Leave franking credits alone, Wilson tells Labor

Fund manager Geoff Wilson has called on Labor to abandon any plans it may have to resurrect its maligned franking credit policy.

Fund manager Geoff Wilson. Picture: John Feder

Fund manager Geoff Wilson has called on Labor to abandon any plans to resurrect its maligned franking credit policy ahead of the next election, warning the attack on franking needs to be put on hold “for at least a generation”.

“The amount of stress that policy caused to hundreds of thousands of elderly Australians and their families — it’s about time they took it off the agenda,” Mr Wilson told The Australian.

“The policy was illogical and inequitable.

“As soon as it’s clearly off the table it’ll be welcomed, particularly by older Australians who have relied on the retirement system to be fair and equitable. That’s exactly what this policy wasn’t.”

Mr Wilson’s comments came as Labor leader Anthony Albanese said he would ditch the party’s policy to scrap franking credit refunds on dividends in its current form but refused to be drawn on whether it would bring it back in a modified form.

“We won’t be taking the same policy to the election,” Mr Albanese told Sky News at the weekend.

When asked about the prospect of taking a similar policy to the 2022 election with grandfathered arrangements, Mr Albanese said the party had a process it would follow.

“I have a view on those things but we’ll have our processes … we have a policy process that we’ll establish and we’ll announce it in the fullness of time,” Mr Albanese said.

Mr Wilson, the chairman of Wilson Asset Management, was a vocal opponent of Labor's original franking policy under former leader Bill Shorten in the lead-up to the election. Listed investment funds whose shareholders are mostly made up of retail investors and self-funded retirees stood to lose out on their store of unused franking credits under the policy.

“The current franking system has been in place for nearly 19 years. It needs to be off the agenda for at least a generation. Unless, of course, Labor wants to remain in opposition,” Mr Wilson said.

“The franking system encourages Australian companies to ­invest in Australia, to pay Australian tax and to employ Australians. And that’s what you want it to do.

“If you start playing around with it then all of a sudden you start encouraging Australian companies to invest offshore and you also encourage individuals to invest offshore … I can’t see any way that changes to the franking system would be of value to Australians,” he said.

Finance Minister Mathias Cormann on the weekend said Mr Albanese should abolish the policy altogether instead of putting it “on life support”.

“Labor's tax attack on older Australians was comprehensively rejected by the Australian people at the last election. Anthony Albanese should do the right thing by older Australians and scrap Labor's retiree tax,” he said.  Labor's original plan, which aimed to remove imputation cash refunds for some individuals and super funds, had been expected to save the budget about $5bn.

Mr Wilson said he understood one of the challenges of an ageing population was balancing the tax burden and he was supportive of any political party that sought to do that. But it had to be done equitably and in a progressive way, like the tax system, he said.

Grandfathered arrangements weren’t the answer, as they wouldn’t solve the system’s issues, he warned.

Last July multi-millionaire Dick Smith said he received a $500,000 franking credit tax refund in financial year 2017, but said he should not be entitled to the funds because he’s already wealthy.