The proposed policy to scrap refundable franking credits undermines the core principles of Australia’s retirement system, a House of Representatives Standing Committee on Economics hearing into the proposal was told yesterday.
In her opening address to the committee’s Sydney public hearing, Alliance for a Fairer Retirement System spokesperson Deborah Ralston said: “As an academic, I’ve spent a lot of time in research on evidence-based policy and I think in this case the evidence does not support the policy.
“As a group, we believe that this policy does not support the principles that we believe are important for the Australian retirement system.”
Ralston said those principles are adequacy, sustainability, certainty and fairness.
“We think it undermines the adequacy of retirement incomes. For some people, it may mean as much as 30 per cent of their income being lost, and we’re very conscious of those elderly shareholders who will be affected by that,” she said.
“We think it also impacts the sustainability of the retirement system as it will incentivise people to move to the age pension.
“And it also betrays the confidence of many Australians who thought they had certainty in planning their retirement incomes about returns on Australian shares over the last two decades.”
But most importantly, the alliance believes it is an unfair policy as it treats people differently, that is, people on the same income, depending on the vehicle chosen for their retirement savings, she said.
“They’ll have a different outcome whether they’re pensioners and whether they’re self-funded retirees; they’ll have a different outcome whether they’re institutional super or whether they’re in an SMSF,” she noted.
“And it could be that now is the time to review the dividend imputation system. It’s done a lot of really good things for this country, in particular, it’s [contributed to] a very deep capital market.
“With the global economy, it could be that we might be outgrowing this system.
“So then let’s review the dividend imputation system and not just pick on some people within the system and leave others out.”