TRANSCRIPT
THE HON PETER COSTELLO MP
Treasurer

Interview with John Laws

2UE Radio

Thursday 26 February 2004
9.15 am

SUBJECTS: Superannuation changes; Australia’s Demographic Challenges;

Mark Latham

LAWS:

You there Peter?

TREASURER:

John, how are you?

LAWS:

I am terrifically well, how are you?

TREASURER:

I have never been better.

LAWS:

I think it is very generous of you to allow me to spend my money that I save.

But that’s what you are doing, seriously isn’t it?

TREASURER:

My goodness. You always have got a catchy phrase on everything, John.

LAWS:

But haven’t I spoken the truth, haven’t you just given us permission

to spend our own money earlier than we were…

TREASURER:

…Well at the moment if you want to get access to superannuation you have

to retire from the workforce. That has always been the rule. Superannuation

has previously been to support people who are retired but what we are saying

now is that if people want to work part-time in the workforce, over 55, they

can access superannuation as well and supplement their earnings.

LAWS:

Now, I agree with what you are doing, I think it’s a terrific idea. I

think that there are some problems with it. But seriously, all joking aside

what you are doing is giving the people of Australia permission to spend their

own money earlier than they would have spent it. Money that they have spent

tax on going in and money that they will spend tax on coming out.

TREASURER:

Access to, after 55, access to superannuation as a supplement for earnings

which they have never been allowed to have before.

LAWS:

…but none the less, do you concede what I am saying is right? The government

is now giving us permission to spend our own money.

TREASURER:

No. What we are doing is we are trying to encourage people to work longer and

stay in the workforce, maybe part-time. And one of the reasons why people haven’t

done that in the past is if you do it you’re not allowed to access your

superannuation which is a retirement income. We are trying to introduce a new

concept which is part-time retirement if you like, part-time work, part-time

retirement and you can access both part-time work and part-time retirement at

the same time and hopefully that will keep people working longer.

LAWS:

I think that’s a wonderful idea and I know many people that will want

to do it but there is some difficulty with keeping people working longer because

they can’t get employment.

TREASURER:

I think this is a big part of it. We have to encourage employers to look at

older workers differently. There has been a tendency by many employers to look

at people as being on the scrap heap when they are in their 50’s and you

know you think of that big wave of change that went through the banks. A whole

lot of bank branch managers were put off in their 40’s and 50’s…

LAWS:

…I remember well…

TREASURER:

(inaudible) decision and people who are 50 are going to live until they’re

80, 82, 85 or something like that. You can’t live in retirement for 30

years or 35 years, you have got to encourage employers to take them back.

LAWS:

Well I agree with that. But that will mean some kind of education program for

employers. You see, I think that one of the biggest problems with the banking

industry was when they started to get rid of fellows who were 50 and 55 who

had experience and they had the ability to have a personal relationship with

the clients.

TREASURER:

Yes.

LAWS:

When they got rid of them they got rid of a whole bunch of experience…

TREASURER:

Absolutely, and now many of the banks are regretting it.

LAWS:

You bet.

TREASURER:

Some of them are announcing that they are going to go back into branch banking

and you will come across bank branch managers who are now going back into the

banks, and you know I hope the banks do take a lot of them in.

LAWS:

Yes, well I made a speech to the bankers association about 4 years ago, saying

just that and what is missing in banking, we are getting off the subject but

it doesn’t matter, what is missing in banking is that personal approach.

TREASURER:

Absolutely and its funny I have just been talking to a lot of people over the

last day since we made this announcement. You come across people everywhere

who say look I took a package at 55 and I got bored in retirement, I want to

come back into the workforce, I wanted to do some part-time work. My other point

is with the population ageing we are going to need these mature age workers

because we are not having as many children, there are not going to be as many

young people in our society as a proportion of the overall population and so

we are going to need these mature age workers just to keep the economy going

in the years. You know I am not talking about tomorrow, but in 10 years time

or 20 years time, there could well be a shortage of young people for labour

in Australia.

LAWS:

Ok so, so what you will need to do, and I presume you will do it, is to conduct

some kind of education program to encourage employers to get people back.

TREASURER:

Absolutely and this is my big message today to the employers, particularly

the big business employers. Mature age workers are very reliable, they tend

to be, not to have as many sick days you know they don’t go out to night

clubs and they generally get to work on time and they are people that are reliable

and dependable. Now they may not all want to work 40 hours or 50 hours…

LAWS:

…but they can do a bit…

TREASURER:

…but they can do a bit…

LAWS:

…but does this thing do anything to stop people using all their super

and then lining up for a pension?

TREASURER:

Well that is why we are saying, look you can access your super but you have

got to access an income stream. You can’t take a lump sum, spend it all

and then go on the age pension. You can access an income stream if you want

to remain in the workforce.

LAWS:

But then again is that fair? It’s their money?

TREASURER:

Well you have got to guard against the situation where if somebody took a lump

sum and spent it all they wouldn’t have enough money to keep them going

into their 70’s and their 80’s. You have got a bit of a balance

here.

LAWS:

Yes, except there should be enough money because there are plenty of people

who didn’t have a lump sum in super or weren’t able to accumulate

a lot of super who have to survive on the pension.

TREASURER:

The age pension that’s right…

LAWS:

Well you’re not suggesting that the age pension is not sufficient?

TREASURER:

Well the age pension is not a huge sum. For many people, it is what they will

rely on of course but others are going to want to have more money in retirement

than the age pension. And if they can work a bit longer, if they can put some

money away in superannuation, that’s the way to get it.

LAWS:

Ok well what’s been done to encourage people to put more super away?

TREASURER:

We are offering tax incentives for people who make contributions into their

own super, that is in addition to the 9% that is the employer matching. We are

offering tax concessions for voluntary payments into superannuation.

LAWS:

What kind of tax concession and is there a limit? Is this means-tested in any

way?

TREASURER:

It is for middle income earners who make a co-contribution to give them a tax

break for money that they put in and also we are trying to encourage, through

tax concessions, maybe husbands putting in money on behalf of their wives. Because

there are many wives of course that have not been in the workforce and are not

getting any superannuation at all.

LAWS:

Rental costs are the biggest expense in retirement if you don’t own your

own home. Is this going to help in that regard, I mean people who own their

own home are going to be a whole lot better off aren’t they?

TREASURER:

I think if you own your own home you are better off in retirement, yes I think

that is right. If you are on the age pension and you are paying rent it is harder

but we do have for many people on income support what is called a rent allowance

to help them with their rental costs.

LAWS:

Is it difficult to achieve all this when people know that you and members of

parliament can access their super as a lump sum but you are telling them you

can’t.

TREASURER:

Yes well that scheme is changing as you know. We have already…

LAWS:

…will that aspect of it change?

TREASURER:

I think like most superannuation, you have a choice between lump sums or pensions

but pensions are generally much better value and I would encourage people to

take pensions or annuities or whatever they are called, because, in particular,

if you are living longer then your money is going to go further.

LAWS:

Will the general public be able to take a lump sum?

TREASURER:

Yes, the general public can take a lump sum. Yes they can.

LAWS:

Even under these new regulations?

TREASURER:

Yes they can. But we are encouraging people to take pensions or annuities or

income streams because the thing about this is that we are all going to live

longer. This is the other part of my message. Life expectancy today, John, is

over 80. Most of our thinking about superannuation was done in a context where,

you know, people retired at 65 and maybe had 6 or 7 years and life expectancy

was 70. Well now if you are looking at retirement at 65 you have got to start

preparing for 16, 17, 18 maybe 20 years in retirement…

LAWS:

…at least, at least…

TREASURER:

…and you have got to think about, will the money last that long? Pensions

are a much better way of doing it but the even better way is if you can extend

your working life.

You are not drawing down on your pension, in fact you keep adding to it at

the later years of your life and that is going to make the money stretch much

further.

LAWS:

Peter do you see the irony in all this, in relation to you and the Prime Minister.

Here you are encouraging mature age workers to keep on working. That encouragement

I presume is being offered to our Prime Minister…

TREASURER:

Well we are all at the hands of the electorate. Whether we keep working or

not is a matter for the Australian people and they will decide.

LAWS:

How do you think Mark Latham is performing?

TREASURER:

I think that he is getting a good run in the media. I think you know the media

(inaudible) because he is new and they are giving him pretty sympathetic treatment.

But I think he will get into trouble when he has to lay down policy because

he has got so many contradictory polices I don’t think they will add up.

LAWS:

Would you invite him home to dinner?

TREASURER:

I don’t know. I wouldn’t if I had a taxi driver around us.

LAWS:

Ok, I know you have got a busy day coming up….

TREASURER:

Nice to speak to you John.

LAWS:

I always appreciate your time and I thank you very much for it, Treasurer.

TREASURER:

Thanks very much John.