Malcolm Turnbull says his government is considering how best to implement the most controversial aspect of his superannuation changes.

But he insists he will not make any changes to the policy’s substance, despite threats from backbench MPs this week to cross the floor to stop his policy going through parliament.

Turnbull said on Friday he believed the controversy over his superannuation changes has all related to his proposal to introduce a lifetime cap of $500,000 on nonconcessional super contributions.

He said that proposal would not change, but he was looking at “transitional and implementation aspects” of it, as the treasurer, Scott Morrison, has already flagged.

“It’s very important for people to understand that we do not conduct policy on the run,” Turnbull told 3AW’s Neil Mitchell.

“Superannuation is notoriously complex as we both know. And what we set out was a very carefully considered change which I believe has been overall well-received.”



Turnbull also said one element of his super changes which Mitchell was insisting was unfair was designed to prevent wealthy Australians using a quirk in the super system to deliberately avoid paying income tax.

The element in question relates to the transition to retirement scheme.

At the moment, people aged 56 to 65 who are in the “transition to retirement” and who want to reduce the number of hours they’re working, can top up their pay packet by drawing down on their super account, with earnings on super being tax-free.

But Turnbull said on Friday: “The truth is, that is a mechanism that is overwhelmingly used as a tax avoidance measure by people on very high incomes.”

The Productivity Commission has found thousands of Australians aged 56 and over are abusing the scheme because rather than using it to work fewer hours, they’re using it to work full-time but to minimise their tax.

Turnbull wants to therefore increase the rate at which super earnings are taxed, from zero to 15%.

That 15% tax rate is still well below personal income tax rates. “Yes it is an increase in taxation but it is still a very concessional rate of tax,” Turnbull said in June.

Mitchell argued that “fat cats” are not the only ones who will be affected by the proposal, saying people earning $70,000 a year who are also drawing down on their super will be adversely affected.

But Turnbull said anyone on a low income who is taking money out of super before they retire “is being really badly advised”.

“If you’re on $70,000 or $80,000 a year you should be putting more into your super, not taking it out before you retire,” he said.

The Queensland Nationals MP George Christensen has threatened to vote against Turnbull’s super changes, warning every vote on the floor of parliament will count for the next three years and he will do what he must to stop the changes going ahead.



The Coalition is sitting on the barest majority of 76 seats in the lower house, with the result in Herbert still unclear. Under the status quo, after the Speaker is chosen, this would mean the government would have to rely on an independent or minor party MP to get the legislation through the House if Christensen crossed the floor, before it even got to the Senate.



However, the government is likely to need either Labor or the Greens to pass the legislation in the Senate anyway, given the senator-elect Pauline Hanson has indicated she believes superannuation should be “left alone” and both senator-elect Derryn Hinch and senator Nick Xenophon have opposed parts of the policy.

Any legislation is also highly likely to be referred to a Senate committee for review.