Federal election 2016: Turnbull warms to super changes

Coalition MPs are confident of gaining valuable changes to the federal government’s $6b tax hike on superannuation.

Malcolm Turnbull has vowed to listen to his colleagues, opening the path to a deal after two months of acrimony over the budget.

Coalition MPs are increasingly confident of gaining valuable changes to the federal government’s $6 billion tax increase on superannuation as Malcolm Turnbull vows to listen to his colleagues, opening the path to a deal after two months of acrimony over the budget reforms.

The push for change now centres on a $500,000 lifetime cap on contributions to super from after-tax income and savings, which could be amended to allow exemptions for those who might have to exceed the limit ­because of divorce, inheritance or other factors.

MPs discussed the changes after drinks with the Prime Minister at The Lodge last night, ­encouraged that Mr Turnbull was open to adjustments despite ­insisting during the election campaign there would be “no change to the policy” set out in the May 3 budget.

Senior minister Christopher Pyne today conceded “there may well be some tinkering around the edges”.

“That is perfectly normal and it is good government,” he told the Nine Network on Monday.

Social Services Minister Christian Porter, one of the policy’s designers, said there were always issues to be worked through when legislation was being drafted.

“Every rule has exceptions to it and, particularly, these are issues that you do sort out during drafting,” he told ABC radio this morning. “It’s not inconceivable that you could listen to concerns about particular narrow, limited circumstances that require exceptions to be considered.”

Even so, backbenchers admitted it would be “too expensive” to keep pushing for wider changes to the super package, ­including a halt to reductions in annual caps on contributions — a measure that would raise about $2.2bn in revenue.

A proposed $1.6 million transfer cap, which applies a 15 per cent tax on earnings from funds over that amount, is also seen as difficult to amend, despite being fiercely criticised by Liberal Party supporters, some of whom ­refused to volunteer in the election campaign.

Mr Turnbull emphasised the help for low-income workers from the super changes yesterday, sending a signal that the overall package had to stay in order to pay for help for workers on incomes up to $37,000 and greater flexibility for women ­returning to the workforce.

The $6bn raised from the tax is meant to fund about $3bn in higher contributions for low-income workers while adding about $3bn to the budget bottom line over four years.

“The reforms are important but obviously in the implementation and transition there is work to be done, there always is with tax changes, and they will go through the normal cabinet and partyroom process,” Mr Turnbull said yesterday.

“And we are listening very keenly. I am listening very keenly and carefully to concerns that are being raised by my colleagues and, of course, by other people in the community as well.

“There already have been some technical details that have been addressed by the Treasurer and there no doubt will be ­others.”

Criticism of the $500,000 lifetime cap has centred on the July 2007 start date for the measure, which means that anyone who has already made non-concessional contributions of that amount would be stopped from making more.

MPs said yesterday they were discussing exemption from the new policy for people who had been divorced or received inheritances, but they acknowledged this would not address the widespread criticism of the “retrospective” start date.

Abandoning July 2007 in favour of a July 2016 date would remove almost all of the $550m from the measure.

The Australian has seen new estimates from Industry Super Australia that show the cut in the annual contributions cap from $30,000 to $25,000 for millions of workers is the biggest single measure in the super reform package and will be the most difficult to scrap when MPs press for changes in Canberra today.

Additional reporting: AAP