Costello said superannuation would become the “plaything of changed taxation arrangements” if governments continued to alter the system with each federal budget. The cut in the co-contribution rate, from $1.50 to $1 for every additional superannuation dollar put forward by members, was an example of the kind of “tinkering” that could undermine faith in the system and discourage engagement.
The government stated that it would lift the co-contribution amount rate to $1.25 in 2012, and $1.50 in 2014. Costello, who as treasurer lifted the co-contribution scheme to $1.50 for each $1 in his final budget in 2007, said the pullback from the government would deliver about $1.4 billion. He said the government’s reduction of the concessional contribution limit from $50,000 to $25,000 was also “done to raise money”, – $2.4 billion over the forward estimates . Unveiling the 2009 budget, Treasurer Wayne Swan said the reductions in the co-contribution rate and concessional limits would enable the superannuation system to be more sustainable. “We are seeing the whittling away of the co-contribution scheme in the name of temporary sustainability,” he said. “We are in the middle of a fiscal stimulus of $100 billion over four years, and yet they felt the need to claw back $2.4 billion out of super.