Pensioners ‘always better off under Labor’
Bill Shorten indicates Labor is working on supporting pensioners following backlash over his proposal to scrap refundable tax credits.
Bill Shorten has indicated Labor is working on providing support for pensioners following the backlash against his plan to scrap refundable tax credits.
Asked on radio this morning whether he would repeat his assurance on Wednesday that no pensioner would be worse off under the plan, Mr Shorten said:
“What I said two days ago, and it’s been our whole voting tradition of the Labor Party, is that pensioners are always better off under Labor and we’ll have more to say about how we’ll help pensioners going forward.”
The Australian yesterday revealed Mr Shorten was considering a supplement payment package for up to 250,000 pensioners to make up for annual cash refunds they stand to lose under Labor’s plan to scrap $59 billion in refundable tax credits on share dividends.
Asked how the announcement of the policy earlier this week would help entice Liberal voters to support Labor ahead of the Greens in the two-horse by-election in the inner Melbourne federal seat of Batman tomorrow, Mr Shorten said the move was a budget reform.
“Reforming the Budget, making changes of a system which disproportionately favours the wealthy, where you can get an income tax refund even though you haven’t paid any income tax, is good policy but what it also does is it shows that Labor is determined to make sure that we can fund our schools, that we can reduce the waiting lists for elective surgery, that we can do something about the long lists of aged care where people are not getting support,” Mr Shorten told ABC radio.
“I think that treating the voters with the respect to put forward ideas as opposed to just slogans, I think that’s actually what Australian politics requires.
“The last six months of Australian politics I think we would all agree, regardless of one’s political biases, has been trying and tawdry.
“What this nation wants is they want to know, who has a vision for the future and of course how can you make sure that it happens.
“I do want to create space in the Budget so that we can look after our aged, that we can look after our health system and we can make room for tax relief for low and middle-income earners.”
Asked whether he accepted that there were people dependant on the aged pension who would be worse off under Labor’s plan, Mr Shorten said: “I think that pensioners and part-pensioners always deserve the support of governments and oppositions.”
Pressed again about whether they were worse off, Mr Shorten said pensioners would always be better off under Labor.
“I can say that because it’s Labor who has fought for the energy supplement, $360 to make sure that it goes to pensioners, the government won’t do that,” he said
“It’s Labor who has said that we don’t want to increase the working age to 70, the oldest in the world. We’re the ones who want to close down some of the gap in out of pocket expenses which have occurred under the Liberals.”
Asked whether he was “giving with one hand and taking with the other”, Mr Shorten said he wanted to put some “facts on the table” about Labor’s policy.
“One, no one’s pension gets reduced, two, no one’s share dividends gets reduced, three, no one pays any extra taxes,” he said.
“I think you’ll find that 50 per cent of all of these tax refunds go to the top 10 per cent wealthiest self-managed super funds.
“What we have is a two class tax system in Australia. You’re never going to convince me it’s fair that the more money you have that you can opt out of the tax system.
“Labor has got a track record in the last two, three years of tackling hard issues, as you would say the sacred issues - negative gearing, why is it fair that property investors get a tax subsidy and first homebuyers have to compete? How is it fair that some people can have big discretionary family trusts and they can split income, when the men and women in our hospitals can’t go down to payroll and split their income?” Mr Shorten said.
Labor could use ‘chump change’ for compensation: Eslake
Economist Saul Eslake says Labor could use “chump change” from its controversial plan to scrap refundable tax credits to compensate self-funded retirees on “genuinely low” incomes.
Labor has cited advice from the Parliamentary Budget Office that the $59 billion plan would adversely affect 214,00 low income earners or pensioners.
“Some of them I think will be at least partly compensated by an increase in their part pension, but the Labor Party could if they wanted to, and I’m not an adviser to them, this is for them to work out, but they could for example say that anyone whose total income is genuinely say below $30,000 is adversely affected by this, a Labor government could sling them, say, $1000 or $2000 a year to compensate for that, on average,” Mr Eslake told Sky News.
“They’d have to prove their circumstances, but that’s not unreasonable.
“The cost of doing that would be somewhere between $240 million and $460m a year, and that’s chump change out of the revenue gain that the Parliamentary Budget Office is telling the Labor Party this proposed change would make.”
Mr Eslake said the government’s argument that the money Labor would bet taking belonged to the individual was “philosophical”.
“If someone is benefiting from more generous tax treatment on a particular form of income than other people or people with income in different forms, is that taking their money, or is it granting a preference that has to be made up by higher taxes on everybody else?” Mr Eslake said.
“I guess your view of that depends on whether you’re a beneficiary of those arrangements, or one of the people who has to pay more tax so that the preferred people can pay less.”
Mr Eslake said it was also important to note that Australia was one of “only a handful” of countries with a dividend imputation system, and the only country that allows franking credits to be handed back as cash refunds for people whose tax rate is less than the company tax rate.
“The government is using as one of its arguments for cutting the company tax rate that other countries have lower company tax rates than we do and that they’re cutting them,” Mr Eslake said.
“Australia is one of only a handful of countries that has a dividend imputation system.
“Most countries do seek to modify the so-called double taxation of dividends ... but very few of them do so through full imputation as we do, and of the four developed countries that have a full imputation system, as I understand it Australia is the only one that allows franking credits to be handed back as cash refunds for people whose tax rate is less than the company tax rate.
“This wasn’t part of Australia’s imputation system between 1988 and 2001 when the Howard government changed it as part of an all-out appeal to self-funded retirees who at that time were deserting the Coalition in droves because of things the Howard government had done to them in its first budget in 1996, and at that stage, between 1988 and 2001, there wasn’t any rioting in the streets, verbally or otherwise, from people thinking that the government was stealing the money of dividend recipients who had relatively low taxable incomes, and the emphasis there is on taxable incomes.”
‘Bill Shorten wants to steal people’s money’: Cormann
Finance Minister Mathias Cormann said Labor’s policy was unravelling, because Opposition Leader Bill Shorten was “wanting to steal people’s money that is not his”.
“There is actually no loophole here. The fact that people on low incomes, and the fact that people who don’t have a personal income tax liability are able to get a tax refund for tax paid on their behalf effectively by the company, under a 30 per cent tax rate, is a deliberate design feature,” Senator Cormann told Sky News.
“I mean what Bill Shorten is essentially saying is that somebody who is earning more than $180,000 a year should be able to have the full 30 per cent of the tax paid by the company deducted from their tax liability, but if you’re somebody who earns less and is on a lower income and pays less tax, you should not be able to get that same tax refund.
“I mean it is wrong in principle, there is absolutely no case for it, and he’s being found out over it, because I mean he hasn’t thought this through, he is now obviously getting quite desperate in trying to defend himself, putting lots of untruths into the public domain.
“He’s trying to mislead the Australian people about what this is about. This is about targeting low income earners to fund his reckless spending.”
Asked whether it was sustainable for the government to maintain a scheme that will soon cost the budget $8bn a year, Senator Cormann said it was a “fundamental mistake” to classify the money as the government’s.
“Don’t let yourself be misled by this Labor rhetoric, this is not a government spend,” he said.
“This is the government giving back money to people that belongs to those people.
“If somebody pays too much tax then the government needs to give that money back. This proposition that somehow the government giving back money that is not theirs, that belongs to taxpayers, is an item of expenditure, is wrong.
“(Bill Shorten is) essentially suggesting that somebody who is on an income of less than $18,200 and therefore pays zero per cent tax, shouldn’t be able to get the same tax refund as somebody earning more than $180,000.
“I mean he wants pensioners to pay 30 per cent effectively, on their income from dividends.”
“He’s trying to put his hands into the pockets of pensioners and self-funded retirees and then hand the money out again.”
Official data published in today’s Australian reveals that almost 90,000 voters across 13 of the most marginal seats in the country would lose an average $2000 a year in refundable tax credits under Labor’s policy.
“What I would say to the Labor members in the House of Representatives, is stand up, stand up for the pensioners and self-funded retirees in your electorate and tell Bill Shorten that this is just not good enough,” Senator Cormann said.
“Stand up for the people that you represent and stop this madness. I mean what Bill Shorten is doing here is wrong, it’s reckless, there’s no justification for it, he didn’t think it through, he didn’t think through the real life consequences for real people and he needs to back off.”
Anthony Albanese: we’ll win Batman, SA polls
Labor frontbencher Anthony Albanese denied that Labor’s scrapping of refundable tax credits risked the party’s chances of winning both tomorrow’s by-election in the federal seat of Batman, and the South Australian state election.
Mr Albanese said Labor would win both, backing former ACTU president Ged Kearney to hold the seat formerly held by factional powerbroker David Feeney.
He said the people of Batman could elect Ms Kearney as a voice in government, or Greens candidate Alex Bhathal, “who can sit back and wait until decisions are made and decide whether they will protest or not.”
“Ged Kearney will be the first nurse in the House of Representatives,” Mr Albanese told the Nine Network.
Speaking alongside Ms Kearney in Melbourne yesterday, Opposition Leader Bill Shorten branded government attacks on Labor’s refundable tax credits plan a “ hysterical scare campaign”, but Ms Kearney was forced to back away from earlier comments that the plan could be reviewed, instead attempting to talk down the tax grab’s impact.
Mr Albanese denied that the timing of the announcement would make a win more difficult for Ms Kearney.
“Labor unlike previous oppositions is prepared to put out policies, to argue for them, to do them well in advance of an election, not wait until the usual processes which is governments get into office and say, ‘Oh look things have changed we have to announce a new cut or policy’,” Mr Albanese said.
“Labor is putting it all out there for everyone to see. It’s good policy. Every economist in the country knows this wasn’t designed for refunds it was designed to reduce tax to zero.
“When it was introduced superannuation wasn’t tax free for everyone above the age of 60.”
Liberal frontbencher Christopher Pyne said Mr Shorten’s “tax grabs” were making the chaotic landing at the beach in the film Saving Private Ryan “look like a tea party”.
“It’s an absolute fiasco,” Mr Pyne told the Nine Network.
“There are 1.1 million Australians who aren’t on high incomes who are largely going to have their income reduced — 610,000 of those are on incomes of less than $18,200 a year.
“It has not been thought through.”
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