Treasurer Scott Morrison has succumbed to pressure and announced the Federal Government will compromise on the proposed changes to supperannuation it took to the election.
The debate has caused much internal party dissent, with some Liberal MPs blaming the package for its poor election performance.
Under a compromise deal, the government will scrap the proposal to cap lifetime non-concessional contribitions to $500,000 and will replace it with an annual $100,000 non-concessional cap.
This change still cuts the previous annual non-concessional cap by $80, 000.
People under the age 0f 65 will still be able to bring forward three years of non-concessional contributions, but those with more than $1.6 million in superannuation will no longer be able to make non-concessional contributions from July 1, 2017.
The changes have been funded by not proceeding with a proposal to remove restrictions on 65-74-year-olds wanting to make voluntary contributions to their superannuation.
Mr Morrison said 96 percent of people would be better off or unaffected by the changes and that it made Australia’s superannuation system “even fairer, even more flexible and even more sustainable”.
Queensland backbencher George Christensen, a vocal opponent of the intitial changes, said the new proposal allayed his concerns.
“They listened and they acted and I’m very thankful where we’ve landed,” he said at a press conference this morning.
Mr Christensen had previously threatened to cross the floor.
Mr Morrison said opposition treasury spokesman Chris Bowen had been briefed about the changes and there was “no excuse” for Labor not to support them.
“These measures remove any remaining impediment or barrier for the government’s budget superannuation package to now receive bipartisan support in this Parliament,” he said.
Mr Bowen said it represented another backflip by the Treasurer and that Labor would take its time to analyse the proposal.
“We will be appropriately diligent and constructive in our policy-making approach,” he said.
Despite the superannuation package being described as “ironclad” by Malcolm Turnbull during the election campaign, Mr Morrison said the new proposal didn’t represent a broken election promise.
“When you’re in government, you have to solve problems, you have to work issues and you have to get to conclusions and that’s what we’ve done,” he said.
The new package is expected to raise $6 billion in government revenue over a four year period.