Treasurer Scott Morrison has ramped up the war on dissidents in his own party over superannuation, distributing a briefing paper portraying those hurt by his budget measures as high-income tax minimisers.
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The briefing paper sent to Coalition MPs says the proposed $1.6 million cap on the amount of super savings whose earnings would be untaxed in retirement is roughly twice the pension assets test, meaning those affected didn't need a tax break to get them off welfare.
At $430,000, the average super balance of retirees 65 years and older was only a quarter of the $1.6 million threshold. Even among the top 10 per cent of retirees, the average was $1.36 million, comfortably below the threshold which would climb each year with inflation. Only the richest 1 per cent of fund members would be above it.
The planned $500,000 lifetime cap on personal post-tax contributions would limit the use of super for "estate planning and tax minimisation". Rather than being retrospective, it imposed "no penalty for past actions". Limiting it to new contributions in order to avoid charges of retrospectivity would have discriminated against future savers.
Only 29 per cent of fund members made additional personal contributions and those that did contributed a lifetime average of only $52,000. Even among the top 10 per cent of earners the average was only $282,000.
Lowering the annual cap on most employer-deducted contributions from $30,000 to $25,000 would hurt only the most well off 3.5 per cent of fund members. The top 10 per cent contributed an average of only $21,000 per year.
So-called transition-to-retirement schemes, which would no longer be tax-free, were used "almost exclusively by people working full-time as a means to reduce tax liabilities among wealthier Australians". Claims by the Association of Superannuation Funds that more than 550,000 people would suffer involved double and triple counting and were overstated by a factor of five. Treasury put the number at 110,000.
Mr Morrison said he welcomed a Grattan Institute report released on Monday, which said that some arguments against the changes amounted to "a claim that they should not proceed simply because Coalition Party donors oppose them, which is not usually considered a relevant consideration for policy decisions".
Asked whether the was frustrated by resistance to the changes from members of his own backbench he said he was "never frustrated by democracy".
"I thank my colleagues for the very good-faith nature in which they've engaged with this process. Government is about making difficult choices. We've made some difficult choices and we have put them in the budget.
"It is addressing a large number of very important challenges facing Australia, most significantly the ageing of the population and the growing size of very large balances in superannuation which attract very concessional rates of tax. That's not a sustainable position to take out over the next 20 or 30 years."
The paper distributed to Coalition MPs says in total only 4 per cent of super account holders, or around 700,000 people, would suffer as a result of the changes. Other changes, including extending deductions for personal contributions to all employers and boosting the spouse contribution tax offset, would benefit 800,000 people. Even those that were hurt would be better off than before the Coalition's 2007 "simpler super" changes, which removed tax on most payouts for Australians aged 60 and over.
