THE TODAY SHOW
WEDNESDAY, 14 MARCH 2018
SUBJECT/S: Labor’s dividend imputation reforms.
BEN FORDHAM, HOST: Opposition Leader Bill Shorten is facing accusations his new tax policy will hit millions of lower income retirees and pensioners. Mr Shorten joins me now. Mr Shorten good morning to you.
SHORTEN: Good morning Ben.
FORDHAM: Can I just go through this. You want to stop people from reclaiming their own money when they pay too much tax. This is not your money, it's their money. Can we just get that clear?
SHORTEN: No, that's not right. I'll keep my answers short, but I know viewers want to hear what is actually happening. Australia currently pays out $8 billion of taxpayer money in tax refunds to people who don't pay any income tax. We can't afford to pay out $8 billion of taxpayer money for mums and dads watching the show today to people who pay no income tax. John Howard introduced this idea in 2000 when the government had a lot of money. We don't have a lot of money anymore, and I've got to choose hospitals and schools and aged care facilities over paying people refunds for income they haven't paid.
FORDHAM: I've got a copy here of the ALP's 1998 tax plan and point five was introducing the measure that now you're saying you are going to scrap.
SHORTEN: First of all when John Howard introduced it in 2000 it was costing half a billion dollars in taxpayer money. Now it’s going to cost $8 billion. As a country - we're the only country in the world who does this. What happens in a nutshell, and I'll keep it really short, is that we - if you have shares, and you don't pay any income tax and you get dividends from the shares, we give you a cash refund for owning shares even if you haven't paid income tax on any other income.
FORDHAM: This policy will reduce the income of more than one million people. We're talking about half a million of them aged 65 and over. Can you confirm 230,000 pensioners will be impacted?
SHORTEN: I can confirm that about 10 per cent of pensioners, and there are 2.5 million pensioners, will have a minor impact. What I also need to say because I read some of this in today's newspapers, is that for a person on the part pension they may get some taxpayer funded supplement to their shares. What we're proposing is if they're not getting some extra taxpayer funded bonus for income tax they haven't paid, their part pension will increase.
FORDHAM: The unintended consequences of this would see hundreds of thousands of low income earners swept up in these changes and impacted, losing hundreds of dollars, maybe thousands of dollars a year. Are you open to tweaking this to make sure? Because you're talking about nurses and doctors and self-funded retirees who don't want to put a drain on the welfare system. Are you open to tweaking this to make sure those people in the lower tax bracket aren't going to be greatly affected?
SHORTEN: Short answer again, 92 per cent of people are not affected. In terms of part pensions, the pensioners are not what we're about -
FORDHAM: Just on that, a short answer would be yes or no. Are you open to tweaking it to make sure – but it’s a yes or no, are you open to tweaking it to make sure that those people aren't going to be affected?
SHORTEN: We will make sure that pensioners are ok, full stop. So there's your answer. And furthermore, the proof of what I've just said is that it's the current Liberals who’ve thrown 100,000 people off the pension, 270,000 people have had their part pension reduced. That's under the Liberals. So we’ve got the track record. The other thing I can promise Australians is we’re not going to lift the pension age to 70, making it the oldest pension in the world.
FORDHAM: I don't think the government is planning on doing that either, are they?
SHORTEN: They are.
FORDHAM: They are? When are they doing that?
SHORTEN: They’re trying to get the legislation for it, but thank goodness Labor is going to stop them.
FORDHAM: Okay, let me just ask you about franking credits, isn't this why people invest in Australian companies? One of the reasons, because you get those franking credits as opposed to international shares. So therefore, you are going to divert more investment into international companies as opposed to Australian businesses. That's not good for Aussie businesses.
SHORTEN: No, again, that's not quite right. Keating in ‘87 said that if you get shares from a company because they've already paid company tax, you can offset the tax that the company has given you - the share dividend, against your income tax. John Howard took it that step further in 2000. He was going to give you a tax refund even if you haven't paid any income tax. You will still get - I don't know your personal financial circumstances, but you will still get franked dividends and you will still be able to offset that against the income you earn say, working here at Channel 9. That won't change.
FORDHAM: They're not going to be appealing. It’s not going to be as appealing for people to invest in Australian companies as it is currently. And therefore you’re going to push more people possibly into property market as well. Won't more people think ok, I'll invest in the property market and therefore you've got more property investors and therefore property prices go up and then it’s harder for Australian families to buy houses.
SHORTEN: We've taken consultations with the markets. 12 per cent of Australian shares are held by retail shareholders. So in other words, most of the people who buy shares in Australian companies are institutions. So we're not going to see I think, that apocalyptic scenarios which a few critics of Labor have outlined. In terms of property it may well be that some people will want to invest more in property. Australian property is a good bet. But that’s why we're also making improvements to property investment to make it more attractive to invest in new housing.
FORDHAM: I think the biggest issue for you going forward is the fact there are so many people who are, who fall into that battler category who have been caught up in this. Even though you're selling it as something that is taking on people who are wealthy, you have people who are pensioners, all the pensioners who are caught up in it, and the self-funded retirees, the nurses, the doctors and teachers. People like that who -
SHORTEN: Well, let’s deal with that. Nurses, teachers, doctors are all going to do better under Labor because of our policies in education and hospitals. What it’s about is choices. How Ben, can we have a system where someone can get a $2.5 million tax refund from the government for paying no income tax, it's ridiculous. This scheme, whilst it will have a marginal effect on a few pensioners is preponderantly going to the top end of town. How can it be that taxpayers, mums and dads, nurses, teachers, and doctors are going to work, paying taxes to the Tax Office and the Tax Office is cutting a tax refund cheque to multimillionaires who pay no income tax.
FORDHAM: You'll have to work out to sell it to the pensioners because they’ve been caught up in this as well.
SHORTEN: I’ll tell you one thing. We're going to look after the pensioners when it comes to their hospital bills, their doctor bills.
FORDHAM: They’re going to be hurt by this though, and that's your challenge.
SHORTEN: One in 10 is going to have a marginal change and their part pension goes up as a result. So yes, we'll fight the scare campaign of the government because I'm going to choose the battler over the top end of town. Mr Turnbull is using a few pensioners as human shields to justify feather bedding the very rich who are getting a tax loophole which is simply unsustainable.
FORDHAM: We’re beaten by the clock. Thanks for your time.
SHORTEN: Good on you, thank you.