LEIGH SALES, PRESENTER: The Shadow Treasurer, Chris Bowen, joined me earlier. Chris Bowen welcome.
CHRIS BOWEN, SHADOW TREASURER: Thanks, Leigh.
SALES: What do you say to the voter in our story on $56,000 a year, self-funded, hoping hell never have to draw the pension, who says he will lose $17,000 under your plan? What do you say to all the others like him?
BOWEN: Well I say to everybody, reform is difficult but we're going to the election being very up-front with our plans. I say it to him and everybody else, people will continue to receive their dividends, they will continue to receive dividend imputation. They'll continue to receive those franking credits and they won't be paying tax. But the situation that was brought into bear in 2000 by John Howard and Peter Costello now means our Budget is being hit by $6 billion a year and that's projected to grow to $8 billion a year in a few years. That's more than the Federal Government spends on public schools, on child care, three times what we spend on the Australian Federal Police. It's no longer affordable and somebody's got to do something about it. We, Bill Shorten and the Labor Party, are saying we will deal with it. The other thing I'd say, Leigh, is the vast majority of the benefit here goes to high income earners despite the Governments predictable and typical scare campaign. 50% of the benefit, for example, from refundability of dividend imputation goes to the top 10% of self-managed super funds.
SALES: I want to try and break down these figures a bit further, because youve said somebodys got to do something about it. I want to know who are the people who are going to be paying for this. So how many people who are full pensioners will be affected and how many people who are part pensioners?
BOWEN: 1% of full pensioners at most.
SALES: So how many people is that though?
BOWEN: Well what we are looking at Leigh is in total when youre looking at the number of complete pensioners who might have any impact at all and in most cases it will be very modest. You're looking at about 10% of part pensioners and at most 1% full pensioners.
SALES: I want to know how many people.
BOWEN: Around 200,000 for part-pensioners and about 14,000 for full pensioners.
SALES: The Coalition says that 97% of people affected by this earn less than $87,000 a year.
BOWEN: This is Scott Morrison's old trick, he did this on negative gearing. We know on negative gearing for example, that he had Treasury advice telling him that he was wrong.
SALES: Let's just stick to this...
BOWEN: No, it goes to his modus operandi. He is doing the same thing.
SALES: It is your policy. I want to know how many people who are affected by this earn $87,000 or less.
BOWEN: Taxable income, hes using taxable income. Well of course people in retirement are by enlarge tax-free because superannuation is in the retirement phase, tax-free. So therefore their taxable income is low. That doesn't mean they don't have large balances, that doesn't mean they don't have very big balances in some instances. So for example, people in the top 1% of self-managed super funds are getting $83,000 a year in refunds. Thats more than the average wage and that's not sustainable.
SALES: I want to be clear because you will have looked at numbers on this, when this policy comes in, of the people who are affected, what's their average earning? What are they living off every year?
BOWEN: What we are talking about are people who are in self-managed superfunds primarily -
SALES: What are they living off?
BOWEN: 90% of the impact on superannuation goes to people with self-managed super funds -
SALES: How much money are they living off every year?
BOWEN: If you're in an industry fund or retail fund, by enlarge not affected by this. This is by enlarge self-managed super funds. Of course there is a big variation Leigh -
SALES: Don't make me ask again. How much are they living off every year?
BOWEN: The situation will vary Leigh, Im giving you a straight answer.
SALES: I'm asking for an average.
BOWEN: Self-managed super funds vary in size. I say this, there are 600,000 self-managed super funds in Australia. Around 200,000 will be affected by this policy.
SALES: You must know, I think the figure is that it will recoup $59 billion over time?
BOWEN: Over a decade.
SALES: Over the decade, so you must then have crunched the numbers to know. If you can come up with the 59 you must know how much all these people are earning that youre going to get back.
BOWEN: $11 billion over the forward estimates so it is a very substantial announcement which gives Labor flexibility going forward for future policy announcements.
SALES: But you still haven't answered directly, the average person.
BOWEN: I think I've given you a number of figures Leigh. Youve asked me questions and Ive answered your questions. Youre asking for an average of all self-managed super funds. The truth is that varies. Ive told you in effect who will be paying the bulk. The bulk will be paid by people with very large balances in their self-managed super funds.
SALES: Can you address something else for me as well, shareholders in a company are part-owners in that company. The dividend imputation is there to ensure that they don't pay tax twice.
BOWEN: Correct.
SALES: So youve got your company tax and youve got personal income tax. Does this plan change that?
BOWEN: No. The whole plan was designed in 1987 by Paul Keating in a way which got rid of double taxation. But he said you can bring your taxable income down to zero but we're not going to pay you negative income tax, were not going to give you a refund when you haven't paid tax.
SALES: If your position is you don't want to give people a handout, if they pay zero tax already will you commit to clamping down on households who generally receive more in government benefits than they pay in tax? Because that's more than three million households.
BOWEN: Very separate issues, Leigh, very separate issues.
SALES: The principle there was that you don't want people to be getting a handout if they're paying zero tax. There are three million households in Australia in that position.
BOWEN: We have a family tax benefit system brought in by the Liberal Party, which has bipartisan support and means tested and tightened over the years.
SALES: Why should they get a handout more than the tax their paying but these people?
BOWEN: With respect, I don't see the point you're making. Theyre very different circumstances. This is one of the very few tax concessions which is fully refundable in Australia. It is also an anomaly in the world, we are the only country in the world with a fully refundable dividend imputation system. That was fine in 2000 when the Budget was in surplus perhaps. But the return to surplus is not guaranteed. Difficult decisions are necessary to ensure it just like we've engaged in tax reform and family trusts, on negative gearing, on capital gains tax reform. We are prepared to lead the debate. That leads to controversy. Today it reminds me very much of the day that we announced negative gearing reform. We saw the same doom and gloom, we saw some of the same stakeholders, we saw the same huffing and puffing from Scott Morrison. Most people will say the Labor Party won that debate. I believe we will win this debate. But it takes time to argue your case, make your point and explain the rationale and there will be much more of that.
SALES: Chris Bowen, we are out of time, thank you very much.
BOWEN: Thank you Leigh.
