A Labor win would hit shares and super

September 25, 2018

A sluggish Australian share market - and Australians' retirement earnings - have struggled to lift as investors factor the likelihood of a Labor government. In particular, as new research emerges today, Bill Shorten's superannuation tax grab is contributing to the retirement earnings doldrums - unless more Conservative Party senators are elected to stop Labor in the senate.

The Australian Financial Review reports, Labor leader Bill Shorten's (pictured) plan to scrap cash refunds for excess franking credits is facing fresh criticism, with new economic modelling finding it was the equivalent of slashing the balance of the average superannuation fund by up to 9 per cent.

Australian National University (ANU) economists also found the existing dividend imputation regime boosted retirees' income by 5 to 6 per cent, while also helping underpin demand for Australian shares.

The ANU research suggests holdings of Australian stocks in a model super fund would fall from 46 per cent to 26 per cent under Labor's proposed dividend imputation reform.

Labor has promised, if elected, to stop individuals and super funds claiming refunds for excess imputation credits not used to offset their tax liabilities.

According to the ANU modelling, the loss of the refunds was like reducing superannuation balances by 8 to 9 per cent. For a person with $500,000 in their super balance and access to imputation credits of 1.37 per cent a year, this can add up to a reduction of about $44,000. For someone with $1 million in their super, it can be as much as $95,000.

The Conservative Party's Victorian Senate candidate Kevin Bailey says he's very worried about the Labor proposal.

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