Alternatives could include tax increases to be applied to the superannuation earnings for the most well-off and new tapering rates to reduce access to the part-pension for couples and singles with extensive financial assets in addition to the primary residence. Mr Morrison said he was pleased by the constructive ideas coming forward from what he termed "a coalition of ideas" which included the Australian Council of Social Service, the Council on the Ageing (COTA), and the independent senator, Nick Xenophon, but did not include the opposition, whom he accused of fear-mongering. Despite his former hard man image as the uncompromising immigration and border protection minister, Mr Morrison is now building a reputation as a conscientious deal-maker within the welfare sphere. But he is not above throwing political punches. "Scaring people is not a policy," he said of Labor's refusal to support the lower indexation without putting forward alternatives to rein in the burgeoning costs of the pension in future years from the current 2.7 per cent of GDP to a projected 3.6 per cent in 40 years - even with generous superannuation concessions.

"The difference between these figures in today's terms, if it were applied to today's budget, would be some $14.4 billion," Mr Morrison said. "The government, by the end of this decade, will need to absorb the full contribution costs of the National Disability Insurance Scheme into the budget, the most important welfare reform in a generation. "We are not going to walk away from the goal of having a sustainable and fair pension scheme". Mr Morrison said Labor's policy of increasing the employer-funded superannuation guarantee to 12 per cent would not achieve the policy goal of reducing the size of the pension bill because it would cost employers and would actually cost the budget revenue in foregone tax receipts as super is taxed at a much lower rate than most income is. COTA chief Ian Yates has warned that most people currently in the workforce but moving towards retirement will not have enough superannuation in their accounts to provide for their retirements.

Prime Minister Tony Abbott said he was absolutely committed to honouring his pre-election commitment of no negative changes to superannuation during this term of parliament and of no cuts to the age pension this term either. Senator Xenophon, who received a visit in South Australia from Mr Morrison on Wednesday, said he had made clear there were no circumstances in which he would support a cut to the indexation rate of the pension which he said "would kill off the pension". "This would basically strangle the pension over time and I won't back it," he told Fairfax Media. However he said it was "not unreasonable" to look at other measures which could see people with considerable savings over and above the family home required to "draw down" on those reserves rather than claiming the part-pension. "Here is an opportunity to keep fairness and equity in the pension system, and control the way it rises," he said.

Mr Morrison said the difference between the government's current plan to reduce indexation rates and the status quo would be $14.4 billion per year in four decades' time. Labor's Jenny Macklin said the opposition took the view that the current pension system was fair and sustainable. The government's moves to abandon lower indexation will remove one of the few remaining barnacles from last year's budget after the GP co-payment was dropped, along with cuts to university funding, a cut to defence force pay, and even cuts to the automotive industry. Follow us on Twitter