Federal election 2016: Turnbull defies super dissenters

Malcolm Turnbull is staring down a new bid from Liberal MPs to scale back a $6bn tax hike on superannuation.

Malcolm Turnbull campaigns in Brisbane yesterday. Picture: Lyndon Mechielsen

Malcolm Turnbull is staring down a new bid from Liberal MPs to scale back a $6 billion tax hike on superannuation, amid rising dissent over the impact on ordinary workers and fears of a backlash from the government’s strongest supporters.

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The Prime Minister is determined to thwart the new push for curbs on the tax increases as Scott Morrison and Cabinet Secretary Arthur Sinodinos insist on the need to proceed with the reforms as set out in the May 3 budget.

MPs are holding out hope for changes when the draft legislation is put to the full Coalition partyroom after the election, warning that some features must be “smoothed out” to avoid damage to average Australians trying to save for their retirement.

The disunity triggered a furious reaction at the top of the government late yesterday, as the storm over super undermined a strong day for Mr Turnbull and the Treasurer on the campaign trail, following the release of positive economic figures that lent new weight to their message on economic management.

The frustration over super has been exacerbated by new questions over the “transition to retirement” rules — an issue Foreign Minister Julie Bishop struggled to explain on Tuesday — and talk of Liberal Party members threatening to quit because of the changes.

Senator Sinodinos conceded there could be consultation on “subsidiary matters” after the election but the overall policy would go ahead because all Australians had to share the burden of budget savings.

“Let’s win the election and go from there,” Senator Sinodinos said on Sky News.

“I think once people see the changes to superannuation in their totality, and we get a mandate from the public to implement them, then I think we’ll have a cap­acity to take them through the partyroom again and through the parliament. The important thing here is that we can’t go to other sections of the community and say ‘You’ve got to play your role in budget repair’ if we’re not prepared to also take on areas like superannuation, the tax concessions attaching thereto and whether they are still fit for purpose. So this is about the burden of adjustment falling equitably across the whole community when it comes to budget repair.”

The comments came after new signs of Coalition unease over the budget plan to impose a $1.6 million transfer cap on tax-free retirement funds — effectively applying an earnings tax on funds over that amount — and a $500,000 lifetime cap on non-concessional contributions.

In a statement on the policies yesterday, Assistant Treasurer Kelly O’Dwyer confirmed that once the $1.6m was transferred into a retirement account, it would not incur tax if subsequent ­earnings lifted it over that amount. Ms O’Dwyer also confirmed the Transition to Retirement Income Stream (or TRIS) pension schemes would incur a 15 per cent earnings tax but this would affect only 115,000 people according to Treasury modelling. Actuarial firm Rice Warner estimates 580,000 accounts could be caught up in the TRIS changes, suggesting the impact could be greater than the government admits.

Seizing on the government woes, Labor superannuation spokesman Jim Chalmers said voters should be told what changes to the policy would be considered after the election.

“This takes disunity and dysfunction in the Liberal Party over economic policy to new lows,” Dr Chalmers said.

“This is a serious test for Malcolm Turnbull: how much will the changes cost, what will those changes be, and will he come clean before the election?”

Liberals admitted the changes were triggering pressure from voters, but said it was mostly mobilising a narrow group compared with the widespread complaints about the 2014 federal budget and its cuts to families.

“There are some edges I’d like to smooth out after the election but I’m not arguing for changes now,” said one MP. “There will be ample opportunity for horsetrading but now is not the time to do it.”

Another said: “It is a complex issue and maybe there are some things on the margins that might need polishing.”

While Liberal MP Ian Goodenough told the ABC he had received a “volume of correspondence” on the issue and MPs planned to raise concerns after the election, others said it would be wrong to amend the policy. Liberal National Party MP Ewen Jones told The Australian: “If someone wants to start an argument over this, they’re just doing what the Labor Party wants us to do. I just don’t see that happening.”

He said “it doesn’t make a lot of sense” to give up the budget saving. “It’s against our narrative,” he said.

Other MPs questioned why colleagues would want to challenge the Prime Minister and Treasurer on this during the campaign. Those fighting for marginal seats said the issue was not as big a concern for their constituents compared with blue-ribbon Liberal electorates.

“It’s obviously been an issue of concern with many constituents but I’ve been able to talk with them, explain the changes and the budget situation that we face, and explain that the tax concessions they’re getting are still very generous,” said Hughes MP Craig Kelly.