Like the franking credits policy. There are those who lament the "loss" of revenue as a result of franking credits refundability now remaining intact under a Coalition government. For example, Anthony Albanese said on the ABC's 7:30 just two days after the election, "the fact is that $6 billion [per year] is a lot of money", not completely ruling out Labor's franking credits policy.

Labor consistently claimed during the election campaign that refunding franking credits is unsustainable because they have increased more than tenfold in amount from $550 million in 2000-01, to now costing $6 billion a year and rising. But is there any substance to that claim?

The $6 billion a year claim was the result of Treasury analysis that revealed $5.9 billion worth of franking credits was refunded in the 2014/15 financial year.

According to Treasury documents, in 2014-15, $47.5 billion worth of franking credits attached to dividends was distributed in Australia. Of that amount, $23.5 billion was eligible for franking credit refunds, either in the form of cash or as offsets to tax liabilities. While the other $24.2 billion was distributed to foreign owners and Australian companies, which are not eligible for refunds.

Of the $23.5 billion in franking credits eligible for refunds, $5.9 billion was returned in cash, and $17.6 billion was used to offset tax liabilities. And of the $5.9 billion returned in cash:

Now the $23.5 billion is just over three times more than $7.6 billion of refundable franking credits distributed in 2000-01. A larger economy and a considerable increase in investment activity in Australia since 2000-01, would have contributed largely to that growth in Australian equities and distributed franking credits. Which in turn, would have certainly led to the growth in cash refunds. But that would not be the sole contributor.

Prior to 2007-08, both the percentage of refundable franking credits received by super funds, and the percentage actually refunded as cash, grew modestly from a negligible amount in 2000-01. Then when the tax exemption of superannuation earnings in pension phase was introduced in 2007-08, growth in self-managed super funds and super fund investments increased sharply. And this saw the average franking credits refunded as a percentage of credits received by SMSFs, increase from 35 per cent pre-2007-08 to 60 per cent post-2007-08. Almost double. Therefore, approximately half of the $2.6 billion cash refunded to SMSFs in 2014-15 would be attributable to the enhanced tax preferred treatment of super, being $1.3 billion.

Also, there were significant changes to individual tax rates and thresholds post-2006-07, that would have contributed to an increase in refundability. The lower the tax rates, the less tax to offset franking credits against, and hence the higher the amount refunded. And average cash refunds to individual investors as a percentage of total eligible franking credit refunds, grew from 10 per cent prior to 2006/07 to 15 per cent post. A 50 per cent increase. So that of the $2.3 billion cash refunded to individuals in 2014/15, approximately $0.8 billion would be due to lower tax scales.

Therefore, strip out $1.3 billion for abnormal super growth, plus $0.8 billion for lower tax scales, and cash refunds grew from $0.55 billion to $3.8 billion in adjusted terms. Then finally, adjusting the $3.8 billion for inflation (average inflation rate of 2.7 per cent over 14 years) brings the increase to just $2.6 billion in 2000-01 dollars. That is in real terms, franking credits refunded in cash have only increased half the tenfold increase claimed.

And further, since 2014-15, we have seen the introduction of the $1.6 million transfer balance cap for SMSFs in 2017-18. The cap has directed funds out of pension phase super accounts into accumulation accounts or other investments. The effect being a reduction in franking credits refunded as cash from 2017-18, all else being equal.

Cash refunds are not actually a leakage of revenue to begin with. Rather they are the rightful return of excess taxes withheld from investors, offset of course by those high marginal tax rate investors who need to top up their franking credits with additional tax payments.

So when Labor claimed that cash refunds on franked dividends are costing the budget $6 billion a year and that its removal would improve the budget bottom line by $58 billion over the decade, the claim would appear to be very much exaggerated.