There is an article on the AFR that puts a dollar figure on the ALP’s policy to pocket tax refunds and not repay them in full.
According to the ANU modelling, the loss of the refunds was like reducing superannuation balances by 8 to 9 per cent. For a person with $500,000 in their super balance and access to imputation credits of 1.37 per cent a year, this can add up to a reduction of about $44,000. For someone with $1 million in their super, it can be as much as $95,000.
The analysis also found providing franking credits over the course of a person’s retirement cost taxpayers $30,000 for someone with a $100,000 balance and $80,000 for those retiring with a $500,000 balance.
That is a lot of money. The ALP are rolling out the usual excuses:
“The pensioner guarantee means that those receiving the full or part pension (or other qualifying payments) will receive their franking credits,” Mr Bowen said.
“More than half of all cash refunds going to self-managed superannuation funds are to those with balances of more than $2.4 million. Given the vast majority of retirees with superannuation savings are in super funds with tax liabilities, most retirees won’t see much of a change to their retirement incomes under Labor’s policy.”
Given that the ALP will ripping nearly 10% out retirement balances maybe more people will be on the pension or part-pension and so get their tax refund after all. Then there is the class envy – some people have super balances of over $2.4 million. Sure they do. Some politicians, for example, have effective balances much higher than that and don’t have to worry about franking credits at all. But the examples are for people with super balances of just $100,000 (almost half the annual pay of a backbencher) and $500,000.
Then Chris Bowen had this brain fade:
Responding to the claim of “home bias”, Mr Bowen said the policy would help de-risk the retirement savings pool by encouraging people to diversify their portfolio.
In English that translates to “Don’t buy Australian”. Good advice, perhaps, but not what a federal politician should be advocating.
Update: Paper here.