If Australia didn't have a system of refundable franking credits, we'd be hard-pressed to justify implementing one. Given that we do have such a system, it's time that we reformed it.

Time to tackle big challenges

At a tax fairness forum in Adelaide recently, a self-funded retiree asked me to ensure that the debate was conducted with respect. I heartily agreed. As the saying goes, you can have your own arguments, but not your own facts. And there's nothing remotely noble about lying in pursuit of a cause.

Healthy public debate involves arguing about the issues, not fear and smear. When I hear our political opponents scaring pensioners into thinking they're affected by Labor's policy, it makes me think that they care more about their narrow partisan interests than the national interest. As the Speaker of the House noted recently, Tim Wilson's taxpayer-funded committee hearings against Labor's policy "could be seen to have caused damage to the committee's reputation".

Opponents of reform like to say "if it ain't broke, don't fix it". The trouble is that the Coalition has been sending the country steadily broke. Since it came to office, net debt has more than doubled, and now stands at more than $14,000 per person. If refundable franking credits were purely funded by international borrowings, you could think of them as adding $200 to that debt bill each and every year.

If cash refunds for franking credits are such a good idea, you have to ask yourself: why doesn't any other country have them? And it's not just those overseas who are bemused by our system. A recent video asking young people about refundable franking credits found that none of them knew about the system. When it was explained, the most common word they used to describe the system was "unfair". If you think cash refunds for franking credits foster the Aussie fair go, try justifying them to a young person struggling to get by on Newstart in an area with double-digit youth unemployment rates.

Like the introduction of the cane toad, no one in 2001 foresaw what refundable franking credits would do to our tax system. Back then, the refunds cost just one-tenth of what they do today. In a decade's time, their cost will be half as large again. That's why we're removing cash refunds for franking credits for everyone who doesn't receive a government pension or allowance.

Every tax loophole has its defenders, which is why tax reform isn't for the faint-hearted. It's easier – as John Howard and Peter Costello did – to create tax exemptions than to close them. But unless we close unjustified tax loopholes, we simply won't be able to tackle big challenges like inequality, climate change and wage stagnation.

For the sake of the current generation, and those to follow, it's time that we joined the rest of the world in removing cash refunds for franking credits.

Andrew Leigh is the shadow assistant treasurer.