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The Government Has Put A Key Election Promise On Hold

"I am continuing to consult with my colleagues and this is complex legislation."

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Treasurer Scott Morrison has left out a number of key election promises from the draft legislation for his $6 million superannuation policy because the contentious items are still being negotiated with unhappy backbenchers.

Stefan Postles / Getty Images

The Coalition went to the election promising to reduce the $180,000-a-year limit on the amount of extra after-tax income people can contribute to their super to a $500,000 lifetime cap.

The reform would affect around 100,000 Australians and take into account all after-tax contributions since 2007, but people who have already contributed more than half a million would not be penalised.

But treasurer Scott Morrison has been forced to leave the core election policy out of his first tranche of superannuation legislation because it's continuing to cause internal dissent from a handful of Coalition backbenchers.

"It was never meant to be in the first tranche," Morrison said.

Instead the first tranche of draft bills contains the government's definition of super – "to provide income in retirement that substitutes or supplements the age pension" – as well as the new Low Income Superannuation Tax Offset.

The treasurer claims the government's entire super package, which he says will only affect 4% of superannuation account holders, had always been planned to be released in a number of tranches.

But others suggest the government's hands have been tied by their ongoing negotiations with the backbench.

"I am continuing to consult with my colleagues and this is complex legislation and those elements of the package will be released in coming weeks and months as they're being finalised," Morrison said.

Over the past few weeks, Morrison has been travelling the country holding a series of explanatory meetings with backbenchers to answer any questions they have about the changes and try to win them over.

One unhappy backbencher is Tony Abbott, who confronted the treasurer during a backbench meeting last week. The former prime minister wants the government to abandon its proposed cap on post-tax contributions because it would affect the top 10% of income earners.

Other Liberal backbenchers have suggested increasing the lifetime cap amount to $750,000 or $1 million.

"We will continue to work through some of the contentious items that have been part of this discussion," Morrison said, "but what we won't walk away from is our commitment to arresting the debt and delivering the budget repair job."

Morrison described his consultation with backbench colleagues as a "real policy challenge" and an "honest debate".

Rather than capitulate to his backbench, the treasurer has promised the government will deliver the package it took to the election, potentially with a few minor tweaks.

The second tranches are expected to include an increase to the tax on contributions for those earning more than $250,000 a year from 15–30%, and for people 60 and over a limit to the amount of tax-free income you can hold in super. Balances above $1.6 million would go into a separate super account where earnings would be taxed at 15%.

The treasurer didn't give a deadline for delivering his super reforms, but seemed confident the final policy would manage to maintain the savings promised during the budget and election campaign.

Alice Workman is a political reporter for BuzzFeed News and is based in Canberra.

Contact Alice Workman at alice.workman@buzzfeed.com.

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