might not have been aimed at voters’ hip pockets, but there’s no doubt Costello was aiming to win votes in the party room because he’s boosted the bank accounts of his parliamentary colleagues big time.
In terms of increasing his party room vote, Cossie’s first pitch was at the new MPs who don’t have generous superannuation. Check out the Oakes transcript here. The key quote was as follows:
“The consequence of the superannuation changes is that it — it now means there are two tiers of MPs. That was a consequence of the proposal that Mr Latham put forward. I remember saying at the time that this would be one of the consequences. I didn’t think it would be a good consequence. Always a bad principle to take advice from Mr Latham. But that’s been enacted.”
Is he hinting at a pay rise for the newcomers after he becomes prime minister? John Howard certainly let the new MPs down last year.
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Then you have the old guard MPs who are huge winners from the abolition of the superannuation surcharge. Those like Larry Anthony, who have served more than eight years and qualified for a parliamentary pension will save an estimated $15,000 a year from the abolition of the measure introduced by Peter Costello in 1996. This is because the super benefit is the equivalent of around 68% of salary, so such a big windfall is not a bad way for Cossie to win friends on the backbench.
Finally, you have Peter Costello’s own pension position. He told Jon Faine yesterday that when he retires in 2020 (does that mean he won’t be still prime minister when he’s John Howard’s age?) he wants enough money put aside in the Future Fund to guarantee him access to aged care facilities and the like.
Cossie won’t need to worry about the government looking after him in retirement. Let’s assume the PM hands over the reins next years after ten years in the job and then the treasurer serves two years in The Lodge before losing to Kim Beazley. By then he would be entitled to retire on a pension equivalent to the maximum available – 75% of a PM’s wage. That’s around $208,200 at the moment (75% of $277,600). Given that it would be fully indexed, Cossie would probably be pocketing about $300,000 a year by 2020.
Jon Faine had an entertaining debate with Costello yesterday in which the ABC Victoria morning presenter said he didn’t want the $91 billion unfunded super hole plugged and would rather the government pour money into big infrastructure projects. Faine is actually a member of the CSS/PSS scheme, which has about $10 billion in assets and $100 billion of liabilities if you include the monstrous military scheme, which is the big daddy of them all as far as black holes are concerned.
It is most unusual to have a super fund member arguing that they don’t want their employer to fund their scheme but that is what Faine said yesterday. When you consider that United Airlines is trying to default on its pension scheme and General Motors may have to go down the same path, surely employees around the world want their retirement incomes fully funded up front.