Shadow Treasurer Chris Bowen says Labor will have a mandate for its franking credit policy, and will treat the Senate with respect in an attempt to get it legislated.
Labor is likely to need additional votes to pass its policy through the Senate. But a number of minor parties are opposed to stopping refunds of franking credits.
At the Treasurer’s Election Debate, Chris Bowen was asked if Labor would curb its spending promises if it failed to get its franking credit change through the Senate. The Parliamentary Budget Office has costed Labor’s policy as raising $10.7 billion out to 2021/22 and $55.7 over ten years.
Bowen said that Labor will have a mandate for its changes because it has announced them ahead of time and is taking them to an election.
“I don’t argue to you that means the Senate must automatically agree, we’ll treat the Senate with respect. But we will point out that is the essential starting point for the passage of our Budget through the Senate.”
He argued the Senate was “perfectly within its rights” to reject Coalition cuts “when they had no mandate to do so in 2013”.
Treasurer claims ‘convenient’ exemptions from franking credit policy
Also in the Treasurer’s Debate, Treasurer Josh Frydenberg claimed Labor was exempting “union-backed” industry super funds from its franking credit policy.
“When it comes to the Retiree’s Tax, you have to ask the question: why has the Labor Party conveniently excluded unions, and union-baked industry funds, from being affected by the retiree’s tax, but they’re coming after more than 1 million retirees, including many self-funded retirees. I mean, there’s a natural inconsistency in Labor party’s position.” Frydenberg said
Labor has said the franking credit policy will only apply to individuals and super funds – seemingly exempting unions. Labor has specifically exempted “ATO endorsed income tax-exempt charities”, along with not-for-profit institutions with Deductible Gift Recipient status.
However industry funds (which have a mix of union and employer representation on their boards) are not specifically exempt. Like retail funds, or indeed SMSFs, the impact on industry funds will depend on their tax position. Potentially this could mean that large industry and retail super funds could loose franking credit refunds. The Financial Services Council found that 50 large APRA-regulated super funds received refunds of franking credits in 2015/16.
Shadow Treasurer Chris Bowen didn’t address the exemptions from Labor’s policy in his response, instead saying: “I make this point to the retired shareholders: I respect the fact they’ve worked very hard, I respect the fact they’ve saved hard. But I also respect the fact that we need to make decisions to ensure the budget is sustainable and fair going forward and to show them the respect of telling them about our plans before an election.”