The Turnbull government has done away with its controversial $500,000 cap on non-concessional contributions, a key part of its superannuation reforms which has caused it so much heartache.
The change comes after a massive backlash from conservative backbenchers and the Liberal Party support base because it was backdated to 2007.
Securing the change, approved in the party room yesterday, locked in backbench support and increases the likelihood of the reform being passed by the Senate.
The Treasurer Scott Morrison said he had spoken to shadow treasurer Chris Bowen about the change, offering him a briefing, and was confident it would now be passed by Parliament.
“These measures remove any remaining impediment or barrier for the government’s budget superannuation package to now receive bipartisan support in this parliament,’ Mr Morrison told reporters yesterday.
The cap will be replaced by an annual non-concessional $100,000 limit, down from the current $180,000.
Scrapping the cap and replacing it with the $100,000 limit will drain $400 million over four years from the Budget.
The government has also scrapped such restrictions as minimum work requirements on people aged between 65 and 74 wishing to make voluntary contributions to their super.
Securing the change is a massive boost for the Turnbull government, coming after it had negotiated the passage of its controversial $6 billion plus omnibus budget savings bill.
The government however was criticised for backing down on its election pledge to reform super because of backbench pressure from the party’s conservatives.
Shadow treasurer Chris Bowen described it as a “capitulation” and Deputy Opposition leader Tanya Plibersek reminded MPs that the Prime Minister Malcolm Turnbull had nominated the government’s super policy as one of his greatest achievements since he ousted Tony Abbott.
“The Prime Minister can’t even deliver on his so-called greatest achievement,” she said in Question Time.
The Business Council of Australia also implied some concerns by urging the government not to back down on its plan to cut business taxes over 10 years.
“If there is uncertainty about the commitment to the 10-year tax plan, what other lever are we going to pull to make Australia more attractive for business investment, which is currently falling at a rate not seen since the 1990s recession?’’ Business Council President Catherine Livingstone said in a statement yesterday.
The Treasurer Scott Morrison denied it was a broken election promise and said it was a pragmatic solution.
“What I accept is that when you’re in government you have to solve problems, you have to work issues and you’ve got to get to conclusions and that’s what we’ve done today,” Mr Morrison said.
“What we’ve done today is not just to take out a hard issue and just drop it and make taxpayers pay for the difference.”
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