Penny Wong (SA, Australian Labor Party, Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

My question is to the Minister representing the Treasurer, Minister Cormann. In the government's tax discussion paper Re:think tax, issued in 2015, the following statement was included:

There are some revenue concerns with the refundability of imputation credits.

Can the Minister representing the Treasurer advise what were the concerns raised regarding the refundability of imputation credits?

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

Of course, a discussion paper is not representative of the view of the government. A discussion paper is precisely that: it is a discussion paper. What I would say to the senator is that the Australian people are concerned about the fact that the Australian Labor Party wants to put their hands into their pockets and steal their money. This is not government expenditure—

Opposition Senators:

Opposition senators interjecting—

Scott Ryan (President) Share this | Link to this | Hansard source

Senator Cormann, please resume your seat. Senator Collins on a point of order.

Jacinta Collins (Victoria, Australian Labor Party, Shadow Cabinet Secretary) Share this | Link to this | Hansard source

My point of order is in relation to relevance. The minister was asked what were the concerns raised in the government's document regarding imputation credits. He's not addressing the question. He's responding to the previous question. The question before him now is in relation to the government's 2015 discussion paper.

Scott Ryan (President) Share this | Link to this | Hansard source

Senator Cormann, I would remind you of the question and the specific nature of it and I call you to continue the answer.

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

The discussion paper is there for all to see. It sets out the items for discussion very clearly. What I found interesting in the way the question was framed by the Leader of the Opposition, though, is that she referred to revenue implications, because the key point that we've been making is that this is a tax grab, this is a revenue measure, whereas the Leader of the Opposition, Mr Shorten, and the shadow Treasurer have been talking about this as if it were an item of expenditure. It is not an item of expenditure. What the Labor Party is proposing to do is to increase tax—to increase the tax on more than one million retirees, including, and in particular, pensioners with direct investment of some of their savings in shares and self-funded retirees who have some direct investments in shares. Whatever way in which Senator Wong and the Labor Party are trying to spin this, this is Labor changing their long-standing bipartisan support for an arrangement, a deliberate design feature of our tax system, that is entirely appropriate—that is, that low income earners should be able to take advantage of the same tax deductibility arrangements as high income earners. Bill Shorten uses the rhetoric of targeting the big end of town, of targeting rich people, for political purposes. He bamboozles people with technical language, when all along he's actually targeting low and middle income earners. Ninety-seven per cent of Australians who use this particular methodology have income of less than $87,000 a year. (Time expired)

Scott Ryan (President) Share this | Link to this | Hansard source

Senator Wong, a supplementary question.

Penny Wong (SA, Australian Labor Party, Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

Professor John Hewson says, 'I think the bottom line is that in economic terms it'—referring to the cash refunds—'doesn't make any sense at all.' Doesn't make any sense at all: is the former Liberal leader correct?

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

No.

Scott Ryan (President) Share this | Link to this | Hansard source

Senator Wong, a final supplementary question.

Penny Wong (SA, Australian Labor Party, Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

I'm sure he'll enjoy that! The government's own discussion paper notes the revenue concerns with the dividend imputation cash refunds and the former Liberal Leader says these make no economic sense. Can the minister explain why the Treasurer has ruled out dealing with cash refunds, even for the wealthiest recipients?

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

The income tax refund that Labor is complaining about now comes after about 20 years of bipartisan support for this important policy. And the whole reason they're complaining is because some Australians pay less personal income tax, or pay no personal income tax, based on their personal marginal tax rate circumstances.

Now, of course, they do pay tax on the income from their shares; they pay, effectively, 30 per cent through the tax paid by the company in which they are part owners. Labor is saying that if you earn more than $180,000 a year you should be able to deduct that 30 per cent off the 47 per cent top marginal rate, whereas if you are a pensioner or a self-funded retiree—say, on less than $18,200 a year—and you pay zero per cent tax, you should not be able to deduct that same amount of tax paid, effectively, on your behalf by the company of which you are a part owner on 30 per cent on their profits. (Time expired)