If the Coalition bows to backbench pressure to lift the lifetime superannuation contributions cap from $500,000 to $750,000 it could cost the budget more than the existing regime, parliamentary budget office (PBO) analysis has shown.

The analysis, conducted for the Greens in November – before the Coalition proposed changes – modelled three options for lifetime caps on non-concessional superannuation contributions: $500,000, $600,000 and $800,000.



It found for $600,000 and $800,000, the amount saved by the government would be wiped out by more contributions being tipped into superannuation accounts to take advantage of the tax benefits.



“Under options 2 ($600,000) and 3 ($800,000), the additional contributions from the one-off contributors would be expected to exceed the reduction in contributions from regular contributors,” the PBO said.



“In these options, a net increase in superannuation funds under management would be expected, resulting in an increase in concessionally taxed superannuation earnings (and a corresponding decrease in capital income attracting personal income tax).”



The PBO found that under the current proposed $500,000 cap there would be a decrease in the amount of super contributions, meaning more money would be taxed at higher personal income rates instead of lower superannuation rates.

The treasurer, Scott Morrison, has said a $500,000 cap would save the budget $550m over four years.

The PBO also found raising the lifetime cap above $500,000 would affect a “relatively small proportion of individuals”.



“Of those aged 55 or over in 2013-14, just 12% of non-concessional contributions were made by individuals who had contributed more than $500,000, and only 6% were made by individuals who had contributed more than $800,000,” the analysis said.

As the costing was completed in November 2015 – before the government’s proposed changes to superannuation announced in the 2016 budget – the analysis assumed the policy would start in July 2016 and would apply to contributions made after 1 July 2006.

The Coalition’s current policy, as announced in the budget, would start in July 2017 and the lifetime cap is backdated to 2007.

“Advice from the parliamentary budget offices suggests that increasing the lifetime cap could actually see the government lose revenue,” Greens MP Adam Bandt told Guardian Australia.



“It beggars belief that the government could put forward a measure that could cost the budget money and make the superannuation system less fair.



“I am concerned that the government is intent on giving even more money to high-income earners just to appease hard-right conservative backbenchers.”



Morrison has consistently argued that the government’s proposals to cut back generous superannuation concessions for high-income earners are fair, particularly given the Coalition is making cuts to family tax benefits affecting low-income earners.

But some Coalition backbenchers, primarily supporters of the former prime minister, Tony Abbott, have criticised the policy, saying it lost votes at the election. They include the former Abbott government minister Eric Abetz and the Queensland MP George Christensen.



As a result, Morrison has been trying to broker a compromise and there have been reports he is considering raising the cap to $750,000 after briefings with the backbench.



Labor supports superannuation reform but remains opposed to backdating the lifetime cap policy to 2007.



Labor’s finance spokesman, Jim Chalmers, said Labor would not commit until it saw the Coalition’s superannuation legislation.



“We’ll wait and see what the government puts on the table at the end of the day,” Chalmers told the ABC. “People know that we’re up for a proper conversation about the tax concessions at the top end of superannuation.”

The Greens have yet to announce their final position on the Coalition’s superannuation policy, but do not consider backdating contributions to be retrospective.



“We don’t necessarily accept the characterisation of the government proposals as retrospective,” Bandt said. “To say you’ll still get a tax break but it might be less than anticipated in the future is not necessarily retrospective.”

The Coalition requires nine votes from other parties or independents in the Senate to pass any policy change and the Greens have been considered most likely to support the changes, given their stance on the retrospectivity.



But the Greens are increasingly concerned the government will water down the proposals.

“Treasurer Scott Morrison must come clean and release any advice from Treasury about whether an increased lifetime cap would save any money at all, or in fact come at a cost to the budget,” Bandt said.

“The government is looking in the wrong place for super reforms. There are billions of dollars in potential revenue available by reining in the generous concessions given to the very wealthy when they contribute to super in the first place.”