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Labor leader rejects calls to water down plan to abolish rebates, branding the status quo ‘millionaires’ welfare’
Bill Shorten has doubled down on his plan to abolish franking credit cash rebates for retiree investors, branding the status quo “millionaires’ welfare” bankrolled by ordinary Australian taxpayers.
Speaking to reporters in Brisbane, the Labor leader rejected calls to water down his policy proposal, or exempt pensioners, following a vigorous initial backlash from seniors groups, the self-managed superannuation fund industry and shareholders lobby groups. Shorten said Labor was braced for “a tough debate”, and he said it was unfair that “a few people” were able to claim a tax refund when they had paid no tax.
“That’s effectively the loophole we’re shutting,” he said on Wednesday. “We’re not saying it’s illegal. We’re saying it’s a tidy little arrangement the nation can no longer afford.”
Labor on Tuesday pledged to axe cash refunds for excess imputation credits paid to individuals and superannuation funds if it wins the next federal election – reversing a policy John Howard put in place nearly two decades ago. The shift, which is forecast to deliver $59bn to the budget over a decade, has been endorsed by the architect of dividend imputation, Paul Keating, but attacked by a range of stakeholders who say the proposal will hit retirees on low incomes. The government said 97% of people who get franking credit refunds have a taxable income below $87,000, and more than half of the beneficiaries have taxable incomes below the tax-free threshold.
It said the change Labor was proposing would hit the incomes of a million Australians, most of whom were over 65, and affect one in three self-managed super funds, 370,000 member accounts and the retirement savings held in about 3.5m super fund accounts.
The lobby group representing self-managed super funds said Labor’s shift would cut about $5,000 of income from the median do-it-yourself super fund retiree earning about $50,000 a year from their pension.
Seniors groups have expressed objections that Labor is proposing to change the rules that have been in place for a generation of retirees, influencing their investment decisions and financial planning, without any grandfathering or transition arrangements. With stakeholders on the warpath, Malcolm Turnbull went on the offensive on Wednesday, branding the Labor proposal a “cash grab” that would hit a million people, including more than 200,000 pensioners and part pensioners.
Turnbull declared Shorten was “going after pensioners’ incomes, he’s seeking to take money from pensioners and self-funded retirees – money they’re entitled to”.
“That is completely fair. It’s been the case for nearly 20 years,” the prime minister said.
But Shorten said Turnbull was intent on “using a few pensioners as a sort of human shield to justify featherbedding the very rich who are getting a tax loophole which is simply unsustainable”. “If millionaires are getting hundreds of thousands of dollars of taxpayer money, that’s not a welfare system I’m going to back. Why is it that Malcolm Turnbull will fight for millionaire welfare but not the welfare of battlers?”
The Coalition counterattack was also blunted by former prime minister, Tony Abbott, who told 2GB Radio it suffered a “credibility gap” on superannuation.
“Everyone is out there doing their job but … there is a slight credibility gap here because the last change to super was an adverse one and it was by the Turnbull government just before the 2016 election,” he said.
The shadow treasurer, Chris Bowen, said the government’s analysis of the numbers of people negatively affected created a misleading picture because wealthy retirees with big super balances and substantial assets often had low taxable incomes because income from superannuation was tax free once people were over 60.
