Those who use loopholes aren't breaking the law, but the effect is that we don't raise the revenue we need to fund vital services.

That's what's happened with refundable franking credits.

In 2001, as the first mining boom was showering John Howard and Peter Costello with more money than Scrooge McDuck, they decided to put in place a system unique to Australia.

Not only would the tax system allow people to offset company taxes against their personal tax obligation, it would actually write refunds to people who'd paid no tax.

For the first time, the tax office started playing the same role as Centrelink and the Family Assistance Office.

Instead of collecting revenue from taxpayers, it started to pay out revenue.

For a small group of people, the tax office started sending cheques rather than collecting them.

At first, this arrangement didn't cost all that much. In its first year, the budgetary hit was $550 million.

But today, it's costing more than ten times that - almost $6 billion.

It's an arrangement that was never intended - in other words, a loophole.

Only 4 per cent of Australians receive cash refunds of their franking credits.

Half of the money goes to people with more than $2.4 million in their superannuation accounts.

Like every tax loophole, refundable franking credits have their defenders.

For people who have grown accustomed to receiving these cheques, ending them will understandably be a disappointment.

We recognise that many beneficiaries of refundable franking credits have worked hard and saved frugally.

But it's vital that everyone understands the purpose of Labor's reforms.

We are ending cash refunds for franking credits so that we can reduce elective and emergency surgery waiting times.

So that we can create more aged care places.

So that we can properly fund public schools.

So that we can restore money to vocational training and expand university places.

So that we can pay down the Liberals' debt.

Labor's policy is simple: no cash refunds for people who do not pay any tax.

Self-managed superannuation funds will continue to be able to use franking credits to reduce their tax bill, but will simply no longer be able to claim a refund if they haven't paid any income tax.

Industry and retail superannuation funds will be treated in exactly the same way.

Labor's pensioner guarantee ensures people in receipt of an Australian Government pension or allowance will still be entitled to refunds of excess franking credits.

Since the poorest two-thirds of retirees receive at least a part-pension, this means that most pensioners are unaffected.

If you're one of the 13,826 electorate age pensioners in Bass, you are are entirely exempt from the policy.

Anyone who becomes eligible for a pension in future will also be eligible for refunds of excess franking credits on any shares they directly hold.

The original dividend imputation system introduced by Paul Keating in 1987 did not allow for cash refunds for excess franking credits.

But the loophole created by the Howard Government created a significant budget problem.

If the current arrangements are allowed to continue, future governments will be faced with an $8 billion annual hole in the budget over the next decade.

Losing $8 billion a year in revenue is equivalent to more than Commonwealth spending on Australia's public schools this year. It is also more than we spend on our public broadcasters, vocational education and the federal police.

With net government debt now over $14,000 per person, the nation can no longer afford tax concessions like giving out cash refunds for excess imputation credits.

The purpose of superannuation is to relieve pressure on the age pension - not to allow people to accumulate large sums to pass on to their children.

We can't keep every tax loophole open, and pay down debt, and improve services. Something's gotta give.

Under Bill Shorten and Chris Bowen, Labor is focused on creating a fairer Australia - one that works for everyone, not just the top end of town.