Opposition Leader Bill Shorten has announced that Labor will oppose the government's proposed pension changes, which are designed to save $2.4 billion over four years.
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The decision, backed by the caucus on Tuesday morning, finally makes clear the federal opposition's position on one of the most contentious measures contained in the budget.
It also sets out clear political battlelines between the two major parties, with Labor committed to tackling superannuation tax concessions if returned to government and the government committed to tightening access to the pension.
Prime Minister Tony Abbott attacked the opposition in question time over the decision, saying the changes proposed by Social Services Minister Scott Morrison in the budget, which would leave 170,000 pensioners with modest assets better off by an average of about $30 a week, would create a fairer system.
As a trade-off under those changes, the pension assets test would be tightened and hit wealthier retirees, with about 91,000 expected to lose access to the part-pension and 236,000 to have their pensions decreased.
Labor arrived at its decision after detailed consideration of the effect the changes would have on people leaving the workforce, with half of all people leaving the workforce in the next decade expected to be hit by the measures.
The effect of the changes proposed by the government is thought to be more widespread than first thought, according to independent modelling provided to the ALP, with up to a million retirees to be hit over the next decade.
Announcing the decision on Tuesday, Mr Shorten said the changes would, in effect, set pensioner against pensioner and warned Australians "the Liberal Party is coming after your pension".
The decision marked a "line in the sand", Mr Shorten said, and Labor would not contemplate failure in attempting to block the legislation.
"The Liberal Party has proposed 330,000 pensioners either lose all or part of their pension. Furthermore, the changes which Mr Abbott is proposing to the pension will mean that another 700,000 people now working in their 50s and early 60s will face cuts to their pension," he said.
Mr Shorten contrasted the changes with Labor's proposal to claim $14 billion in savings over a decade from a clampdown on superannuation concessions and said that "in the next four years, the government's own budget papers point to what is unsustainable: it's the superannuation tax concessions".
The ALP will, however, back the abolition of the Seniors Supplement, which will save the budget about $1 billion over four years, as well as changes to defined benefit income streams. These will deliver another saving of about $460 million over four years.
Mr Abbott said the changes meant "it will be a fairer system when people with more than a million dollars in assets, and their own home are no longer part pensioners".
"How lost is the modern Labor Party?" he said.
"I've got to say, I never thought I would say that the Greens are showing more sense on this issue than the Labor Party, but I believe they are."
Labor's move increases pressure on the government to do a deal with the Greens or the crossbench to pass the changes.
Greens leader Richard Di Natale indicated his party could back the pension changes, providing a circuit breaker, but on condition that a review of retirement incomes was reinstated.
Dr Di Natale said the Greens wanted to see pension changes made a little fairer and superannuation tax concessions addressed, too.
Independent advice provided to the ALP showed, for example, that a single aged pensioner who owned their own home and had a super income of less than $25,000 would lose as much as $8200 from their total income, including pension, of a little less than $40,000 each year.
Similarly, a couple on the aged pension who own their own home and receive a combined income of $45,000 – and who each have $450,000 in superannuation – would lose their entire combined part-pension of $11,400.
Industry Super Australia's submission to a Senate inquiry into the proposed changes helped Labor arrive at its decision, too.
That submission argued that Mr Morrison's proposals would, in net terms, reduce the adequacy of retirement incomes.
