Kim Beazley (Brand, Australian Labor Party, Leader of the Opposition) Share this | Link to this | Hansard source

My question is to the Treasurer. Isn’t it a fact that since last night’s budget the bank bill futures market has shifted to predicting with 100 per cent certainty that interest rates will rise again within the next year? Is the futures market wrong? Will the Treasurer guarantee that interest rates will not go up as the futures market predicts?

Peter Costello (Higgins, Liberal Party, Treasurer) Share this | Link to this | Hansard source

According to my information, the overnight interest rates swap moved by one basis point, from 5.76 to 5.77. That is one basis point. I will have the Leader of the Opposition’s figures investigated, but I always take his figures with a grain of salt. This is the man who, back in 1996, said a $10 billion budget deficit was a surplus. But there is one question that we are always happy to take from the Australian Labor Party: a question on interest rates. Those of us who have been in this place in opposition well remember the then Leader of the House and Minister for Finance presiding over a government which had home mortgage interest rates at 17 per cent. Whilst he was in office, through the whole period of the Keating years, the average home mortgage interest rate was 12¾ per cent, compared with an interest rate today of 7½ per cent.

Mr Speaker, if you were paying the ‘Kim Beazley average rate’—not his highest rate but his average rate—you would be paying another $215 on a standard mortgage loan today. So the evidence is there. This is the government which has so run economic policy as to keep interest rates low. We will continue to manage the Australian economy so as to keep interest rates low, and they will be substantially lower than the Australian Labor Party’s 12¾ per cent. If the Australian public want to make an assessment of records in relation to interest rates, we would invite them to do so because there is one person who would be coming down the bottom of the list and he goes by the name of the Leader of the Opposition.

Trish Draper (Makin, Liberal Party) Share this | Link to this | Hansard source

My question is also addressed to the Treasurer. Would the Treasurer inform the House of his plan to introduce the most significant reform to the superannuation system in decades? Who will benefit and how will this help provide for future retirement needs, especially for my constituents of Makin?

Peter Costello (Higgins, Liberal Party, Treasurer) Share this | Link to this | Hansard source

I thank the honourable member for Makin for her question. I can inform her that the constituents of Makin, like other Australians, will benefit from the largest superannuation reform in at least two decades and, if you exclude bad reforms like the big one two decades ago, one of the best that has ever been made in respect of superannuation in this country. This is a plan to radically cut through the complexity of the superannuation system. It is a plan for no tax on end benefits: no tax on end benefits for lump sums and no tax on end benefits for pensions if you are in a taxed superannuation fund and you take your earnings after the age of 60.

As a consequence of that, we will now no longer need different rates for pre 1983 and post 1983, for pre 1994 and post 1994, for capital gains exempt, for getting the rebate and for a whole host of other complexities currently in the system. We will now no longer need reasonable benefits limits or age based limits because we will have one standard, universal limit. This will make superannuation an attractive savings vehicle for all Australians, and it will give people certainty in their retirement as a consequence.

The reform of the Australian superannuation system is broad-ranging reform and it is being undertaken by this government as part of its major tax reform in relation to income tax and business tax. It is a reform that will make retirement easier to understand. It will boost standards of living in retirement and it will boost Australia in a way in which we want to build our country into the future.