A 2019 Australian Federal Election Policy Guide






(Baby Boomers)






                     50 + Voters          50+ %      SEATS



NSW             2,152,330             48.1              47


VIC               1,925,905             46.7              38


QLD             1,513,913              47.1              30


WA                  756,787             46.5               16


SA                   615,357             51.2               10


TAS                205,077              53.6                5


ACT                118,736             40.6                3


NT                    50,937              36.6                2


National      7,698,312              49.1            151



(Baby Boomers)


In March 2018, shadow treasurer Chris Bowen detailed plans to cut cash refunds from dividend imputations for retirees. His website declares the policy in full




- A Shorten Labor Government will make the tax system fairer by closing down a concession that gives cash refunds for excess dividend imputation credits.


Australia’s dividend imputation system was introduced by Paul Keating to eliminate double taxation on dividends from company profits. Under this system, shareholders can use imputation credits to reduce their overall tax liability.


Under Howard and Costello, a concession was created allowing some individuals and superannuation funds to receive a cash refund from the ATO if their imputation credits exceeded the tax they owed.


Because of this change, Australia is the only OECD country with a fully refundable dividend imputation credit system – a concession which has grown at a rapid rate and now costs the budget more than $5 billion dollars a year.


Professor John Hewson remarked on this tax concession recently, stating that: “I think the bottom line is that in economic terms, it [cash refunds] doesn’t make any sense at all” (Tax Forum, McKell Institute, 2 March 2018).


Self-managed super funds are a major beneficiary of this practice, with 50 per cent of the benefit to SMSFs accruing to the top 10 per cent of SMSF balances – with some funds receiving cash refunds of more than $2.5 million a year.


Failing to reform this unfair revenue leakage puts a greater tax burden on low and middle income working Australians. A Shorten Labor Government will close down the concession created by Howard and Costello, and return to the arrangement first introduced by Hawke and Keating – so that imputation credits can be used to reduce tax, but not for cash refunds.


Closing down this concession will save the budget $11.4 billion over the forward estimates from 2018-19, and improve the budget bottom line by $59 billion over the medium term.


This change only affects a small number of shareholders who have no tax liability and use imputation credits to receive a cash refund. While those people will no longer receive a cash refund, they will not be paying additional tax.


More than 92 per cent of taxpayers do not receive a cash refund for excess imputation credits, and won’t be affected at all by this change. Shareholders who may be affected will have the ability to adjust their investment decisions to limit any impact from this policy.


Charities and not-for-profit institutions, such as universities, are exempt from these changes.


The policy will apply from 1 July 2019, which means it will only affect future earnings and franked dividends that start flowing in following financial year.


Labor’s policy has been fully costed by the independent Parliamentary Budget Office. Labor will consult with the Australian Tax Office, Treasury and tax experts on the implementation of this policy.


Source : Media Release, March 2018. Shadow Treasurer, Chris Bowen. https://www.chrisbowen.net/media-releases/a-fairer-tax-system-dividend-imputation-reform/

Taking the political gamesmanship and vested interest of those affected in the Australian superannuation industry out of this issue to find some kind of consensus on four critical questions from people with no apparent ‘skin in the game’ is no easy task.    


1 How many will be affected by this policy;


2 Who exactly will be affected by this policy;     


3 When will these people be affected by this policy;  and    


4 How much will it affect their income flows per annum  .   


What is a dividend imputation?  


When Paul Keating designed the dividend imputation system in 1987, the thinking was shareholders would offset their tax liabilities, not that they would have no tax liabilities to offset.


This system was introduced to ensure the same money is not taxed twice – once at company level and then again in the hands of the shareholder.  


The Howard-Costello government went a step further and changed the system so the credits didn’t just extinguish your tax bill to zero, but any excess credits became a debt that the government needed to refund the taxpayer in cash.  


With encouragement from financial planners and accountants, many people in this demographic then structured their investments around the tax break.


Baby Boomers set up DIY funds so they could ensure the fund invested to the hilt in Australian equities and raked in the refundable franking credits.  


Source: Caitlin Fitzsimmons Real 'victims' of Labor's dividend tax policy are not average Joannes. SMH 24 November 2018.  


People with substantial assets and big super balances were also in a position to report low taxable income and structure their affairs to ensure they have low taxable income.  


Source: Cited in Factchecking Coalition claims: is Labor going after Mum and Dad's savings? Katharine Murphy The Guardian 14 March 2018.  


Then Treasurer, Scott Morrison told Sky News 97% of people claiming cash refunds had an annual income of $87,000 or less, a misleading statement given the difference between “an income” and taxable income.  


The individuals claiming this ‘cash benefit’ do not pay tax on their self-funded Superannuation after they turn 60, nor do they pay any tax on personal savings accounts. Most of these people do not earn any ‘taxable’ income .  


Morrison also claimed the proposal Labor would be unfair to lower income earners because the policy would allow high income earners with shareholdings to access the full value of franking credits, but part pensioners and self-funded retirees would not.  


“It cannot be fair that someone who’s on a low income cannot be given the full value of the franking dividend that someone on a higher income can,”


Scott Morrison declared Labor "is stealing tax refunds from pensioners and low-income retirees."   


Former Liberal leader and current university economics professor, John Hewson observed that


“If the income we are looking at is $87,000, how much do people have in assets to earn $87,000? A million to a million-and-a-half in assets?”  


Then Prime Minister Malcolm Turnbull claimed Bill Shorten


“is going after the savings of your parents and their friends and their contemporaries


This claim was received by some as a blatant attempt to mislead the public, implying that Labor was planning a raid on banking institutions to “steal” from the savings accounts of age pension recipients and self-funded retirees.  


Source: cited in Factchecking Coalition claims: is Labor going after Mum and Dad's savings? Katharine Murphy The Guardian 14 March 2018.  


Vested interests were quick to react to this policy announcement.  


Unaffected, industry super funds had little to say about the policy announcement. However, the Chief executive officer of the Self-Managed Superannuation Funds Association, John Maroney, put out a press release with the alarming claim that the policy would impact on  


“..more than one million Australians saving for their retirement and other purposes. Our calculations show it will cut about $5,000 of income from the median SMSF retiree earning about $50,000 a year in pension income. To be saying these people won’t be paying any more tax is just semantics. This hit on retirement incomes clearly is not just affecting the very wealthy and can substantially damage the lifestyles of retirees who have prudently saved and are carefully drawing down on their retirement savings”.


SuperConcepts, which provides services to Self- Managed Super Funds argued Labor’s policy would “hit the lower end of retirees”.  


Their definition of a 'lower-end retiree' is someone with $900,000 in an self-managed super fund at age 65.  


Source: Caitlin Fitzsimmons Real 'victims' of Labor's dividend tax policy are not average Joannes.   Source: SMH 24 November 2018.  


With no apparent vested interest, Economist Saul Eslake thought the Government’s political posturing on this issue was


“misleading in the same way that most of what Scott Morrison said about Labor policy on negative gearing was misleading”.  


Eslake says  


-John Howard converted “something that was only of value if people had a tax liability to something that was worth cash in hand.”


That change has conferred a “huge benefit” on people with significant assets and a substantial non-taxable income.  


-The policy which was forecast to cost tax payers $500m now runs into the billions annually largely benefits people who are fully capable of total financial independence.


The practical effect is people are getting a tax refund despite the fact they pay no income tax, at other tax payers expense.  


- There will be a small subset of self-funded retirees with low total incomes (as opposed to taxable income) negatively affected.  


Labor conceded the decision to end dividend imputation cash payments would impact on 14,000 full Government pension recipients and 200,000 part pension recipients.


People in this category of low actual income who end up losing a low cash refund income stream may become eligible for a larger pension because it would change their Government pension income test outcome.  


Reporting on Saul Eslakes comments, political journalist Katharine Murphy concluded that the Coalition was


“deliberately over-egging the impact of the change, hoping to amplify the inevitable outrage from self-managed super funds and seniors groups”.  


What about Grandfathering the policy ?  


Economics Professor John Hewson noted that it is not fair that the tax system is furthering the interests of people with the resources to look after themselves, yet the fairness question is more nuanced than the way Labor is framing the debate.  


Hewson argued Labor would have been smarter to frame the reform with transitional arrangements or a grandfathering mechanism because


“it’s also not fair that a generation have structured their financial position in retirement in good faith, only to have the rules change”.  


Labor would later argue that there is no need to grandfather because it’s giving people plenty of notice to adjust their arrangements, with a July 2019 start date.  


Brendan Coates and Danielle Woods from the The Grattan Institute wrote a paper on ‘The real story of Labor’s dividend imputation Reforms’, published by Inside Story on March 20th 2018.  


- Labor claims most of those hit by the change are wealthy retirees who are not paying their fair of tax.  


- Scott Morrison claimed  that


- Abolishing refunds of unused imputation credits will mainly hurt low-income earners.


- 54 per cent of people affected by Labor’s policy


— some 610,000 individuals


— have taxable incomes of less than $18,200, and


- 86 per cent of the value of all franking credits refunded are received by those with taxable incomes of less than $87,000 a year.  


The Grattan Institute paper found that the Morrison claims were deeply misleading because  


- Taxable income ignores the largest source of income for many wealthier retirees: tax-free superannuation.  


- Most of those affected by Labor’s policy who declare taxable incomes of less than $18,200 a year are far from being low-income earners. They are either part-pensioners, or not receiving any pension at all. They are drawing much of their income from tax-free superannuation.  


- When superannuation withdrawals are stripped out from income in ABS survey data, as is done to calculate taxable income, almost half of the wealthiest 10 per cent of over-sixty-fives report incomes of less than $18,200. On average, though, they have wealth of nearly $2 million before considering the value of their home or any other property assets they might own.  


- There will be examples of seniors with low incomes being hit hard by the change. But media reports highlighting their plight rarely tell the full story.


- About 33 per cent will be paid by (mainly wealthy) individuals who own shares directly, 60 per cent will be paid by self-managed superannuation funds (typically held by wealthier retirees), and the remaining 7 per cent will be paid by super funds regulated by the Australian Prudential Regulation Authority, and  


-Among self-managed superannuation funds (primarily held by wealthier retirees), half of the refunds are currently going to people with balances over $2.4 million.    


Source: Factchecking Coalition claims: is Labor going after Mum and Dad's savings? Katharine Murphy The Guardian 14 March 2018.




An 'alternative' approach: Australian National University Economists


In contrast to the Grattan Institute paper, journalist Paul Karp reported on a September 2018 work of three economists at the Australian National University. The paper found that -


Dividend imputation or franking credits help retirees boost consumption by up to 6%;


- Self-funded retirees would have to boost their savings by up to 9% to make up for Labor’s proposal to end cash rebates for excess imputation credits, according to their modelling; [Shadow Treasurer Chris Bowen would later dismiss this claim on the grounds it postured ‘questionable modelling’].


- Dividend imputation “delivers considerable value to retirees”. On average, retirees would need to boost their superannuation balance at the age of 65 by 8% to 9% to make up for not being able to claim franking credits in retirement;


- Although the cost of dividend imputation “may seem relatively expensive” it offers “social benefits”, such as boosting consumption in retirement or reducing the amount workers need to save in superannuation before retirement;


- The paper acknowledges that “wealthier individuals are benefiting from the tax credits to a much greater extent” which raises “some question around equity”.


Source: Paul Karp, The Guardian. Economists say dividend imputation seems expensive but offers ‘social benefits’. 25th September, 2018


The final substantial contribution to this debate from those without any ‘skin in the game’, at least for for 2018, came from Caitlin Fitzsimmons who edits the Money section for the Sydney Morning Herald and The Age.


Readers may note the tendency of the SMH and The Age to promote a left wing approach to the political world we live in, in the same way that The Australian tends to promote a conservative, right wing view of the body politic. However, the substance of this report comes from analysis recently released by the Government Parliamentary Budget Office.


Fitzsimmons reported that Self-Managed Super Funds either pay tax at 15 cents in the dollar when in “accumulation mode or zero when in pension mode”.


These individuals are going to lose out if they are paying no tax and, therefore, can no longer use franking credits to claim ‘cash refunds’.


Parliamentary Budget Office provided information clearly demonstrates that SMSF members “are not on struggle street”. For example, in 2014-2015 more than 80 per cent of excess franking credits claimed by SMSFs went to funds with balances above $1 million and more than half by funds with balances above $2.44 million.


Source: Caitlin Fitzsimmons Real 'victims' of Labor's dividend tax policy are not average Joannes. SMH 24 November 2018.


Election implications


If this policy is implemented, the Australian tax payer would no longer be paying a very large pile of cash, some with zero taxable income-- claiming a ‘tax refund’ ambiguously labelled a “cash refund” through the Australian Tax Office.


This pile of cash is estimated to amount to more than $11bn over two years and $59bn over a decade and it comes out of the pockets of real tax payers.


On the other hand, the Labor party could have and probably should have ‘grandfathered’ the policy so the current slew of ‘baby boomer’ retirees are not penalised so suddenly for the sins of the previous Coalition Government, albeit retirees who are predominantly financially independent.


Patient tax reform, however, is an unfamiliar characteristic of modern government in Australia. As political editor and journalist Katharine Murphy put it - Labor’s shift is certainly about progressivity and policy purity. But at the end of the day, it is also about the calculated risks people take in politics – and about anticipating the specific, hip-pocket politics of the next federal election contest”.







Shadow Treasurer Chris Bowen is expecting a substantial political backlash to this policy from Australians over fifty years of age, the so called ‘baby boomer’ generation. These voters represent 49.1 percent of the people registered with the Australian Electoral Commission on 30 September 2018.


These 7,698,312 people will have a strong influence in the upcoming election.


Source: Australian Electoral Commission. Federal Voting Entitlement-- Elector Count by Division, Age Groups and Gender for all States/Territories as at 30 September 2018.https://www.aec.gov.au/Enrolling_to_vote/Enrolment_stats/elector_count/2018/elector-count-sep-2018.pdf


Taking the risk of putting almost half of the Australian electorate off-side despite assuring us that "only 4 percent of Australians will be affected by this policy" is a couragous thing to do in an election year and a headache for Labor election strategists. Labor will need to find some media profile and political air cut through a Coalition scare campaign on this issue.


That is, to put some 'fact check' water on some of the more outragous fire breathing Coalition discourses on this issue.


For example, the Murdoch Press front page on Saturday January 12th was screaming in large black text on page 1




Beneath the title, Rosie Lewis and Adam Creighton reported that


'Josh Freydenberg, who has already launched a new years pre election assault on Labor's negative gearing, franking credit ban and capital gains tax policies, seized on other figures to declare the Opposition's suite of super takes would not only discoureage people to save but punish those who do in their plan for $19 billion of higher, misguided taxes..[which would] ..sap the balances of up to 1.17 million Australians at retirement to the tune, potentially, of hundreds of thousands of dollars'.


Source: Rosie Lewis and Adam Creighton: Shorten Super Net to Trap a Million. The Weekend Australian, page 1. 12 Jan 2019.


The main engineer of this particular cash refund imputation policy, shadow Treasurer Chris Bowen, conceded that this policy would be


“difficult, but we’re going to the election up front. People will continue to receive their dividends and dividend imputation. They’ll continue to receive those franking credits and they won’t be paying tax,”.


The proposed policy shift, which raises more than $11bn over the forward estimates, and $59bn over 10 years, creates fiscal room for Labor to offer voters tax cuts at the next federal election, in essence matching the Morrison government.











[UNDER 5.1%2PP]




SEAT STATE                    50+                               2PP

                                             %                                 %


Gilmore NSW                   61.2                              50.6


Cowper NSW                   58.6                              54.5


Page NSW                        57.6                             52.1


Grey SA                             57.1                             51.7


Barker SA                         56.9                             54.0


Boothby SA                      51.9                             52.3


Corangamite VIC            51.5                             50.6


Dawson QLD                   47.8                             52.8 


Casey VIC                        47.4                             54.2


Flynn QLD                        47.4                             50.7


Petrie QLD                      47.3                              51.7


Capricornia QLD            47.2                            50.03


Leichhardt QLD             45.9                              53.6


Robertson NSW             45.4                             51.0


Bonner QLD                    45.3                             53.4


Reid NSW                        44.5                            54.5


Forde QLD                       42.8                            51.4


Swan WA                         43.3                           53.6


Pearce WA                      40.6                           53.5


La Trobe VIC                   39.6                           53.4


Dickson QLD                   39.3                           51.9


Hasluck WA                    39.3                           52.0


Banks NSW                     32.1                          51.1


National                           49.1  %  AVERAGE 



 [UNDER 5.1%2PP]




SEAT STATE              VOTERS AGED 50+         2PP 

                                                  %                            %


Richmond NSW                      57.9                     4.0


Lyons TAS                               56.1                     4.0


Braddon TAS                          55.3                     2.4


Eden-Monaro NSW               53.9                     2.9


Bendigo VIC                           51.4                     3.9


Longman QLD                        50.1                     4.5


Macquarie NSW                    49.7                     2.2


Dobell NSW                            49.6                     4.8


Hotham VIC                           49.3                     4.2


Jagajaga VIC                         47.2                     5.0


Isaacs VIC                              46.9                     2.3


Dunkley VIC                            46.4                    1.3


Cowan WA                              43.1                    0.7


Moreton QLD                         42.1                    4.0


Herbert QLD                           41.1                   0.02


Cooper VIC                             40.1                   4.3


Lindsay NSW                          39.7                   1.1


Macnamara VIC                     39.6                   1.3


Wills VIC                                  37.2                   4.9


Griffith QLD                             35.1                   1.6



[UNDER 5.1%2PP]




Electorate              Voters        2PP


                                    %               %



 Indi VIC                   55.9         54.1


Chisolm VIC            50.1         53.4


Wentworth NSW    42.1         51.2


Do our Baby-Boomers have the hatchet out for the Labor Party ?  


In December 2018, Ann Remeikis for The Guardian reported that Government’s attack on Labor’s ‘retiree tax’ appeared to had failed because the  


"yuletide season didn’t bring any good news for the Morrison government, with Newspoll showing the prime minister has failed to win over the grey vote, despite a concentrated attack against Labor’s “retiree tax”.  


Scott Morrison remains preferred prime minister over Bill Shorten, but the crucial baby-boomer vote has been floundering since October, with 45% of those aged 50 and over dissatisfied with Morrison’s performance.  


The government had worked to discredit Labor’s plan to scrap imputation or franking credits for those with low tax liabilities who receive a cash refund from the system.   Labelling it a “retiree tax”, Morrison and the treasurer, Josh Frydenberg spent the best part of the year attacking the plan as “punishing those who save for retirement”, aiming their message at the key baby-boomer demographic.  


Remeikis' analysis of the last quarter Newspoll by The Australian newspaper found support for the Coalition in the 50+ bracket has been falling since the 2016 election, when almost half supported the Turnbull government.  


From a high of 49.9% at the July 2016 election, support in that age group dropped to 44% in July-August in 2018, before falling again to 41% following the leadership spill in August and dropping to 40% in the October-December Newspoll.  


The same analysis shows Labor has made significant gains in that age group after receiving 30.6% of that bracket’s vote in the 2016 election, peaking at 37% in August-October, a percentage it has held in the December Newspoll but minor parties have been the real winners.  


One Nation, which received 1.8% of the baby-boomer primary vote in 2016, is now polling at 9% in the same bracket. The Coalition was losing part of its baby-boomer vote to One Nation.  


One Nation’s rise as the disillusioned baby-boomer party of choice put the Coalition’s plans of holding its 21 Queensland seats in jeopardy. One Nation votes helped state Labor win the 2017 election and contributed to the drubbing the Coalition received in the Longman byelection of 2018.  


One Nation achieved almost 16% of the primary vote in Longman, despite Pauline Hanson being out of the country on a cruise around Ireland for much of the byelection campaign.One Nation’s rise in the seat came largely at the expense of the Coalition, which saw its primary vote in the seat drop by 9.5%.  


The Longman result was the final straw that triggered the Liberal Party leadership spill. Longman shares similarities with Petrie, held by Luke Howarth and parts of Dickson, held by the home affairs minister, Peter Dutton, as well a seats in north Queensland, Forde and Flynn.  


Source: Ann Remeikis The Guardian. Newspoll fails to bring Christmas cheer to Coalition as grey voters desert Morrison 27 December 2018.

A wealth sharing perspective 


The accumulated wealth of our country can be more equally distributed.  We can embrace more than the equal opportunity to grab more of the wealth pie than someone else because we may  be more 'aspirational'.    


The Australian Labor Party has historically attempted to use the levers of the economy at their disposal to share the wealth pie more equally and fairly, through wage increases for example.   


The Conservatives prefer to let the market decide, let us compete with each other for wealth and reward the hard work of the aspirational with lower taxes and still more opportunity and to get the government out of the way as much as possible.      


For Labor this policy is about redistributing more of the national wealth pie; If the government no longer has to pay cash refunds here the 'saved' billions can be distributed to those who can not be 'aspirational', people with severe disabilities who can not participate in the labour market or start a small business for example.  


Alternatively the 'saved' billions can be put into things that improve the well being of the whole community, better infrastructure, schools, education or roads for example.   

The Australian Labor Party is not perfect, it will stuff up spectacularly at times, but at least in principle if not in practice, the intent to share the wealth pie is a more laudable goal than self obsessed 'aspiration' and a government happy to stand aside and watch us fight over it.  

I’m over this constant debate about franking credits cash refunds and Wilson’s scare campaign.


Fact don’t get in the way of good media fodder for Schomo but let me say my last word on this subject. Parliamentary Budget Office provided information clearly demonstrates that SMSF members “are not on struggle street”.


For example, in 2014-2015 more than 80 per cent of excess franking credits claimed by SMSFs went to funds with balances above $1 million and more than half by funds with balances above $2.44 million


Source: Caitlin Fitzsimmons Real ‘victims’ of Labor’s dividend tax policy are not average Joannes. SMH 24 November 2018.


Here are the Marginal Coalition seats where the policy might bite for Labor trying to gain seats 50+ voters 2PP


Gilmore NSW 61.2 50.6


Cowper NSW 58.6 54.5


Page NSW 57.6 52.1


Grey SA 57.1 51.7


Barker SA 56.9 54.0


Boothby SA 51.9 52.3


Corangamite VIC 51.5 50.6


Here are the Marginal ALP seats where the policy might bite for Labor trying to retain seats 50+ Voters 2PP


Richmond NSW 57.9 4.0


Lyons TAS 56.1 4.0


Braddon TAS 55.3 2.4


Eden-Monaro NSW 53.9 2.9


Bendigo VIC 51.4 3.9


Longman QLD 50.1 4.5


Macquarie NSW 49.7 2.2


Dobell NSW 49.6 4.8


Source: Australian Electoral Commission. Federal Voting Entitlement– Elector Count by Division, Age Groups and Gender for all States/Territories as at 30 September 2018.https://www.aec.gov.au/Enrolling_to_vote/Enrolment_stats/elector_count/2018/elector-count-sep-2018.pdf


The latest newspoll said 50% of those 50-65 said NO to the policy and 59% of those 65+ also said NO, the rest were either for the policy or undecided.


My view is only Eden Monara and Macqaurie might get a kick in the butt in Labor held seats and Gilmore, Page and Grey will be a bit tougher to win at this election.