Malcolm Turnbull and Scott Morrison will face a push by the backbench after the federal election to change or even abolish elements of the superannuation overhaul announced in the budget.
Simmering discontent among the Liberal Party’s conservative base has started to boil over and several MPs told The Australian Financial Review on Wednesday that should the Coalition win the July 2 election, there would be a push to amend some of the measures before they were legislated.
The issues causing the most concern include the $500,000 lifetime cap on non-concessional contributions that was backdated to 2007 and came into effect on budget night. Others that will be legislated to start on July 1, 2017, include lowering from $30,000 to $25,000 the annual limit on contributions that are taxed at the concessional rates, and the tightening of transition to retirement provisions.
All MPs agreed the election campaign was not the time to start a fight but they warned there was a strong resolve to act afterwards.
“There’s lots of anger but we can’t backflip now, that would make it worse,” said an MP.
Another said “there’s a lot of dissent”.
“It was dumb to drop something so complex on the base on the eve of an election.”
Western Australian Liberal MP Ian Goodenough said he had “received a volume of correspondence from constituents objecting to the changes”.
“It is a significant issue in this election, however, the dilemma is to identify another area of revenue to target given the constraints with the budget situation.”
The issue flared on Tuesday when Foreign Minster Julie Bishop could not explain what transition to retirement was. It allows people who have reached preservation age to keep working while drawing a tax-free pension from their super. At the same time, they can contribute back to their super and the earnings on super are tax free. The budget change would apply a 15 per cent tax on earnings during transition to retirement.
On Wednesday, Greens Senator Sara Hanson Young fumbled badly on Adelaide radio when she had no idea about the Greens super policy, which was announced in February last year.
Treasurer Scott Morrison said based on a Productivity Commission estimate, only 115,000 people, or 5 per cent of superannuants aged 55-64, had transition-to-retirement pensions.
“It is a scheme that minimises the tax paid and so this is an important integrity issue that needs to be addressed,” he said. But the industry said there were 550,000 people on the scheme.
Mr Turnbull acknowledged the specific changes to super had not been canvassed with the party room on budget day, just the budget more broadly.
“The budget, which comprises obviously the superannuation changes, has been presented by the Treasurer and has the full support naturally of the government, the cabinet and the party room,” he said.
Cabinet secretary Arthur Sinodinos said the party room could have its say after the election but he indicated that if the government received a mandate at the election for the changes, they would be implemented unchanged.
Senator Sinodinos said it was critical that the top end of super took a haircut because all sectors of society had to contribute to budget repair.
Labor announced its own superannuation policy 13 months ago and says it will take its time and consult the industry before responding to all the elements of the Coalition’s policy.