Sky News AM Agenda (39)

15 March 2018




SUBJECT/S: Labor's fairer tax plan; Stephen Hawking; Batman by-election


KIERAN GILBERT: Welcome back to the program. With me now, the Shadow Finance Minister Jim Chalmers. Jim Chalmers, is Labor considering a top-up payment to help those retirees and investors adversely affected by your dividend credit changes?


JIM CHALMERS, SHADOW MINISTER FOR FINANCE: Good morning, Kieran. No we're not. Some of those stories which have appeared today are not accurate. I think they just pick up on the obvious point that Bill Shorten made yesterday, which is for some - not all, but for some - pensioners whose income is impacted by what we're proposing, that will be factored into the income test for the pension and some people will see a change to their part pension, but we're not seeing the type of package which was described in the paper today.


GILBERT: When you have some of the individuals who are affected across various papers and news reports saying that they'd planned for this over years, decades in many cases, and now feel like the rug would be pulled from underneath them if you went in this direction, do you have some sympathy for them in that sense?


CHALMERS: Kieran, I think whenever you propose a meaningful change like we are proposing, there will be supporters and detractors. There will be from time to time people who are adversely affected. What I would say to them is, we're not abolishing dividend imputation or franking credits. Nobody will pay a dollar more in tax. Nobody will get a dollar less in share dividends. Nobody will have a dollar less in their superannuation. And I think importantly as well, we're talking about a prospective change. It wouldn't come in until 1 July 2019 and it wouldn't impact until a year after that when it takes that tax year into account. And so I certainly listen to the concerns which are being raised, but I think we can give that assurance that people will not lose those dividends that they are getting from their shares.


GILBERT: They won't lose the dividends, but they will lose that credit and some people have factored that in in planning their expenses. Do you concede that there is quite a number of those people who aren't that well off?


CHALMERS: It's a small proportion of people who are in that situation. Overwhelmingly, the savings that we are proposing come from the wealthy end of largely self-funded retirees and the self-managed superannuation fund part of the system, overwhelmingly that's where the saving comes from. Yes, there will be some people impacted, but I think broadly the Australian community understands that what we're trying to do is to make the Budget fairer. What we're trying to do is close a tax concession which the country can no longer afford, particularly when we have a deficit eight times bigger than it was in 2014 and net debt has doubled and gross debt is more than half-a-trillion dollars. I think people appreciate that we have to make some difficult decisions. This is certainly one of them. We don't take this decision lightly, we don't dismiss people's concerns. But it's important, if we win Government at the next opportunity we will inherit a Budget which is in terrible condition, far worse than what the current Government inherited. And the onus is on us to propose ways to address that. The alternative is to go down the Liberal path of cutting health and education and pensions and we think our alternative is better.


GILBERT: Do you accept the argument though that these individuals now without that credit will be effectively having that tax paid twice, because the companies pay the tax and fully franked dividend, then the individual if they don't get that rebate would be as well?


CHALMERS: I don't accept that argument, Kieran. When Paul Keating brought dividend imputation in in 1987, it was to address the fact that people were arguably being double taxed. And the situation or the system which survived the 13 years from 1987 addressed that concern. We're just proposing to go back to that system so that people can still use franking credits to reduce their tax liability all the way down to zero if they can, but we just don't think the country can afford to continue to send often quite big cheques to people who haven't paid that tax in the first place.


GILBERT: The Future Fund received $628 million in franking credits last year - more than $600 million for the Future Fund. This could also have an impact on your ability to pay public servants superannuation?


CHALMERS: Our proposal impacts on individuals and superannuation funds and so we don't expect an impact of that magnitude that you've just described. The saving doesn't come overwhelmingly from things like the Future Fund, it comes overwhelmingly from the wealthier end of the self-funded retirees.


GILBERT: So would the Future Fund be exempt as other not-for-profit organisations would?


CHALMERS: Our policy is for people's funds and individuals who are using these franking credits to get a cash refund.


GILBERT: So not-for-profits, I know charities have been exempt and other not-for-profit groups, so the Future Fund would be exempt as well given that context? Is that right?


CHALMERS: That's not part of the costing that we've been provided by the Parliamentary Budget Office, that's right.

GILBERT: Let's look at Stephen Hawking, the legacy of that great scientist and we spoke before the break with one individual who was inspired by him, Brad Tucker, astrophysicist at ANU. What are your thoughts on the legacy of this person? A great scientist, but also someone who I guess encouraged research and thinking much more broadly than that.


CHALMERS: I thought that was a wonderful interview with Brad Tucker and there must be tens of thousands - I don't know how many - people like Brad around the world who've been inspired by a truly extraordinary man. A lot of us fret about the fact that people don't get sufficiently fired up about science and fascinated by science and Stephen Hawking made the most extraordinary contribution to getting people interested in science. And I think also later in his life, one of the things I really appreciated was his focus on the potential impact of technology on inequality in our economy and in our society. And so I think he's left an enormous positive mark on the world and you can see why so many people right around the planet that he knew so much about are mourning his passing today.


GILBERT: Amazing contribution and legacy he's left. And just to bring our discussion back closer to home and much more smaller horizon really is a small part of Melbourne - the seat of Batman, just to wrap up our conversation this morning. As we look at this by-election at the weekend, what's your sense of things? Would you agree the Greens are favourite heading into that by-election on Saturday?


CHALMERS: I certainly think it'll be really tight, Kieran. I haven't seen any of our internal polling, but my understanding is it will be very, very close. And one of the key things which will determine the result there is whether or not moderate voters - people who don't want to see more Greens in Canberra - whether they'll show up to vote at all. That'll be a key determinant. But there'll be a whole range of issues as well. I think Labor's proposal to extend the tram line, our better funding package for schools, the fact that we resist the trickle-down economics of the Liberal Party in Canberra. These will be important. I also think we've got a far superior candidate. We've got someone who's literally spent her whole working life looking after people as a nurse, then standing up for them as a representative of workers right across the board. So we've given ourselves every chance. We don't have long to wait now. But I think it will be extraordinarily tight.


GILBERT: And in terms of the argument against trickle-down economics, are you worried that this has an adverse impact on voters over 65? I think there's some 23,000 voters in Batman over that particular age. Is there a concern here that the direction that you've been heading in in recent days might have an adverse impact in that sense?


CHALMERS: I'm not concerned about that. I don't think it will be a big factor in the by-election on Saturday. There are a whole range of other factors which I've just run through. I don't think that will be the most consequential one. I think it was going to be tight before we made the announcement and it will be tight after we made the announcement. And if people vote on policy, or if they vote on the best person to represent them in Canberra, then we'll be OK.

GILBERT: Appreciate your time, Jim Chalmers, Shadow Finance Minister. We'll talk to you soon.