The chief executive of Australia’s oldest listed investment company says Labor’s plan to change dividend imputation rules goes to the heart of the fairness of the tax system, and will reverberate for generations.
Speaking on the sidelines of the annual general meeting of the Australian Foundation Investment Company, Mark Freeman said investors in the 90-year-old company would be among the hardest hit from the proposed changes.
“Have a look at the people here,” Mr Freeman said of the audience of mainly elderly retirees.
“Do these look like the people Labor should be targeting? I’d love to get Bill Shorten here.”
Labor has repeatedly insisted that the changes, which would stop individuals and super funds claiming cash refunds for excess imputations credits not used to offset tax liabilities, are aimed at the wealthy. Pensioners and those on part pensions are exempt from the plan.
But Mr Freeman said those on low incomes would be hit hardest and some AFIC shareholders had told him they could lose as much as 30 per cent of their income under the changes.
During the meeting he urged his investors to make submissions to the federal House of Representatives Economic Committee inquiry in to Labor’s plan and share their personal experiences.
“This is a significant issue and if shareholders are going to be impacted by this, you need to do something about it,” Mr Freeman told investors. “You need to have your say on this matter.”
“Unfortunately this proposal has been pitched as attacking the wealthy…but this is an all-encompassing strategy, where unfortunately the hardest hit will be those on low incomes.”
AFIC’s push comes amid a broader attempt to mobilise retiree investors in listed investment companies.
Wilson Asset Management chairman Geoff Wilson has also lashed the changes, and has more than 17,000 signatories to a petition protesting the Labor policy.
“If we can get this to 50,000 to 100,000 signatures, then Labor will crack. I am 100 per cent sure of that,” Mr Wilson said last month.
But shadow treasurer Chris Bowen questioned the credibility of the petition, and insisted Labor would not be dumping the policy, which it says raises $10.7 billion in its first two years, and $55.7 billion over a decade.
Mr Freeman said Labor’s plan ignored the purpose of the franking credit system, which was to restore individuals to their marginal tax rate.
“It goes to the heart of the tax system.”
He also argued the changes would affect future generations, and urged investors to talk to their children and grandchildren about the implications of the Labor policy.
“You need to talk to your children about what’s going happen whey they retire, they’re going to miss out on this,” Mr Freeman said.
Retiring AFIC chairman Terry Campbell warned that the global investment outlook was deeply uncertain, and warned it would be geopolitics, and not economics, that investors would need to monitor.
He said policies that hit the middle class were particularly dangerous.
“Democracy is a wonderful thing but I think we have to face the fact that a Labor government in Australia would not be investor or middle-class friendly.”