Labour’s proposed changes to the imputation system are based on false premises, are discriminatory and will end up hurting the most vulnerable.

Labor starts from the premise that millions of dollars in franking credits are being unfairly claimed by members of large self-managed super funds. But the problem here is the phrase “are being”. It should be “once were”.

Until last July it was true that self-managed superannuation funds could hold all their money in the tax-free pension mode and so get a full refund of all franking credits. But the Turnbull government axed this, and now the most any fund can hold in pension mode is $1.6 million per member.

A fund with a balance of $10.2 million last June has had the goal posts moved. Now they will hold $3.2 million in pension mode, with the remaining $7 million in accumulation mode paying 15% tax on earnings.

When the self-managed funds do their tax return for the year ending June 2018 it will become clear that the amount of imputation credits refunded will have been massively reduced.

But there’s more. If the government introduces a tax like a GST, they can depend on a growing source of revenue over time. Once again, in the superannuation area, the Turnbull government have beaten Labor to the punch. Since last July the most that can be left inside superannuation to a beneficiary upon death of a member is $1.6 million.

Given that the majority of members of large funds are at least 65 years of age now, it is obvious that within 25 years most of these will be dead and funds with big balances will be no more due to the removal of the money when a member dies.

It will not be a growing income stream from surplus imputation credits being forfeited it will  be a rapidly shrinking income stream.

Ironically it will be the vulnerable who will be most hit. The big retail funds will be unaffected as they invest in a wide range of assets and can allocate franked dividends where necessary to optimise returns. This strategy is also available to self-managed super funds.

But think of a pensioner couple with $200,000 in bank shares paying dividends of $9000 a year plus franking credits of $4000 a year. Under Labor’s proposals they would no longer be able to claim a refund of those franking credits, and so would be $4000 a year worse off. That sum might be the difference between having private health insurance and going without.

But worst of all, this non-stop tinkering with the superannuation rules, and the continual moving of the goalposts destroys trust in the system, and makes the public more cynical.  The proposed measure is an ill-thought-out disaster.