by Joe Kelly
Investment fund manager Geoff Wilson AO has challenged Labor’s estimate it will claw back $55.7 billion over 10 years from its crackdown on refundable tax credits on dividends, suggesting the extra revenue would be about $40bn.
Wilson Asset Management has used a survey of more than 3,000 of its 80,000 retail investors, of whom about 60 per cent are self-funded retirees, to argue that the Labor policy would raise some $16bn less than claimed once behavioural changes were accounted for.
The survey of some of those most affected by the Labor policy, announced by Bill Shorten in March, also suggests it could emerge as a sleeper issue at the next election and switch the votes of many self-funded retirees.
Wilson Asset Management began a petition in May that has now amassed 12,341 signatures opposed to the Labor policy.
Mr Wilson — the founder and chairman of the fund manager — said self-funded retirees had an incentive to dwindle down their retirement savings, particularly those who fell just outside asset test thresholds for the Age Pension. This is because — under Labor’s “pensioner guarantee” — all recipients of a government pension will be exempted from the Shorten plan to scrap cash refunds.
Mr Wilson said the survey revealed that 27.9 per cent of respondents planned to spend down their financial assets to qualify for the Age Pension assets test in order to receive refunds for excess dividend imputation credits.
Under the assets test, the threshold to qualify for a part pension is set at $844,000 for couple homeowners and $1,051,000 for a couple who are non-homeowners.
“Labor’s proposed changes to franking guarantee its defeat at the next election,” Mr Wilson said.
“Our poll found that 28 per cent of people plan to dispose of their capital to qualify for the Age Pension if these changes come into effect. Extrapolating these results to the broader population finds the incorrect $55.7bn figure is about a $16bn overestimation of savings by the opposition. The additional ongoing costs of a sudden increase of people moving on to the Age Pension is also unaccounted for.”
Opposition Treasury spokesman Chris Bowen rejected Mr Wilson’s costings, saying Labor’s policy had been costed by the Parliamentary Budget Office and behavioural changes had been taken into account.
“Mr Wilson has made it clear he intends to run a scare campaign against Labor’s reforms. Fair enough, he is perfectly entitled to do so,” Mr Bowen said. “But Labor’s policy is not costed by a group trying to undermine our policy. It is costed by the independent Parliamentary Budget Office, who have as recently as just couple of weeks ago, publicly stood by their costing, which of course fully factors in behavioural changes.”
Mr Wilson also warned that the poll showed that 20.7 per cent of the 3,047 people surveyed were Labor supporters likely to change their vote because of the dividend imputation crackdown. Only 23.7 per cent of those surveyed said they voted for Labor, suggesting the vast majority of self-funded retirees who backed Mr Shorten at the last election are considering switching their support.