La­bor’s $3.75bn sav­ings grab



More than $3.75 bil­lion would be wiped from al­most 2000 small re­tail su­per­an­nu­a­tion funds and 50 of the largest re­tail funds over the next 10 years, in a sec­on­dround hit to 2.6 mil­lion mem­ber ac­counts un­der La­bor’s plans to scrap re­fund­able tax cred­its for re­tirees.

In a di­rect chal­lenge to Bill Shorten’s claim that APRAreg­u­lated su­per funds would be largely unaffected by the $56bn tax grab on re­tirees, up­dated Aus­tralian Tax Of­fice fig­ures due to be re­leased show the ma­jor­ity of APRA funds claimed re­funds for im­pu­ta­tion cred­its in 2015-16.

The re­funds as­sessed by the ATO amounted to $309 mil­lion for the year, which if av­er­aged over the 10-year life of La­bor’s tax pol­icy would amount to $3.75bn, based on a 3.5 per cent growth rate.

While La­bor’s pol­icy would draw the bulk of the re­funds from self-man­aged su­per funds — es­ti­mated to be $2.6bn — and high­wealth in­di­vid­u­als, Trea­sury anal­y­sis of ATO data re­veals the Aus­tralian Pru­den­tial Reg­u­la­tion Au­thor­ity-reg­u­lated funds that would be af­fected rep­re­sent 2.6 mil­lion mem­ber ac­counts.

La­bor claims that only 10 per cent of APRA-reg­u­lated funds would be af­fected by the changes, but the gov­ern­ment said the ATO data re­vealed that 2013 of the 2603 APRA-reg­u­lated funds re­ceived frank­ing credit re­funds worth $308,844,250 in 2015-16.

The ma­jor­ity of the funds had fewer than five peo­ple. Of the 2363 small APRA-reg­u­lated funds, 1963 re­ceived re­fund­able frank­ing cred­its worth $74m.

While the Op­po­si­tion Leader has ar­gued that the large re­tail funds would not be af­fected, the Trea­sury anal­y­sis re­veals that 50 out of 240 of the large APRA reg­u­lated funds — com­pris­ing hun­dreds of thou­sands of mem­bers — re­ceived re­fund­able frank­ing cred­its worth $235m.

The 2031 APRA-reg­u­lated funds po­ten­tially af­fected are on top of the 200,000 self-man­aged su­per funds that were the pri­mary tar­get of La­bor’s pol­icy.

As peo­ple of­ten hold more than one su­per ac­count, it is es­ti­mated the num­ber of peo­ple who are mem­bers of an or­di­nary re­tail or in­dus­try su­per fund that would be af­fected could be sev­eral hun­dred thou­sand and pos­si­bly more than one mil­lion.

The anal­y­sis used by the gov- ern­ment con­tra­dicts claims by La­bor and in­dus­try su­per funds that the pol­icy would have lit­tle to no im­pact on the ma­jor­ity of funds be­cause most im­pu­ta­tion cred­its would be ex­hausted be­cause of the tax li­a­bil­i­ties of most funds.

The As­so­ci­a­tion of Su­per­an­nu­a­tion Funds of Aus­tralia has warned that re­tail in­vestors could be af­fected by the pol­icy di­rectly through their su­per­an­nu­a­tion funds as well as any shares out­side their fund.

Mr Shorten was forced into a po­lit­i­cally dam­ag­ing change to the pol­icy last month, two weeks af­ter it was an­nounced, fol­low­ing an ad­mis­sion that low-in­come pen- sion­ers with mod­est eq­ui­ties in­vest­ments would lose an­nual frank­ing credit re­funds.

The strate­gic re­treat to pro­tect 300,000 pen­sion­ers and wel­fare re­cip­i­ents from the pol­icy shaved $3bn from the $59bn that La­bor claimed would be sav­ings but which the gov­ern­ment has at­tacked as a tax grab.

Scott Mor­ri­son said the new anal­y­sis meant that many pen­sion­ers and re­tirees stood to be hit twice by La­bor’s plan.

“This is just an­other ex­am­ple of how shifty Bill Shorten has been

over his plan to thieve the le­git­i­mate tax re­funds of older Aus­tralians, now re­vealed to hit hun­dreds of thou­sands of Aus­tralians, in­clud­ing pen­sion­ers, through their su­per fund ac­counts, cost­ing them around $3.75 bil­lion,” the Trea­surer told The Aus­tralian.

“Once again La­bor’s re­tiree tax has been ex­posed as hit­ting pen­sion­ers and re­tirees on low in­comes. This has oc­curred ei­ther through the fur­ther in­com­pe­tence of his shadow trea­surer, Chris Bowen, who has muffed this pol­icy from day one, or Bill Shorten’s own men­ace in de­lib­er­ately hid­ing the im­pact.”

Mr Bowen yes­ter­day main­tained that the only 10 per cent of cash re­funds went to APRA funds.

“La­bor was up­front when mak­ing the an­nounce­ment on re­forms to div­i­dend im­pu­ta­tion that 90 per cent of all cash re­funds to su­per funds ac­crued to SMSFs with just 10 per cent go­ing to APRA-reg­u­lated funds (based on 2014-15 ATP data),” he said.

“In­dus­try Su­per Aus­tralia, which rep­re­sents the su­per­an­nu­a­tion of five mil­lion Aus­tralians, has said that La­bor’s re­forms ‘will have lit­tle or no im­pact on the su­per of most Aus­tralians’ and ‘su­per funds where most Aus­tra- lians have their re­tire­ment sav­ings will be largely unaffected by this pro­posal be­cause the im­pu­ta­tion cred­its are ex­hausted off­set­ting tax li­a­bil­i­ties of the fund’.

“The fun­da­men­tal is­sue is that Aus­tralia can no longer af­ford to give out cash re­funds — it is pro­jected to cost the bud­get up to $8bn a year in the next 10 years.”

ASFA chief ex­ec­u­tive Mar­tin Fahy said the in­dus­try was call­ing for a halt to any more changes to su­per­an­nu­a­tion from both side of pol­i­tics.

“Un­til leg­is­la­tion is drafted and the de­tail fully spec­i­fied, we can­not be cer­tain how many peo­ple or funds will be af­fected,” Mr Fahy said.

“ASFA re­mains con­cerned about pos­si­ble un­in­tended con­se­quences of such a mea­sure on re­tire­ment out­comes.

“Fur­ther­more, we con­tinue to call on politi­cians to cease tin­ker­ing with the su­per­an­nu­a­tion sys­tem as it un­der­mines con­fi­dence.”

Mr Shorten has de­fended the pol­icy, claim­ing that the re­funds are paid to a “few very wealthy peo­ple who are al­ready very com­fort­able”.

In­dus­try su­per funds, which are heav­ily in­flu­enced by union mem­ber­ship on their boards, have wel­comed the pol­icy but claim the pro­ceeds should be rein­vested to im­prove the su­per sys­tem.

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