Feb 27, 2019

Transcript of Radio Interview – 2GB, Chris Smith Program – Wednesday, 27 February 2019

Subjects: George Pell; Dividend Imputation Reform.

CHRIS SMITH: Anthony Albanese, good afternoon.

ANTHONY ALBANESE: Good afternoon, Chris.

SMITH: Now as a Catholic – Question Without Notice please Member for Grayndler – what’s your response to the conviction of George Pell?

ALBANESE: Well my response is that we’ve got to think of the victim here. George Pell has been convicted in a court of law. He of course is appealing so we need to be somewhat careful given that the legal processes haven’t been exhausted. But quite clearly across the board I am very proud to have been part of a government that made what, at the time was I think a gutsy decision to call the Royal Commission into institutional abuse.

SMITH: True.

ALBANESE: And it wasn’t of course just the Catholic Church. It’s right across the churches; it was institutions like the Boy Scouts and what we heard come through that process was quite horrific. And the institutions need to wake up to themselves and recognise that they have let down their communities and they have caused literally many suicides and trauma for the individuals who were abused. They’ve caused lasting damage to them, to their families and to society.

SMITH: You just wonder whether the Catholic Church has it in them to change something that was left behind by George Pell, which is this Melbourne Response. Because there’s nothing in that, that even looks rarely or anything like an independent body to look after victims.

ALBANESE: Well they have to because they let down people. The principal of the school that I went to is in jail. You know people almost – tragically I’ve discussed this with some of my fellow students who I keep in contact with – we knew some things and it was almost like that we’ve taken for granted, you know, be careful. Don’t you know have a shower when brother (inaudible) is around and just treating it as one of the things. Now that shouldn’t be the case for a young man or young woman for that matter growing up. Let alone people who – you know my mum was a single mum who wanted to ensure that I went to a Catholic school. It was very much a part of her faith. And I must say that the school I went through were very good to me personally. And when we couldn’t afford school fees they said you know just pay what you can and I had some terrific experiences. There was one brother in particular, Brother Simpson who passed away just a couple of years ago; who I think had a big impact on my life because I grew up without a father in my life. He made me captain of the rugby league team in Year 6, in the final year of primary school, and I wasn’t the best player but it meant that, I think that’s the first time I got given a leadership position and I think that had an impact on me.

SMITH: I’ve had positive influences too within the Catholic Church, both through various priests and brothers and I think they’ve been, you know …

ALBANESE: Well they’ve been let down …

SMITH: Wouldn’t they what …

ALBANESE: There are some very good people in the Catholic Church, not just the clergy, but all those volunteers who you know – my mum was very sick for most of her life – I mean, you know my story. But while she could, she went up and cleaned the Church at St Joseph’s Camperdown, whenever she could, you know and put in. And all those people who do fantastic work in the Catholic Church, have been let down by some of the hierarchy and it requires a response from the top down. It requires contrition and it requires structural training and it requires a real response that recognises that the victims of abuse have had to suffer long-term and are entitled to proper compensation because they can’t ever really, of course, be compensated. Some of them have lost things that you can never give back. But I do think that this is a huge wake-up call for the Church and so many Roman Catholics out there will be devastated by the news that came through yesterday.

SMITH: Very true, I couldn’t have said it better. I am with the Shadow Minister for Infrastructure, Transport, Cities and Regional Development. We want to talk about your franking credit policy; we will do that straight after a break. Anthony Albanese on the other side and if you’d like to join the conversation 131 873.

(Break)

I’ve got Anthony Albanese with me. We are talking about something I’ve been wanting to talk to him about for quite a while, Labor’s franking credit change. One of the biggest concerns for my listeners, whenever I raise it I get a stack of callers on the board and already I’m getting emails sent to me even after mentioning it at the start of the program. Anthony, the main issue here is that my listeners in particular think that you are punishing those Australians who’ve worked very hard to secure their retirement – not a drain on the pension or taxpayers money and they want to know why are you taking away from them, the incentive for people to work hard and plan for their own retirement?

ALBANESE: Well we’re not doing that of course. And of course it is a cost to the taxpayer, it costs the taxpayer currently $6 billion a year, that will grow to $8 billion over the forward estimates and is growing exponentially. When it was introduced by the Howard Government at a time when we had the huge boom and we had money going out the door, you had one-off payments and various measures that cost just $550 million a year. It’s now $6 billion. There is nowhere in the world that gives people – essentially a tax rebate is what it is designed for imputation – it is not a tax rebate if you haven’t paid any tax.

SMITH: But the company that they have invested in has already paid that tax. So they’re being double taxed.

ALBANESE: That’s not right.

SMITH: They are owners of the company, Anthony.

ALBANESE: No one will pay a single cent more tax, that’s the first thing. No one will lose a single cent from their super. No one will lose a single cent from their pension.

SMITH: That’s irrelevant.

ALBANESE: No one will lose a single cent from their share dividends. And the fact is it’s not retrospective. The idea that you get a refund, which is essentially what it is, of your tax when you haven’t paid any tax is not sustainable …

SMITH: But the company you own has paid tax.

ALBANESE: Well you have not paid any tax. And what is happening is that this is growing to the point whereby it simply is not sustainable.

SMITH: Okay. I understand that …

ALBANESE: It costs the Budget more than we give to every public school in the country.

SMITH: But you haven’t done a calculation on the loss of investor’s money that will now stop being poured into companies around the country. Because retirees won’t do this, they won’t go there anymore they’ll go: ‘Hang on, the rules have changed I’m getting out of there’.

ALBANESE: Because what’s happening at the moment, because there is this huge bonus, is that it’s been growing exponentially. And that’s why you’ve seen this flood in, because people are getting, as I said, a refund when they haven’t paid any tax.

SMITH: Was this your idea?

ALBANESE: No, it’s not my call.

SMITH: So you’re trying to sell it. The Government says over 80 per cent of those affected have a taxable income of less than $37,000. These are your people.

ALBANESE: Eighty per cent of the benefit, 80 percent of that $6 billion, accrues to the wealthiest 20 per cent of retirees. And the top 1 percent of self-managed super funds receive a cash refund on average of $83,000. Now this is an amount at a time when the median income in Australia is $57,000. This huge, huge cash payment …

SMITH: I’m hearing you. The self-managed superannuation sector has grown exponentially. Sixty-five per cent over the last five years to more than $700 billion. That’s going to come crashing down, isn’t it?

ALBANESE: No, it’s not.

SMITH: And people will go on the pension.

ALBANESE: People are getting payments now through this system, Chris.

SMITH: But people are also relying on …

ALBANESE: People are getting payments, which is – which the average worker out there pays their taxes, their PAYE tax – that goes into consolidated revenue. And $6 billion of it is going out, not to pay for education, not to pay for hospitals, not to build infrastructure, but to people to get refunds for tax that they haven’t paid.

SMITH: Okay. But logically, if this is no longer a chance to live off the money you get from franking credits, if this is no longer an income stream for a lot of retirees. They will simply calculate their retirement so they take part pension and live off the rest of their investments. And so therefore this will be a drain on the welfare budget. Surely that makes logical sense?

ALBANESE: No. What makes sense is that a system which is not used anywhere else in the world, anywhere, not in the United States, the UK, Germany, France, Japan. Nowhere in the world does this occur. And there’s a reason for that. If you are one off, if you’re one out, then there’s usually a reason. And that’s why in 1987 when I was working in the Federal Government as an Adviser when Bob Hawke and Paul Keating introduced it, the imputation system, they certainly didn’t allow for a payment to be made if tax hadn’t been paid.

SMITH: Okay, all right. Let’s go to a few callers. Barry’s got a really good question. It was my next question, Barry, give it to Anthony Albanese.

CALLER: How are you Chris, how are you Anthony?

ALBANESE: G’day. I’m good, Barry.

CALLER: Why is the franking credit still going to be allowed in union-based superannuation funds and the self-funded can’t keep that?

ALBANESE: Well there is a different system in terms of – the same as for charities that are tax exempt they will be permitted as well – in terms of industry super funds. That doesn’t impact on people’s income in terms of it’s a different system.

SMITH: But you don’t know that. There could be members of certain unions who have an Industry Super Fund who rely on franking credits to live, you know, week by week as do investors in other super funds, non-industry super funds. Why wouldn’t industry super funds be affected the same way?

ALBANESE: Because there’s a different system. The self-managed super funds by definition are about individuals who have established their own nest egg, who make their own decisions about where their investment goes …

SMITH: Or are we just protecting union members?

ALBANESE: Not at all. What we’re doing, we have made sure for example that every pensioner or allowance with individual shareholdings will be able to benefit still. So whether it’s an Age Pension or Disability Support Pension or carer payment or parenting payment – Newstart – they will still be allowed. Any self-managed super funds as long as there is one person with, at least one, with a government pension or allowance, they’ll be exempt from the changes as well.

SMITH: But in some cases they would be used in the same way as investors use non industry super funds. That was the point that Barry was making. Chris, go ahead, Anthony Albanese is listening.

CALLER: Yeah my dad worked hard all his life, became a self-funded retiree and then worked out what he had to do to become a pensioner so that you guys couldn’t access his franking credits. And he did it – sorry to be a bit rude – he said: ‘When comrade Bowen gets in at least he can’t touch my money’.

SMITH: So in some ways it is retrospective. He had planned based on the current laws how he was going to live through his retirement and now the goalposts have changed.

ALBANESE: Well it’s not retrospective, Chris, we’ve made it very clear. Unlike …

SMITH: It’s indirectly retrospective.

ALBANESE: Can you recall Tony Abbott when he was Opposition Leader or any other opposition leader in history putting out policies including tax changes well in advance of an election? Saying what date …

SMITH: Oh it’s gutsy, it’s gutsy stuff. But you’ve copped a criticism, heaps of criticism over it.

ALBANESE: Well it’s a tough decision. But tough decisions have got to be made if we’re going to live within our means. If we’re going to be able to fund health and education and infrastructure and the last time we were in government, what we did was have the largest ever pension increase in Australia’s history. And have a look at the current mob; in their 2014 Budget one of the things they did of course they tried to cut pension indexation, that would have meant an $80 a week cut over 10 years. $23 billion that was worth, that they tried to put in. In the 2014 budget they cut $1 billion from pensioner concessions. In the 2014 Budget they also axed the $900 Senior’s Supplement to self-funded retirees.

SMITH: And it’s good to see the Labor Party realising the importance of a streamlined economy, Anthony Albanese.

ALBANESE: Well we have said across a range of measures not just what we would invest in health and education and infrastructure. We’ve said where the money would come from. And don’t forget that in 2015 the Libs did a deal with the Greens which cut the pension to 370,000 pensioners by changing the Pension Assets Test. No advance notice of that. That was the Libs in their 2015 Budget; the Greens went along with it. And then in 2016 they tried to cut the pension to another 190,000 pensioners by trying to limit their overseas travel. In areas like mine, where a lot of hard-working people of Greek, or Italian origin, or Portuguese, travel back over the summer and spend some time there. They tried to make changes that would have impacted 190,000 of them.

SMITH: But once again it’s a policy bringing those back to the pack. In other words, those that have been successful, moderately successful. They’ve been brought back to the pack against – so much for aspiration – so much for being able to achieve something. Terry is an accountant. He’s got a question for you. Go ahead, Terry.

CALLER: Anthony I’m a little taken back by your dodge of the question, of the earlier question, as to why the union funds were allowed to still get the credit. Because you clearly don’t understand your own policy. As long as you, even a self-managed fund even if they had somebody who was able to use the credits, they would still get it. It’s only somebody who’s in retirement that doesn’t get the credits. So if any fund …

ALBANESE: If you’re working, you’re paying tax.

CALLER: No. As long as there’s somebody in the fund – so if it’s a union fund and there are members who are paying tax in their super fund then you get the credits. It’s a complete snow job on people who are in retirement. It doesn’t matter – anybody can use the credits and this nonsense about, only any other country that we’re the only country in the world …

ALBANESE: Which other one does it, mate? You’re the accountant.

CALLER: Let me speak. If you take somebody like America, you take somebody like Newscorp, they don’t pay dividends. The reason they don’t pay dividends is because there’s no point because there’s double taxation. The companies keep the funds in their pool and you get your return from an increase.

SMITH: You can’t compare apples with oranges, is his point.

ALBANESE: Sir, with respect, that is a complete nonsense to suggest that international companies never pay dividends. I’m sorry, but that is just wrong.

CALLER: Do the taxation on it. If you don’t have imputation credits you pay double tax.

ALBANESE: I understand that. Which is why Labour introduced, in 1987, that system. But to argue that international companies don’t give dividends is just wrong. You’re just wrong.

CALLER: Capital growth is all I will say.

SMITH: Terry, repeat what you were about to say.

ALBANESE: You can’t point to another country in the world where you get refunds on your tax that you haven’t paid.

CALLER: So you’re happy with double taxation is what you’re saying? No, forget that …

ALBANESE: It’s a reasonable question. You said it wasn’t right, I am saying …

(Inaudible)

CALLER: Unions can claim it.

ALBANESE: I am saying to you, which country in the world has this system?

SMITH: Can I just go back to this union fun stuff. Forget about the fact that the union is regarded on the same category as a charity. Those who use their union superannuation investment in franking credits can use it the same way as someone who’s not in a super fund. That’s your point Terry, isn’t it?

CALLER: That’s the thing. It doesn’t matter whether it’s union or not, as long as some funds can use it, it doesn’t matter whether it’s union or not. Some funds are allowed to use it, other funds aren’t.

SMITH: All right, Terry, I want to move on. Are you able to spend another 10 minutes with me, Anthony Albanese?

ALBANESE: I can indeed. I’ll be late for my next thing, but it will be okay. Hopefully my office are listening.

[ENDS]

WEDNESDAY, 27 FEBRUARY, 2019

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(02) 9564 3588 Electorate Office

Email: [email protected]

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