While the world was watching the US election on Wednesday (AEST), the Turnbull government introduced the final version of its superannuation reforms to parliament.
But it will face difficulty passing them before the end of the year with only two sitting weeks left before the Christmas break.
The Labor opposition has put up a series of alternative policies that would further restrict contributions from high-income earners.
But Labor’s superannuation spokeswoman, Senator Katy Gallagher, has committed the party to supporting the government’s legislation in parliament.
“We won’t oppose it; we’ll put forward our position at the next election,” Senator Gallagher told The New Daily.
The package, first introduced in the May budget, has been highly contentious within Coalition ranks.
Significant changes were made to after-tax contribution arrangements after elements of the Liberal and National parties went into revolt and leading figures on the right in the government threatened to cross the floor.
The revised package, was given final approval by Treasurer Scott Morrison and Financial Services Minister Kelly O’Dwyer and introduced into Parliament after a four week consultation process which did not result in changes.
Labor proposes two new changes to the government’s package. It would restrict non-concessional – or after-tax – super contributions to $75,000 a year.
The government plans to make that figure $100,000 with a carry-forward provision to allow $300,000 contributions in one hit.
Labor would also reduce the high income superannuation contribution threshold, where contributions are taxed at 30 per cent, not 15 per cent, to $200,000. The government’s package sets that at $250,000 while the current cap is $300,000.
The ALP also opposes moves in the legislation to allow catch-up concessional contributions and provide tax deductibility for personal superannuation contributions. The government has claimed these measures will help women build up super later in life.
However, Senator Gallagher said “there is no evidence that those measures will benefit women. Treasury have told us they have no data on it.”
Labor’s measures would reduce the budgetary cost of the super system, she said.
“Labor’s proposed reform package will improve on the government’s proposals by $1.4 billion over the forward estimates and $18.9 billion over the medium term,” Senator Gallagher and opposition Treasury spokesman Chris Bowen said in a statement.
Labor described the concessional cap measures as “loopholes (that) will cost the budget about $12.3 billion over the next decade. This is fiscally reckless, especially given the budget is already under pressure and our triple-A credit ratings are under threat because of the Government’s economic mismanagement.”
The parliamentary path
A spokesman for Financial Services Minister Kelly O’Dwyer said it was likely the super proposals would be referred to a committee after they are introduced to the Senate.
It is not clear how long this process would take. Given there are only two more sitting weeks until Parliament rises for the summer break, the package may not be passed until the February sessions in 2017.
While the government has classed the superannuation legislation as high priority, Senator Gallagher said it may be difficult to pass it by the year’s end. “I’m not sure if it will get through. There are a lot of bills backed up,” she said.
Senator Gallagher said Labor’s non-concessional super proposals would allow up-front payments for three years totalling $225,000.