Labor’s plan to scrap cash refunds for franking credits is shaping up as a battleground election issue, with the Coalition desperate to win over older voters by raising the spectre of a “retirement tax”. The ALP’s policy, which Bill Shorten believes will save the government nearly $60 billion over a 10-year period, has been the subject of considerable media scrutiny, and more recently, an inquiry by a parliamentary committee. But while such inquiries are generally non-partisan, the Standing Committee on Economics’ probe into Labor’s policy seems to be anything but.
The inquiry
The Coalition first announced that the House of Representatives standing committee on economics would hold an inquiry into Labor’s proposal late last year. This itself was an unusual step — the taxpayer-funded committee rarely, if ever, holds inquiries on potential opposition policies. The standing committee, chaired by Liberal Tim Wilson is dominated by coalition MPs, who make up five of its nine members.
The inquiry intended to examine the impact of removing refundable credits on retirees, and the sustainability of Labor’s revenue forecasts, and Wilson argued it was a necessary response to “legitimate community concern”.
Shadow Treasurer Chris Bowen immediately savaged the plan, calling it an “unprecedented step of making a ministerial reference to a parliamentary committee solely focused on opposition policy”.
At the time, The Australian Financial Review reported that the Coalition privately believed it had not “sufficiently exploited” the issue of franking credits.
The hearings
Recent public hearings have been marred by allegations that Wilson and the Liberals have effectively turned the inquiry into a national election campaign. Twelve public hearings will be held across the country, costing taxpayers $160,000, for venue hire and other expenses. Of the hearings held so far, over half have been in marginal seats, with the roadshow most recently visiting Merimbula, in Labor-held Eden-Monaro.
The hearings themselves also break with convention. Instead of following a formalised witness list published in advance, attendees are given three minutes to vent about Labor’s proposal. Coalition MPs, meanwhile, have used the hearings as an opportunity to woo potential voters. At a hearing in Alexandra Headland in Queensland, Liberal MP Andrew Wallace urged disgruntled retirees to join his party, before handing out membership forms.
Wilson further stoked Labor’s anger when he created a website called “Stop The Retirement Tax” to register attendees for the hearings. The website, which was privately funded and authorised by Wilson in his capacity as committee chairman, included a petition against the “retirement tax” which people had to sign in order to register. This function was later removed, and Wilson described it as an “error”.
Labor’s Matt Thistlethwaite, who is the committee’s deputy chair, called Wilson’s behaviour an “outrageous abuse” of the parliamentary committee process.
Wilson and Wilson
Labor’s claim that the inquiry is a partisan roadshow were strengthened this morning, when the Sydney Morning Herald reported on the links between Tim Wilson and fund manager Geoff Wilson. In an audio recording, Geoff Wilson boasted to investors that he could use the government’s inquiry to get the policy overturned, and claimed he had called Tim Wilson (to whom he is distantly related) and asked him to schedule the committee’s hearings to coincide with a “franking credit roadshow” held by his own company, Wilson Asset Management.
The report also revealed Tim Wilson owns shares in Wilson Asset Management, which he failed to disclose before public hearings. Labor has called on Wilson to resign as committee chairman, or for Scott Morrison to sack him. But Wilson appears to have dug his heels in, and this morning responded to a tweet by Thistlethwaite calling for his resignation by accusing Labor of “trying to rig the law to smash retirees”.
Geoff Wilson has been a fervent campaigner against Labor’s policy. Last year, he created a petition protesting the franking changes, which he claimed had over 17,000 signatures. Labor claims this is overblown. Labor MPs, including Bowen, said they received emails thanking them for signing it, leading to a fiery email exchange between Wilson and the shadow treasurer.
The media strategy
The serious concerns about the committee’s inquiry hasn’t stopped the Coalition garnering sympathetic media coverage for their crusade. Yesterday, a story in The Australian on self-funded retirees’ anger at Labor featured quotes from Jon Gaul, a retired “communications consultant”. The story, which has now been updated, failed to note that Gaul was a long-term Liberal staffer and local branch president. The AFR also featured quotes from Gaul in their reporting, but as yet, have not acknowledged his Liberal ties.
Such attacks on Labor’s proposal are not unusual for The Australian and AFR. This Monday, ABC’s Media Watch reported that in the last month, The Australian and the Fin have respectively run 15 and 10 stories on franking, most of which have been negative.
Has anyone (looking at you Crikey journalists) checked with DPC-Honours, Symbols and Territories Legal Policy Branch about use of the Commonwealth Coat of Arms on the https://stoptheretirementtax.com? I would have thought it wasn’t quite a permitted use?
Interesting. Whois says the site is registered to Berfawn Pty Ltd, which is on ABN Lookup as a super fund but not the one listed in Wilson’s register of interests. So its a private website bearing a guvvy crest but authorised by an MP. The guidelines (https://www.pmc.gov.au/sites/default/files/publications/Commonwealth_Coat_of_Arms_Information_and_Guidelines.pdf) permit use by parliamentarians in the course of their duties, so it is likely OK for him to use it if it is him, but the private website (if it is) might be an issue depending on who benefits from it. (Hey! That’s a s.44 issue.)
The use at the bottom of the webpage is inconsistent with the guidelines (prominence over all other images preferably at the top). The overtly partisan grubbiness of the webpage is a different matter and maybe that’s a misuse of public $$
Labor is fighting back with the “welfare for the wealthy” line, and by pointing out that someone who gets a cash refund of franking credits of $5,000 has share assets of about $250,000 and dividend income of about $10,000. Those who write letters to the papers claiming it will cost them $30,000 have about $1.5 million in shares.
Not only that the smart ticket clippers have set up many clients to receive much more in tax free cash than an age pensioner and at a much earlier age
Some ‘self funded retirees’ these people
They’re my rough calculations Robert. $5k franking credits actually $11,666 dividends exactly. That doesn’t include any unfranked dividends also.
They still think they’re good ole battlers.
Because they’ve never known any different – or experienced what it really means to “battle” through life.
I think your calcs are off Robert, but the sentiment is correct. If it costs you $30k, I’m calculating about $5m in investment portfolios.
On average.
With apologies Robert, I can see how you came up with the $1.5m figure. I suspect your calcs are closer to the mark, assuming the most conservative of all possible scenarios.
What none of the critics can do is name a single country that has dividend imputation (refund of tax paid by investors on their dividends) let alone tax free cash handouts for investors paying no tax.
Nor can they explain why Howard’s mining boom era freebie should continue to be supported by borrowing as noted by economist Stephen Koukoulas.
I’m far from a critic of the policy but I think you’ll find NZ copied Australia’s original dividend imputation policy, but not Howard/Costellos later largesse
Ok ONE country but sensible enough not to turn it into a revenue black hole.
Some of the ratbag journos have taken to referring to the current mess as dividend imputation.
I have no problem with the original scheme that Labor is promising to restore to an affordable level.
Is there no depth of infamy to which this government will not descend, no defence of the indefensible in which it will not engage? It’s dishonesty in respect of this franking credit policy is despicable. If I have it right, all Labor is proposing is to end taxpayers’ liability to pay a tax exempt citizen simply because that non-taxpayer receives franked dividends on shareholdings. That is, the community pays people who pay no tax simply because they are tex-exempt. Just trying to express it demonstrates the laughable illogicality of this obvious and unnecessary middle class welfare.
I think that every opportunity should be taken to take on the deliberate deceptions being peddled in various newspaper using newspaper comment sections
Nobody has had an answer to the question where else in the world does this rort exist
In SMH yesterday, either Asset Wilson deliberately misconstrued the policy or he is ignorant of what is proposed by Labor. Either way, not a great advert for someone selling their ‘asset management’ services.
I assumed it was quite deliberate but I could have been wrong.
What else can you expect of a party with no integrity or decency?
I am not surprised, just continuously appalled.
I know a few oldies who are collecting this benefit, and guilt is not a problem they suffer with.
Not at all. Putting it bluntly, we have no hope for progress until the Howard/2GB/The Australian set all shuffle off.
Australian Institute has an anti franking petition which demonstrates this world first in giving out tax payers money to us who no longer work and are self funded.Good idea. I collect but DO feel guilty.