Labor plan could see retirees hit

Thousands of Tasmanian retirees will suffer under federal Labor’s new tax policy, it has been predicted.

Association of Independent Retirees Northern Tasmanian president Shane Dennington said he had written to his national organisation and Labor to get more details about the policy.

Labor wants to change a superannuation measure dating back to the Howard Liberal Government whereby some shareholders not paying any tax can convert franking credits from shares into a cash refund from the Australian Tax Office.

Mr Dennington said he believed any Tasmanian who had funds with a self managed superannuation fund would suffer.

“For Labor to say that only 10 per cent of retirees will be affected is nonsense,” he said.

“Superannuation funds will get less in returns and a hell of a lot more than 10 per cent of retirees will be worse off and it will not just be independent retirees.

“Industry funds will get less too.

“It will affect thousands of people in the longer term with people pulling out of shares and putting their money in a bank account at 2.5 per cent interest.

“They will go backwards.”

However, economist Saul Eslake said he was “broadly supportive” of Labor’s policy.

“It would see the reversal of one of a number of unwise decisions made by the Howard Government when it had money coming out of its ears,” he said.

“You have to ask whether they should be getting this in the first place and do they really deserve it?”

Labor’s Treasury spokesman Chris Bowen said the policy was no longer affordable.

"We can't afford this any longer, the budget's under pressure, and difficult decisions are necessary to ensure the budget returns to surplus."

Mr Bowen said the cost of the Howard-era policy had exploded and now exceeded the Commonwealth's annual spending on public schools.

Mr Dennington said the northern Tasmanian branch of the Association of Independent Retirees was the largest branch in Australia and would do what it could to overturn the changes.