Treasurer Josh Frydenberg accused Labor of arrogance towards voters while retirees in key battleground state Queensland urged Opposition Leader Bill Shorten to grandfather his franking credit clampdown, saying it unfairly targeted older people who invested in good faith.
“Today Chris Bowen offended over one million Australians, dismissing their real and deep concerns, about Labor’s retirees tax, and arrogantly telling them to vote against Labor,” Mr Frydenberg said.
“These people have done nothing wrong. They’ve simply saved for their retirement. And their retirement savings should be protected, not raided.”
The franking credits changes will save $11 billion in the first two years and $55.7 billion over a decade, but existing beneficiaries of the scheme say it is unfair to target them.
A few hours after Mr Bowen told critics they could take their vote elsewhere, angry retirees told a parliamentary committee on the Sunshine Coast that they would do exactly that.
“This credit is not a rebate but a return of taxes already paid. The government doesn’t need to steal it from me by taxing again,” said Keith Muller, 65, a retired pharmacist, one of more than 200 residents who packed the Alexandra Headlands surf club.
Mr Muller said he would lose $20,000 of his income each year. “The introduction of Labor’s retirement tax will have a dramatic impact on the economy. It is a blatant attack on a section of retirees who have made a great contribution to this country. I like to think common sense will prevail.”
Self-funded retiree Cyril Gaudart said he set up his investments according to the rules at the time and was now being punished.
“I cannot go back and start again. In my senior years I could lose 20 per cent of my income. Where is the fairness in that?,” he told the hearing.
“If you have to have it then grandfather it so the people who worked hard and played by the rules are not penalised.”
Labor sources said that, while a backlash was inevitable, the government’s own research showed that at least two-thirds of the 900,000 people affected were in Coalition seats.
They cited the release last year of the government’s analysis of Labor’s policy which, based on Australian Tax Office data, showed the policy would mostly target people in Coalition seats but would also hit more than 300,000 voters in Labor electorates.
In NSW, there were 310,000 people who would be affected, with 120,000 in Labor-held seats. The average amount people stood to lose was about $2200 a year.
The Morrison government has seized on the franking credits issue, saying it will unfairly hurt self-funded retirees on low incomes. The hearings, chaired by Liberal MP Tim Wilson are a platform to target Labor over the policy change.
The Sunshine Coast is a well-known haven for retirees, with more than 20 per cent of the population older than 65.
Retirees said Labor should either scrap dividend imputation altogether or leave it alone, saying the goal posts on their retirement savings were being moved. Others warned it would simply push more retirees on to the government pension, which would be a bigger burden on taxpayers
Mr Bowen was similarly defiant over Labor’s plans to limit future negative gearing to new properties only. Unlike the franking credits policy, all existing investors who use negative gearing would be exempted. Mr Bowen said the start date for the negative gearing changes would be announced “well before” the election.
“What we’re doing is reforming unsustainable, unfair concessions and loopholes in the system. We make no apology for that, it’s the right policy,” Mr Bowen said.
“It’s necessary to invest more in schools and hospitals, to deliver bigger personal income tax cuts [than the government].
“We make all those commitments and we provide bigger budget surpluses.”
The negative gearing changes were announced before the last election and the franking credits changes were announced a year ago.
Mr Bowen said that, unlike the Abbott government which tried to introduce a Medicare co-payment and increase other taxes only after it was elected in 2013, Labor had been courageous and up-front enough to detail its plans well before the election.
“We’ve had the courage to tell them our plan,” he said.
“We are saying negative gearing is unfair to first homebuyers and is a big cost to the budget.”