Labor hits the road to sell tax policy to worried retirees

Labor believes it can weather criticism over its proposal tax policy as it attempts to placate lower-income retirees.

Andrew Leigh and Chris Bowen at Parliament House in Canberra yesterday. Picture: Kym Smith.

Labor believes it can weather criticism over its proposal to axe cash payments for excess dividend credits while it considers a package to placate lower-income retirees who rely on the payments.

Labor MPs were out in force yesterday, after the party’s weekend win in the Batman by-election, to argue the $59 billion tax hit on self-funded retirees and investors would stand.

But, as the Turnbull government prepares to target Labor in key marginal seats over the policy, the opposition is banking on a broader package of measures for pensioners to salvage the seniors vote.

Labor frontbencher Michelle Rowland said the result in Batman was an endorsement of the party’s decision to pursue challenging economic reform, and to be upfront with voters.

“What we take away from this result at the weekend is that we should keep going with it,” Ms Rowland told Sky News.

“We are emboldened to continue an intelligent conversation with the Australian people and be upfront with them about policy.”

Labor was “looking at a range of things for people in the pensioner bracket” to ensure low-income retirees were better off under Labor.

The ALP says its policy would hit wealthy retirees who were cashing in on a loophole.

But government analysis of Australian Taxation Office data shows more than 610,000 Australians on incomes of less than $18,200 will lose an average $1200 a year in tax refunds.

Bill Shorten declared at the weekend that pensioners would always do better under Labor, and “we will have more to say in the future about our good deal for pensioners”.

Opposition assistant Treasury spokesman Andrew Leigh said Labor was resolute in its decision to get rid of the perk.

“Tax reform isn’t a subset of political pork barrelling,” he said. “We’ve got to be guided by the principles of equity and efficiency — and cash refunds for franking credits are both inequitable and inefficient.”

Labor frontbencher Anthony Albanese also stood by the policy, saying the “scare campaign” it had sparked was expected. “The fact is that more money is going to these payments than currently goes from the federal government to pay every single public school in the country,” Mr Albanese said.