Treasurer Scott Morrison has warned that big changes to the federal government's proposed superannuation policies could deliver a half-a-billion-dollar hit to the federal budget.
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But he has moved to reassure colleagues there will be further consultation over the $6 billion package of measures, and suggested technical changes to the policies could be made.
The package includes a $1.6 million cap on the amount that can be put into a tax-free retirement accounts, dropping the annual limit of contributions taxed at the concessional rate of 15 per cent from $30,000 to $25,000 and a $500,000 lifetime cap on non-concessional contributions, with this latter change being attacked by some critics for being retrospective as it is backdated to 2007.
Liberal National Party MP George Christensen became the latest Coalition critic of the $500,000 lifetime cap on Wednesday, threatening to cross the floor if the "Labor-style" policies did not change.
"If the government's superannuation policy does not change, I will be crossing the floor and voting against these measures," he said.
Possible concessions to the proposals have been floated in recent days, including allowing superannuants to make large one-off deposits into savings even if they have exceeded the cap and exemptions for divorced people, farming families and heirs to deceased estates.
But Mr Morrison told the ABC on Wednesday that, if MPs wanted to drop the proposed $500,000 cap and revert to the previous arrangements that would deliver a "significant" hit to the budget bottom line of about $500 million.
Asked if he had told backbenchers such as Mr Christensen to find savings elsewhere in the budget to offset any proposed changes, Mr Morrison said that "when things come off the table, other things have to go on".
"It's important to understand that the changes we put forward in the budget are an essential part of doing two things. Making superannuation more sustainable and fairer into the future and let's not forget that many of the changes we made to superannuation were to ensure those on low incomes are able to make contributions to their superannuation," he said.
"The other issue that it addresses clearly is the one of fiscal sustainability. Now the ratings agencies have made this very clear."
Mr Morrison highlighted recent warnings from ratings agencies about Australia's AAA credit rating and the need to "hold to the trajectory" of budget repair set out in May.
"I have no doubt we'll be able to address the specific issues that some have raised and frankly we've already done that in a number of cases, particularly in relation to self-managed superannuation funds," he said.
"There are technical issues that can be addressed within the scope of the policy and that process is well under way. But that doesn't represent a change in policy, it represents a practical implementation of the policy."
An exposure draft of the Coalition's budget changes is expected by the end of 2016. A Senate inquiry will likely follow, with a vote likely not due until February or March next year.
Labor treasury spokesman Chris Bowen said on Wednesday the opposition would consider "sensible proposals, we will work with them but we retain our concerns about the retrospective nature of some of the measures".
Labor super spokesman Jim Chalmers seized on Mr Christensen's comments as further evidence of division in government ranks.
"Whether it's George Christensen's strong opposition, Eric Abetz's calls for "recalibration" of the policy, Julie Bishop's inability to explain the changes or the sniping and backgrounding playing out in the papers, this Government is all at sea when it comes to superannuation reform."
- with Fergus Hunter
