Ms Credlin said she was not interested and Ms O'Dwyer said she was not afraid of a challenge.

Treasurer Scott Morrison advocated during his days as social services minister a downsizing policy in which people would be encouraged to sell their large homes by having some or all of the proceeds quarantined from the pensions assets test. It is understood, however, that modelling commissioned by the government showed a majority of people already downsize and greater behavioural change could be effected if people were given exemptions from superannuation restrictions.

The amount of super people have does affect their eligibility for an age pension. Under the budget proposal, if an age pensioner wants to downsize and top up their super, they could do so but lose some or all of their pension.

Those to be targeted by the government policy are pretty much self-funded retirees who don't receive a pension and would be encouraged to sell their home by being able to bolster their retirement income.

Scott Morrison's reform package includes a focus on renters. Louise Kennerley

Under the super changes which come into effect on July 1, a retirement account, on which the earnings are tax free, will be capped at $1.6 million. Any excess must remain in an accumulation account which will continue to be taxed at the concessional rate of 15 per cent.

Also under the changes, people aged under 65 can contribute a maximum of $100,000 a year in non-concessional contributions to their super until the $1.6 million cap is reached.

Those aged over 65 can contribute $100,000 a year in non-concessional contributions but only if they meet a work test of having done 40 hours work over 30 consecutive days.


It is believed exemptions to both the $1.6 million cap and the $100,000 non-concessional contributions cap are being considered in the event of ump sum contributions from the proceeds of downsizing. It is unclear whether some or all of the proceeds from downsizing could be used to bolster super.

Labor was the first to propose such a policy. When last in government, it announced a trial scheme in which up to $200,000 in sale proceeds would be exempt from the pension assets test. The trial was scrapped when Tony Abbott won government.

Shadow treasurer Chris Bowen told The Australian Financial Review Labor was still favourably disposed towards the idea and would consider whatever the government put in the budget.

"Labor has supported measures to make it easier for seniors to downsize their housing without penalising them. That's why Jenny Macklin had a pilot program in the 2013 Budget to work on exactly that – a pilot program scrapped by the Liberal Party in 2013," he said.

"If the Government wants to help older Australians downsize their home, why did they abolish a Labor program that did exactly that. We're receptive of similar measures subject to our normal policy processes and ensuring the government doesn't botch their implementation."

The Property Council of Australia supports exempting downsizers from the pension assets test, but only for people aged 75 and older to prevent a free for all among retirees.

"We have to reduce transaction costs which lock people into homes that don't suit them and are a big drag on the economy," said council chief executive Ken Morrison.

"As well, pensioners are discouraged from downsizing because of the way the pension assets test is configured. Some small changes to the downsizing rules could see tens of thousands of family homes enter the market."


Meanwhile, Treasurer Scott Morrison renewed the push for the Senate to pass the remainder of the government's 10-year plan to reduce the company tax rate to 25 per cent by 2026-27.

With US President Donald Trump to formally announce as early as Wednesday his plan to cut the company tax rate to 15 per cent, Mr Morrison said more was needed than last month's Senate decision to allow a cut for companies with turnovers capped at $50 million.

"The Trump administration's move to cut their company tax rate is all about keeping investment and jobs in the United States," he said.

"Already we have legislated tax cuts for companies that employ more than half of Australia's work force, but we need the Parliament to support the rest of the plan."