Labor has vowed to campaign fiercely against pension changes but crossbench senators and the Greens have left the door open to reaching a deal with the government amid a fresh political brawl over fairness.
In a reversal of last year’s budget debate, the Coalition accused Labor of favouring the wealthy by seeking to block a suite of changes that would restrict eligibility to part pensions at the higher end and boost payments at the lower end.
Labor brushed off the attack, saying the government was pitting pensioner against pensioner while refusing to rein in generous superannuation tax breaks that disproportionately benefit higher income earners.
The Coalition will be forced to negotiate with the Greens or crossbench senators in order to secure savings of $2.4bn over four years from changes to pension asset tests. The policy replaces the unpopular plan in the 2014 budget to cut pension indexation across the board.
The Greens are prepared to consider the changes, depending on the government committing to a comprehensive review of retirement incomes including superannuation tax concessions – something the Coalition is not keen to do.
If Labor and the Greens do not support the legislation, the Coalition would require support from six out of eight crossbench senators. Most crossbenchers have signalled that they remain open to negotiating the details.
The government’s policy would create winners and losers by reducing the maximum value of assets people could hold to remain eligible for the part pension, while increasing the generosity of the system at the lower end. The taper rate – the speed at which the part pension reduces as a retiree’s assets increase – would be changed so that payments cut out sooner.
About 91,000 current part pensioners would no longer qualify for the pension and a further 235,000 would have their payments reduced, the government says, but more than 170,000 pensioners with modest assets would have their pensions increased by an average of more than $30 per fortnight.
The opposition leader, Bill Shorten, announced on Tuesday that Labor would oppose the changes, saying they breached Tony Abbott’s pre-election pledge not to cut pensions and would hurt people currently planning for their retirement.
“They deserve dignity and security in their old age,” he said. “If you’re on a pension, if you will rely upon a pension in the future – the Liberals are coming after you.”
Shorten, who campaigned against the 2014 budget on the basis of unfairness, brushed off suggestions of Labor inconsistency, saying it should not be a “binary competition” in which pensioners were pitted against each other.
He said the government was refusing to act on the tax-free status of earnings of people “who have multiple millions of dollars in superannuation”.
“When it comes to superannuation, they know that they are defending the Howard-Costello generosity given at the top of the mining boom which is unsustainable. Superannuation tax concessions in the next four years will pass the cost of the age pension,” Shorten said.
The government returned fire in parliamentary question time, saying Shorten was seeking to “plunder” people’s retirement savings and was “coming after your money”.
Labor has proposed a policy to raise $14.3bn over 10 years by scaling back tax concessions on super at the top end, including imposing a 15% tax on any earnings in the retirement phase that are above a threshold of $75,000 a year.
Abbott said retirees could be assured that their superannuation savings were “safe with us”, and he described the Coalition’s part-pension changes as fair and sustainable.
“Today, the opposition decided to deny to 170,000 people with relatively few assets up to $30 a fortnight. They don’t want poorer pensioners to get more money,” the prime minister said.
“They want millionaires who also own their family home, so they want people who have more than a million dollars in assets, plus their family home, to stay as part pensioners. Well, this is a strange position for the Labor party and it shows absolutely comprehensively [that] this is the welfare party; it’s not the workers’ party anymore.”
Abbott said even the Greens were “showing more sense” than the opposition on the need for sensible pension reform.
The Greens senator Rachel Siewert said the party would “continue to scrutinise changes to the assets test while pushing for a broader retirement income review as part of pension reform”.
“It is clear we need to look at superannuation, which would be key to any review of retirement income,” she said.
The social services minister, Scott Morrison, told parliament that pensions were a welfare payment or safety net “to support and help those who are most in need”, while the super system was based on people’s hard-earned savings.
But National Seniors, an advocacy group, backed Labor’s decision, saying the changes were poorly thought through and unfair.
The chief executive, Michael O’Neill, said thousands of retirees who had saved for decades were suddenly worried about the future. He said his group was not opposed to reform but he renewed his calls for a comprehensive review.
Many crossbench senators are keeping their options open.
A spokesman said the Liberal Democratic senator, David Leyonhjelm, liked to save taxpayer money “and is likely to support the government’s proposal”.
A spokesman for the Palmer United senator, Dio Wang, said he did not support the government’s proposed changes. “He feels the government needs to deal with superannuation policy at the same time or the current proposal simply drives behaviour with asset disposal and super funds,” the spokesman said.
The office of the Motoring Enthusiast senator, Ricky Muir, said he did not have a position “at this stage but looks forward to working with minister Morrison, the Greens and relevant stakeholders”.
Similarly, a spokesman for the Family First senator, Bob Day, said he was “still taking advice and receiving representations from constituents”.
The independent senator Nick Xenophon told the ABC he wanted an equitable outcome that achieved sustainable pensions but also looked seriously at superannuation concessions.
Xenophon described Morrison as an assiduous negotiator who might reach a compromise that achieved broad support from crossbench senators and the community.
The $2.4bn saving from the pension asset test is part of the government’s social services legislation amendment (fair and sustainable pensions) bill 2015. Together with some smaller measures in the same bill, Labor is opposing $2.9bn in savings. But it will support a further $1.5bn in savings, including scrapping the seniors supplement.
