Retirees express their fears over Labor’s franking credits plan

Retirees John and Maureen Pritchard at the franking credits inquiry. Picture: Colin Murty

Self-funded retirees have told a public inquiry that Labor’s controversial plan to axe refundable franking credits is causing them mental anguish as they confront the threat of losing a big chunk of their income.

More than 100 seniors packed into a hall in the Perth suburb of Carlisle yesterday to vent their anger at Labor’s policy.

Many told the standing committee on economics, chaired by Liberal MP Tim Wilson, that they had worked all their lives andhad invested in shares to fund their retirement because they did not want to become a burden on the pension system.

Some called for Labor’s policy to be grandfathered, arguing it was unfair that they would be penalised for making investmentdecisions based on current laws.

One speaker, Trevor Thomas, criticised the move as “sleazy, underhand and despicable”. Another retiree, Gary Carter, saidhe planned to take up opposition Treasury spokesman Chris Bowen’s suggestion for voters to boycott Labor at the election ifthey did not like the policy.

Several speakers referred to the personal impact of the policy. “I recently had a heart attack,” said one man. “And when thedoctor asked if I was under any stress, my wife immediately said ‘yes, Bill Shorten and franking credits’.’’

Among those at the inquiry were John and Maureen Pritchard, who said they were worried about the impact on their retirementincome.

Mr Pritchard, 82, a retired engineer, said he faced the prospect of losing about 15 per cent of his income under the policy. “That money actually pays for our private health insurance, saving the government money,” he said. “Why should we have thesepressures at a time in our lives when ­financial stability is so important?

‘‘In the long term — and we plan to be around for a little while — as inflation kicks in we’ll have less to live on, andI don’t like the idea of being dependent on anybody or any government.”

Mr Wilson has come under fire for not previously disclosing at the hearings into franking credits that he invests in two separatefunds managed by Wilson Asset Management, which is campaigning against the proposed tax reform.

He declared the investment at yesterday’s hearing.

Franking credit refunds involve giving a tax credit to shareholder dividends to offset any company tax already paid on theprofit — ensuring there isn’t a double tax.

Labor plans to end a practice introduced by the Howard government that allows people who have no taxable income to receivea refund from the Australian Taxation Office for franking credits on their shares.

A Labor member of the committee, Matt Keogh, said the government was promoting misinformation about the policy, includingthat pensioners with a personal shareholding will be ­affected by the plan.