The Morrison government has passed its controversial superannuation bill through the lower house after dropping a measure that would have allowed the Treasurer to cancel any super fund investment.

The government made the amendment on Thursday afternoon to win over the support of crossbench MPs who had publicly said they would not support the bill in its original form.

And the amended bill passed the House of Representatives hours later.

Dropping the measure described as an “investment kill switch” by Labor allowed the government to win over enough support from the cross bench to pass the bill after a few weeks of difficult negotiations.

Independent MP Craig Kelly’s exit from the Liberal Party left the Coalition with just 75 out of 151 seats in the lower house, meaning it required the support of at least one crossbench MP to pass the legislation.

But that support was far from guaranteed last week after Mr Kelly came out and described parts of the reforms as “contrary to Liberal party values”.

Crossbench MPs Zali Steggall, Helen Haines and Bob Katter also voiced their opposition to the bill, telling The New Daily last week they strongly opposed the inclusion of the new investment-cancelling power for the Treasurer.

Mr Katter said he was also concerned about the provision to staple Australians to the first super fund they joined throughout their careers.

Although Mr Katter said he agreed with the reform’s intent – to minimise fees by limiting the number of multiple accounts – Mr Katter told TND it would leave many members languishing in underperforming funds as “the average person” did not keep a close eye on their accounts.

Labor says the removal of the Treasurer’s directions power is a big win for super funds and their members.

But the industry argues that some of the other measures in the bill will still lead to worse outcomes for members.

The proposed legislation seeks to introduce annual performance tests that will prevent super funds from taking on new members if they fail to meet a benchmark for returns two years in a row.

Although the industry supports the intent of this measure, it has taken issue with its implementation as the reviews in their current form still exclude one in three superannuation funds.

Super funds also argue that another measure – the introduction of a Best Financial Interests Duty – runs counter to a key recommendation of the Hayne royal commission and will lead to higher costs for members as funds would have to carry out additional compliance “without any corresponding benefit”.

“The amendments to the bill don’t change the fact that this piece of legislation contains fatal flaws that will result in significant unintended member detriment,” said Eva Scheerlinck, CEO of the Australian Institute of Superannuation Trustees.

“This bill excludes more than one-third of super savings from scrutiny and disclosure, and does not prevent members from being stapled to funds that have not been tested or have failed the test.”

The bill will now progress to the Senate.

The New Daily is owned by Industry Super Holdings