31 January 2019
Simon Benson, National Affairs Editor
Joe Kelly, Political Reporter and
Greg Brown, Journalist
Bill Shorten has defended Chris Bowen for saying retirees who don’t like Labor’s dividend imputation crackdown are “entitled to vote against us”, saying his Treasury spokesman was merely pointing out there was a “choice in policies”.
The Opposition Leader said Labor was being upfront with voters about how it will raise revenues by clamping down on “unsustainable tax concessions”.
He said axing cash refunds for franking credits would enable a Shorten government to spend more on services such as health and education.
“Chris was saying there is a choice in policies, and that is sensible. There is always a choice,” Mr Shorten said.
“We respect all Australians. That is why we are putting all of our policies out in advance. We have done something unusual in Australian politics: we are explaining how you pay for things before we then say how you use some of that money.
“But I think it is appropriate that we shut down unsustainable tax concessions. Why are we the only country in the world who will let people claim an income tax refund when they have paid no income tax in that year? It is generous but it is not sustainable.”
Mr Shorten said Labor would be a better choice than the government for retirees because it would lower electricity bills, make private health insurance more affordable and unfreeze the Medicare rebate for patients.
claims by World Vision and the Cancer Council that Labor’s franking
policy would lead to reductions in donations.
“What I can say to charities in the future is that because of a Labor government the causes you are most interested in are going to get a better deal in funding from a Labor government,” he said.
“We should have a health system that doesn’t rely on charity but relies on your Medicare card. “
‘PM: a two-fingered salute to retirees’
Scott Morrison says Mr Shorten will give the “two-fingered salute to retirees” if he becomes prime minister as the government ramps up its attack on Labor’s $55.7 billion dividend imputation crackdown.
The Prime Minister leapt on comments from Mr Bowen, who said self-funded retirees upset with Labor’s plans to axe cash refunds for franking credits were “entitled to vote against us”.
“This is the arrogance. They so think they are going to win the next election. They so think it that they just don’t care,” Mr Morrison told 2GB radio.
“And they will change it all. They will basically just give the two fingered salute to retirees right across the country and they just dare them.”
Mr Morrison said people were “turning up in droves” to committee hearings on the policy in Queensland, saying the rooms had to be expanded to fit in all the concerned self-funded retirees.
He said World Vision and the Cancer Council say the policy would reduce donations to charities.
“(Mr Shorten) hasn’t just got his hands into retirees pockets he’s got his hands into the donations bucket at the train station,” Mr Morrison said.
More than 50,000 voters across the nation’s 10 most marginal seats stand to lose up to $2700 a year under Labor’s policy.
On the Opposition Leader’s negative gearing reforms, Mr Morrison claimed the policy would “take 30 per cent of buyers out of the housing market” and lead to a “price collapse”.
“And if you get a shock to the housing market like this, then that will affect the economy because of consumer confidence. That’s when it runs onto jobs,” Mr Morrison said.
“It is like when you buy a new car. The minute you drive it off the lot it falls in value. That is what Labor’s policy is going to do to the value of your home.”
ALP goads seniors: vote against us
Chris Bowen has told self-funded retirees upset with Labor’s $55.7 billion franking credit crackdown to “vote against us”, as new data reveals more than 50,000 voters across the nation’s 10 most marginal seats stand to lose up to $2700 a year on average under the opposition tax grab.
Drawing battlelines months out from a May election, Bill Shorten’s Treasury spokesman yesterday appeared to pit older Australians against working families after dismissing the grievances of retirees concerned about losing their cash refunds for excess franking dividend credits.
Josh Frydenberg last night told The Australian “Labor’s not listening; Labor doesn’t care”, and accused the opposition of “arrogantly” ignoring the concerns of self-funded retirees.
“Bill Shorten is obsessed with class warfare and pitting one Australian against another for political gain,” the Treasurer said. “His retiree tax is designed to punish aspiration and those who have taken personal responsibility for their own retirement.”
Mr Bowen’s remarks came as new analysis of tax data shows the policy, a key Labor measure set to raise $55.7bn in revenue over 10 years, would be a potential trigger issue at the election in May, with up to 8 per cent of voters claiming the refunds in the 10 most tightly held electorates.
Confirming yesterday that Labor had no intention of modifying or delaying the election policy, despite admitting it would not be popular with many Australians, Mr Bowen said the refund scheme cost taxpayers almost as much as was spent by the commonwealth on public schools: “If they (voters) feel very strongly about this, if they feel that this is something which should impact on their vote, they are of course perfectly entitled to vote against us.”
National Seniors Australia and the Self-Managed Super Fund Association yesterday hit back at Labor, warning that many people would simply restructure their affairs and go on to the pension.
Mr Bowen later told The Australian that his remarks could in no way be construed as offensive as they were merely an expression of people’s democratic rights.
“It’s a pretty unremarkable revelation that we live in a democracy and people are under no obligation to vote for a party if they don’t like its policies,” he said.
Referring to Coalition claims of Labor arrogance, Mr Bowen said: “There’s nothing more arrogant than promising ‘no cuts to schools, to hospitals, to the ABC and SBS’ before the 2013 election and then delivering those cuts in the 2014 budget.”
According to the most recent available tax data, but factoring in the redrawn electoral boundaries for the next election, more than 4000 voters in the north Queensland seat of Herbert — held by Labor on a margin of 0.02 per cent — claim an average of $2295 in cash refunds annually. In the Liberal-held regional Victorian seat of Corangamite, now notionally Labor on a margin of 0.03 per cent, almost 9000 voters claim an average of $2036 a year in cash refunds. The highest refunds were claimed by 5000 people in the regional Queensland seat of Flynn, held by the Coalition on a margin of just 1 per cent.
While Labor is unlikely to lose seats on the back of the policy, senior party sources have admitted it could have an impact in seats it is targeting to take from the Coalition.
National Seniors Australia chief advocate Ian Henschke said he had received no guidance from Labor about whether older Australians who had restructured their finances to receive the Age Pension would be exempt from the crackdown.
Within weeks of announcing its original dividend imputation policy last March, Labor backtracked under pressure from seniors groups, setting up a pensioner guarantee that quarantined those on government pensions or allowances with individual shareholdings.
“We have members who tell us that they are just sitting outside the pension at the moment,” Mr Henschke said.
“They are not pensioners, but they could adjust their affairs to get the pension so they can get the franking credits … we wonder whether the full amount that Labor says it will get from this is going to eventuate.”
SMSF Association head of policy Jordan George questioned whether the Labor policy would claw back the forecast $55.7bn in revenue over the decade. He said some SMSF trustees with assets under the part Age Pension assets limit of $848,000 could choose to hold their Australian shares in their own name instead of in an SMSF. This would allow them to qualify for the pensioner guarantee and retain their refundable franking credits, given that Labor imposed a cut-off date of March 28, 2018, under which SMSFs with at least one pensioner would be exempt from its crackdown.
“This is another example of how taxpayers can move assets around to avoid the application of Labor’s franking credit policy,” Mr George said. “The type of behavioural change will undermine Labor’s anticipated revenue gain.”
Mr Frydenberg accused Mr Bowen of arrogance. “Labor has arrogantly told over one million Australians to vote against Labor: people who have simply saved for their own retirement, people who are not necessarily rich, people who have taken personal responsibility to save for their retirement,” the Treasurer said.
“Australians’ retirement savings should be protected, not raided, as Labor is promising to do.”
Mr Frydenberg described Mr Bowen’s claim that the cash refund scheme cost taxpayers almost as much as was spent by the commonwealth on schools as a mistruth. “The truth is that Labor’s retirees tax on their own numbers raises $55bn over a decade while government spending on schools is over $307bn for the same period,” he said.
In response to questions from Labor MP Matt Thistlethwaite, the Parliamentary Budget Office, which costed the opposition’s policy, made clear in November that it had considered the possibility that some people might reduce their assets so that they were eligible for the Age Pension and therefore no longer subject to Labor’s policy. “The PBO’s assessment is that under current policy settings, there are already strong incentives for individuals to reduce their assets in order to qualify for the Age Pension, particularly for those with assets just above the threshold for the Age Pension asset test,” the PBO said.
“While a small number of individuals may choose to reduce their assets and qualify for the Age Pension as a result of the proposal, this would be unlikely to materially affect the costing.”
ATO data for 2015-16 shows the value of claimed franking credits peaks for both men and women over the age of 75 years. While the ATO measured the full value of franking credits claimed — not just those that were refunded in cash — it reveals that the demographic group that most benefits from them are older females. The ATO figures show that 170,614 women aged 75 and over claimed $1.2bn in franking credits worth an average of $6561. This compares to the 159,380 men aged 75 and over who claimed $955,109 in franking credits over the same period worth an average $5993.