Federal election 2019: Bill Shorten says franking credit recipients 'already' on public purse

Updated

Opposition Leader Bill Shorten has hit back at claims Labor's changes to franking credits will push self-sufficient retirees onto the pension, saying those who benefited from the existing regime were "already" receiving a gift from taxpayers.

Key points: Opposition Leader Bill Shorten has said franking credits are a "gift from the Government"

Mr Shorten said the allowance could cost up to $8 billion a year "in the very near future"

Prime Minister Scott Morrison has said Labor's proposed changes would burden the economy

In an interview with Leigh Sales on 7.30, Mr Shorten was asked to respond to some retirees who claimed the promised changes would rob them of income they expected in their later years and force them to sign up for a pension.

Mr Shorten was also asked if his reforms would result in 83-year-old retired carpenter Chris Phillips, who featured in an earlier story, ending up "on the public purse".

"He already is, and this is the real heart of the issue," Mr Shorten replied.

"When you get an income tax credit when you haven't paid income tax, it's a gift from the Government. You're already on the public purse."

Franking credits were originally introduced under the Keating government to eliminate double-taxation on company profits.

Shareholders who were paying income tax were given money back from the tax office to compensate them for the fact their dividends were being taxed twice.

The Howard government then extended the scheme so shareholders who were paying no income tax — mostly retirees — could also get a cash-back from the tax office.

This is the change Mr Shorten has promised to unwind if Labor wins the election.

The Coalition has branded the changes a "retiree tax" and slammed Labor for changing the settings when many retirees had factored money from franking credits into their long-term financial plans.

But Mr Shorten, despite repeating that those benefiting from the credits had not done anything "immoral" or "illegal", is maintaining a tough line on the reform.

The change would save the budget a forecasted $60 billion over the next decade.

"This generous gift going to some people purely on the basis they get dividends from shares and don't pay tax, it's costing $6 billion a year," the Opposition Leader said.

"Nearly $8 billion a year, in the very near future. It is eating the budget and it is just a gift."

Shorten denies 'redistribution' agenda

Mr Shorten was asked if his tax and spending proposals represented a platform of wealth redistribution, with most of the revenue measures targeting wealthier Australians and the spending targeted at pensioners and other low-income earners.

"No, that wouldn't be right," Mr Shorten said.

"We are closing loopholes, we're stopping spending money on franking credits, we're going to stop giving out tax cheques to people who haven't paid income tax. And instead, we're going to spend that money on pensioner dental."

Prime Minister Scott Morrison has said Labor's planned tax changes — which cover investment properties, family trusts and franking credits — constitute a tax burden on the economy of some $157 billion.

By adding in income tax cuts that the Labor party opposes, the Coalition puts the total tax bill at more than $380 billion, using costings from Treasury.

As the campaign progresses, Labor is unveiling big-ticket spending promises on childcare, dental and cancer treatment — which it says it can afford because the party took "hard decisions" on tax.

Topics: government-and-politics, federal-government, superannuation, business-economics-and-finance, budget, federal-elections, elections, alp, political-parties, liberal-national-party, liberals, tax, australia

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