Cabinet scraps $500,000 limit on after-tax super contributions following backbench pressure

Extract from ABC News 

By political reporters Caitlyn Gribbin and Francis Keany

Updated 4 minutes ago

Video: Scott Morrison backs down on controversial superannuation changes (ABC News)

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Cabinet has buckled to intense backbench pressure and dumped many unpopular elements of its superannuation policy, in a move Labor has characterised as a "massive capitulation".

Treasurer Scott Morrison has announced significant changes to the plan it announced at the last budget, scrapping the proposed $500,000 limit on after-tax contributions.
It will be replaced by an annual non-concessional $100,000 limit, down from the current $180,000, and will quash debate that the $500,000 lifetime cap was retrospective.
The deal was secured with Coalition backbenchers, a number of whom have said the tough budget measures contributed to the Coalition's performance in the election.
Mr Morrison said the policy was "supported by acclamation today in the party room".

Government 'caves in to super rich'

Critics slam the Government's backdown on superannuation and say it undermines efforts to make the retirement savings system more equitable.

"The reason we have made this change is because it makes it even fairer, even more sustainable and even more flexible," Mr Morrison said.

"It addresses the issues that have been raised and it makes sure the entire package delivers on the budget repair task."

Dumping the $500,000 cap and replacing it with the $100,000 annual limit will cost the budget $400 million over four years.
To offset the cost, the Federal Government will now not proceed with a proposal to remove restrictions on 65 to 74-year-olds wanting to make voluntary contributions on super.
People aged under 65 years will be able to continue to "bring forward" three years' worth of the $100,000 contributions, Mr Morrison said.
But he said once individuals hit a $1.6 million super balance, they will no longer be eligible to make non-concessional contributions.
Mr Morrison said Labor had "no excuse whatsoever not to immediately I would say, subject to their normal processes, support this".

Labor labels decision a 'defeat'

Shadow treasurer Chris Bowen said the Government's backdown was a "capitulation".

Analysis: 'Massive capitulation' on super still good for budget bottom line

As it turns out, all it took was a "massive capitulation", for the Government to achieve success on superannuation reforms.

Mr Bowen promised Labor would scrutinise the legislation when it is introduced later this year, but claimed Mr Morrison's policy was poorly thought out.
"Today [Mr Morrison] announced his own defeat," Mr Bowen said.
"This is the man who said they'd never touch superannuation and now we see the latest capitulation in this long line of policy disasters on superannuation from the Government.
"Superannuation is important, it's important there's consistency and stability in superannuation."
Deputy Opposition Leader Tanya Plibersek pointed out Prime Minister Malcolm Turnbull had previously nominated the super policy as one of his greatest achievements since toppling Tony Abbott.
"The Prime Minister can't even deliver on his so-called greatest achievement," she said in Question Time.
Mr Turnbull dismissed the criticism and told the chamber that this week's deal to pass the Government's omnibus savings bill shows the Parliament "can achieve great things".
"They demonstrated the 45th parliament can come together to pass sensible economic reforms," he said.
Mr Morrison said the changes did not amount to a broken election promise.
"What I accept is that when you're in government you have to solve problems, you have to work issues and you've got to get to conclusions and that's what we've done today," he said.
"What we've done today is not just to take out a hard issue and just drop it and make taxpayers pay for the difference.
"No, we have applied a discipline to ourselves in working through this issue fiscally which I think should be a model to others."
The omnibus bill is set to pass the Senate tonight.