Both sides of the franking credit debate were given air time during day one of the Self-Managed Superannuation Fund Association's national conference in Melbourne, but one dominated.
Opposition to Labor's franking credits policy rose on the opening day of the conference yesterday, with several distinguished speakers going hard on the proposed changes to dividend imputation credits.
Appearing on a panel, Rice Warner chief executive Michael Rice said Labor's proposals amounted to "a pretty bad policy".
"It's biased, it's just a tax grab," he said.
"It is just an unfair tax. You can debate the merit of it, the only reason they're grabbing it is because it's grown from $500 million to whatever it is...$5-6 billion."
He said it would eventually force more people onto the Age Pension, and said many would use the money they had built up to give to their children before reverting to the pension.
"It will force more people onto the Age Pension. If you are 60 in an SMSF with $1 million, you can get the pension from 67. Gifting is only counted in the last five years, so from between 60 and 62 give away half your money to your children and build a granny flat or upgrade your home and become a part pensioner," he said.
"And this will be the sensible investment strategy. People will get advice to do that. So where is the benefit?
He labelled it "just dumb policy".
Rice's comments drew adulation from the crowd, but were challenged by CoreData founder and principal Andrew Inwood, who sees merit in Labor's policy.
He stopped short of whole-heartedly supporting it, but Inwood said money spent on franking credits could be better utilised than becoming a source for retirees to fund their choice of lifestyle.
"If you think that the money is best held by the state, then we should transfer the money to the state, which is what the franking credit changes will do. If you think the money is best managed by the individuals, then we should take that money off the state and transfer it to the individuals," he said.
"It can't occur in both places at once. You have to choose where it occurs, and the evidence is that if you transfer the cost to the state then it becomes something else, it's a part nationalisation of the system. I'm not opposed to it; I just think we should be honest about what's occurring."
While he doesn't know whether that's good or bad for the country, he continued: "The evidence is in most cases it's not necessarily a good outcome because the money tends to go somewhere else."
"People will spend it, people will buy things with it, they'll transfer it to their children," he said.
"They'll move it through the system and the burden will remain on the state or the money is frittered away on expensive cars. And that's frankly happening now."
Following the panel session, SMSFA chief executive John Maroney said the peak SMSF advocacy body had been sure to weigh into the debate.
"We believe this policy is poorly designed and would be very unfair and discriminatory if the policy was implemented under the current proposed parameters," Maroney said.
Shortly afterwards, Prime Minister Scott Morrison delivered a video message and also took the opportunity to go after Labor.
This is a vital time for the SMSF sector, Morrison said.
Equating the policy to theft, he said: "We have a fight on our hands to protect SMSFs and your prosperity. Labor's $45 billion retiree tax will hit hard-working Australian retirees who have done the right thing and saves for their retirement."
By Harrison Worley
21 February 2019