Superannuation changes an issue for Coalition party room

Nest egg, superannuaiton, SMSF, retirement
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Budget 2016/17, 2016 Budget, changes to superannuation, $500,000 lifetime non-concessional contributions cap, Liberal Party, Coalition, party room meeting, backbenchersSuperannuation has been an issue for the Government ahead of the first Coalition party room meeting since the election.

The Liberal Party held a party room meeting on Monday, followed by a Coalition party room meeting.

Afterwards the PM announced some changes to ministerial positions, including in the Treasury portfolios. Kelly O’Dwyer’s title of Assistant Treasurer changes to Minister for Revenue and Financial Services. Minister O’Dwyer was also the Minister for Small Business, which moves National party member Michael McCormack.

Superannuation has become a key issue for some members of the Government since the election, especially amongst parts of the backbench.

The Prime Minster has somewhat softened his language on the changes to super in recent days. Prior to the election the PM said the superannuation policies were “ironclad”.

After the election he said: “We will be presenting our Budget, our Budget measures in the same manner that we took them to the election.”

On Sunday he said that: “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 party room process.”

“We are listening very keenly, I am listening very keenly and carefully to concerns that have been raised by my colleagues, and of course by other people in the community as well. There is a process being undertaken, but it is important to recognise that is always the case. They already have been some technical details that have been addressed by the Treasurer and no doubt there will be others.”

“With changes like this, big reforms like this we have made to superannuation – they have gone through a careful process, they have gone through a careful expenditure review committee process and so forth and when the legislation is finalised that again will go through the same careful process again. These are very complex areas and it is important to get them right.”

The Government is, reportedly, considering an advertising campaign to sell the superannuation changes.

Minister for Finance, Mathias Cormann, said the Government had a mandate to implement the superannuation policies, but left open the option of changes.

“We took a policy to the election. We won the election. We received a mandate to implement our national economic plan for jobs and growth, including our plan to make our superannuation system fairer and more sustainable. Now the Government will be presenting that plan into the Parliament. That will trigger a series of processes, including through the party. As we have indicated during the election campaign, there will be a consultation process in relation to administrative implementation issues and the like. That is what was always going to happen,” he told Sky News.

Leader of the House Christopher Pyne said there may be some “tinkering” with the policy.

“There’s going to be a party process, a Cabinet process for the superannuation changes,” he told Channel Nine.

“The overall policy remains the same, but in framing that final policy before it goes to legislation, there may well be some tinkering around the edges. That’s perfectly normal.”

The Treasurer has already had to set out some ‘transitional arrangements’ which will apply to SMSFs.

However there is still disquiet among the backbench, who may want more significant changes. There are reports that exemptions could be allowed to the $500,000 lifetime non-concessional contributions cap for windfall gains – such as an inheritance or the sale of assets held for long periods of time.

It is also reported that backbenchers will suggest exemptions be added to the $500,000 lifetime non-concessional contribution cap for windfall gains – such as inheritance of the sale of assets held for long periods of time.

However sources also told the AFR that the PM and Treasurer were “standing firm” and that any revenue lost would have to be offset.

Liberal senator Chris Back says that Liberal voters were displeased with the $500,000 lifetime non-concessional cap.

“There were certainly people who said to me we will vote Liberal in the House of Representatives but we won’t support you in the Senate,” Senator Back told the ABC.

Senator Eric Abetz also pointed to the lifetime non-concessional cap as being particularly unpopular with Liberal supporters.

“The superannuation measures were presented to the partyroom at the budget and then the budget was immediately announced to the people and we went off to an election, so this matter has not been properly ventilated through the partyroom,” he told Radio National.

Update: It is being reported that Senator Abetz was the only person to raise superannuation in the Liberal party room meeting on Monday, though some backbenchers are saying they are waiting until the legislation is put to the party room.

The Labor party has also focused its criticism on the $500,000 lifetime cap.

“What are they going to do about fixing up the legitimate concerns about retrospectivity in superannuation? I’d like to see the Liberal Party focusing on these matters rather than necessarily just worrying about who gets what spoils of office,” said Opposition Leader Bill Shorten.

Asked if the election win gave the Coalition a mandate to implement the Budget superannuation changes, Mr Shorten responded: “I don’t even think they’ve got a mandate from their own party room on the superannuation changes.”

“We know Scott Morrison and Malcolm Turnbull both rode roughshod over the concerns from the industry, concerns from self-funded retirees, concerns from respected third parties such as CPA and they put forward changes which according to many experts are simply unworkable. According to many other experts, are clearly retrospective. What we’ve said is there should be an independent expert review.”

The call by the Labor party for an independent review of the proposed Budget changes comes after they adopted the savings but not the policies in the last days of the election campaign.

Shadow Minister for Financial Services and Superannuation, Jim Chalmers, was asked on Radio National why an inquiry was needed: “Well we’re just asking the Government to do what we committed to, which is to have a proper look at these pretty dramatic and drastic changes which were dropped on the table on the eve of an election.”

“The Australian people expect us to take the time to get them right. They don’t want us to do what the Government has done which is to rush to judgement on these changes which have big impacts on retirement incomes. We’ve said all along that one of our big concerns is the retrospective nature, particularly about that $500,000 non-concessional cap. And as I have conversations around the country about these super measures with stakeholders and with the community, it is that retrospectivity that people are most concerned about.”

However Mr Chalmers left open the option of supporting the Budget superannuation changes.

“We’ve said we would support anything which turns out to be workable and fair. We’ve made that announcement during the election campaign and that’s the approach we still plan to take to superannuation. If it turns out that when you look at all of these changes in their totality, in isolation and the way that they interact with each other, if there’s a case that can be made that they’re workable and fair then we will support them.”

“If there are improvements that could be made, for example, if you could make that $500,000 cap prospective rather than retrospective, that’s worth a discussion, that’s worth looking at. But we’ll do what we’ve always said we’ll do when it comes to super. We do think that the tax concessions are poorly targeted, particularly at the top end. So what we’ve said and what we still say after the election is that we will agree where we can with the Government, but we will disagree where we must.”

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