Super tax changes made by Coalition were too generous: Paul Keating Judith Sloan finds the government's much vaunted superannuation changes minor as the 'fabulously wealthy' prove elusive. The Gillard government says only about 16,000 retirees will be impacted by changes to tax on super earnings. THE architect of Australia's superannuation system, Paul Keating, says the Gillard government has scaled back overly generous tax changes put in place by former treasurer Peter Costello. In a statement released today, the former prime minister said the taxation of superannuation fund income over $100,000 at 15 per cent went some way to restoring the original intent of the system that there should be a reasonable limit on superannuation tax concessions. "It corrects by some measure the unsustainably generous Costello tax changes which dismantled the former reasonable benefit limits structure in favour of an open ended tax-free regime," Mr Keating said. The endorsement came as the Financial Services Council said it had not been consulted on the taxation of superannuation earnings, and elements of the package announced today were "inconsistent" with the government's comments in recent months. FSC chief executive John Brogden also expressed concern that the proposed changes would not be legislated by the September 14 election, saying superannuation should be taken "above politics." "It's in the interests of all Australians that this new set of proposals have some certainty around them before the election," he said. Earlier, Tony Abbott accused the government of breaking a promise not to tax superannuation payments. In fact, the government wants to tax superannuation income over $100,000 a year, not withdrawals. However, Mr Brogden said he remained concerned over the change. "We think the decision to tax people at all in the retirement phase is inconsistent with what the government has said in recent months," he said. Mr Keating said the superannuation system was designed as a retirement income system to augment the age pension, not as a tax haven. "It was never designed to make possible the shelter of income for those able to contribute increasing levels of precautionary savings and their associated compound earnings," he said. The sustainability of the retirement income system demands that that balance be maintained. The government, by these changes, appears to be striking a reasonable balance. Mr Keating said the limitation of what had become an open-ended concession had been achieved while leaving lump sums unaffected and without returning to the rigidity of the former reasonable benefit limits structure. Simon Crean, who blew the lid on the Gillard government's superannuation plans, said the changes announced today "seem to be positive." But the former cabinet minister and member of the budget expenditure review committee told The Australian he feared the changes under consideration could have been much worse. After being sacked from cabinet two weeks ago, when he publicly called for a leadership spill, Mr Crean urged the Gillard government to keep its hands off superannuation and follow the principles of the Hawke-Keating superannuation reforms. Mr Crean called on the government to explicitly rule out changes that retrospectively taxed earnings generated by super accounts, saying it was "tantamount to taxing people's retirement surpluses to fund our surplus." Today he said the proposed changes appeared to be positive because they were not retrospective and "not seeking to use super funds to fill a revenue hole." "The question of superannuation changes is about sustainability in the long term and adequacy of funding," Mr Crean said. When asked if he had been afraid the potential changes would go much further and be retrospective Mr Crean replied: "There was that concern." Treasurer Wayne Swan said the announcement of the proposed changes had been delayed because the government needed time to consult with industry stakeholders. But Mr Brogden said the industry had not been told about the taxation of superannuation income and needed to consider the practical implications of the proposal. National Seniors chief executive Michael O'Neill said the government had fallen short in its attempt to lift the annual cap for concessional tax treatment of superannuation contributions. The government has proposed lifting the concessional contributions cap from $25,000 to $35,000 from July 1 next year for Australians aged 50 and over. "It is still $15,000 short of the $50,000 cap average earners had counted on last year and the government had promised for 2014," Mr O'Neill said. However seniors lobby group COTA Australia said older Australians would receive a better deal from the measures announced today. "Whilst we do not support increases in superannuation taxes we understand the changes are needed to obtain sustainability and certainty for the retirement system," FPA chief executive Mark Rantall. "We have been calling on the Government to put a stop to the hysteria and consider policies which take a long-term approach to the future sustainability of Australia's superannuation system," ASFA chief Pauline Vamos said. She said a number of the changes were complex and would need to be considered carefully. Senator Milne said now that it had retreated from super reform, the government needed to fix the mining tax to fund policies such as education and health care.