Labor punishing working people .... again
12 February 2019
By Nyunggai Warren Mundine AO
My father came from a small Aboriginal settlement in remote NSW with no electricity or running water where families lived in small shacks made from materials they collected around them. Women and girls slept in the shacks and my father slept on the ground outside with the other men and boys.
My parents’ first home together was a tent by a river while dad worked on a road project. They had their first two children living there. My parents were determined to buy their own home and overcame huge obstacles to do so, including being paid less and not being able to get a bank loan because they were Aboriginal.
But with determination and many sacrifices they bought a small house and paid off the loan.
When they moved to Sydney in the 1960s they moved to a better home at Auburn and paid that off too. My father lived there until he died aged 90.
My parents were examples of the aspirational working class. Despite being the poorest of the poor with little education, they worked hard all their lives to become Sydney homeowners. They aspired to do better than their parents and to see their children do better again.
Their aspirations were answered. Many of their grandchildren have been to university, own their own homes and businesses, and are building assets for their future, including through negative gearing. This isn’t unusual. Many other working class families have done the same.
When Labor was in government between 2007 and 2013, I was shocked and disappointed to see it attack the very opportunities and aspirations its traditional base had embraced, and alienate the very people it used to claim to represent.
That’s why I tore up my Labor membership.
Labor’s proposal to get rid of franking credit refunds if it wins the next election is a case in point. Labor says the government shouldn’t refund dividend tax to “non-taxpayers”. But the government doesn’t do that.
When shareholders receive dividends, tax has already been deducted and paid by the company. If a shareholder’s tax rate is over the company tax rate they get a credit for the tax already paid and only pay the difference. If their tax rate is lower, they’ve effectively paid too much tax and so the difference is refunded.
If you have a franking credit system — and Australia does — these refunds are completely logical.
But when I look at Labor’s policy I don’t just see a debate about how much retirees should be taxed.
I also see a political party turning its back on its heartland.
The House of Representatives Economics Committee has been holding hearings into franking credit refunds across the country. The retirees speaking up at these meetings aren’t silvertails. They include former tradies, small business owners, nurses, teachers, even a union official.
They speak of retirement incomes being reduced by 20 to 30 per cent.
One, living with his wife on $30,000 per annum, told the hearings he’d lose a quarter of his income. He used to work as a quarantine officer.
Working class people who aspired to do better now find themselves on the wrong side of a class war being waged by the very people who once wanted them to get ahead.
It’s a class war driven by the socialist-Left which used to claim to care about working people but actually resents their aspirations and hates the industries so many of them work in.
When the Left says “fair” it really means is “the same”: no one should get more than anyone else and government should take it from them if they do.
Most retirees are ordinary working people living on modest incomes from savings built through hard work and sacrifice. Those savings have to last a long time. For a man of my father’s generation, living to 90 years old was unusual. Today it’s not and it’s becoming more common every year.
According to Treasury’s most recent Intergenerational Report a 60-year-old man in 2015 could expect to live to age 86, a woman to age 89. Those are averages and many will live well past that. Life expectancy is going up and will continue to. Children today can expect to live well into their 90s, a sizeable proportion well past 100.
A two to three-decade self-funded retirement requires a large nest egg. But when you have a large nest egg you’re at risk of being declared “rich” and of people saying that’s not “fair”.
So those who work hard and make sacrifices to achieve an independent retirement end up an easy target for those who want to take it away.
My father’s nest egg was very modest. But the security and independence he had from owning a home outright in his retirement meant everything to him.
Today self-funded retirees have had the benefit of superannuation and can live with even more independence, even without the aged pension.
We should be encouraging this kind of aspiration, not punishing it.
This article was first published in the Daily Telegraph.