“It’s clear Labor doesn’t have the guts to tax big corporations and billionaires fairly,” McKim said.

“Of course low-income people need some tax relief on their super contributions. This is something the Greens have called for, for some time, so we will run the ruler over the changes to low-income earners’ superannuation.”

McKim continued that he believes Labor has “stripped out the tax on unrealised gains” and indexed the $3 million threshold, as a gift to the super-rich that will cost the budget billions.

“This is a capitulation to the wealthiest people in the country, and a slap in the face to everyone else who pays their tax straight out of their pay packet.”

“This new model will give a green light to the richest 0.5 per cent to keep hoarding investment properties. No capital gains tax will have to be paid as long as they don’t sell their properties and even then, less than half of the profits will attract tax.”

He added that the Greens will look at the full legislation when it’s introduced, but said the backflip shows Labor’s priorities “loud and clear”.

“They’d rather protect the wealthy few than stand up for the many.”

“The Greens will keep pushing for a fair tax system that makes the wealthy pay their way, instead of one that still rewards those hoarding obscene wealth through super accounts.”

Meanwhile, The Australia Institute said the revised Better Targeted Superannuation Concessions bill is a “significantly weaker superannuation tax plan than the one he promised two years ago”.

The institute said in this current financial year, an estimated $21 billion in superannuation tax concessions will flow to the richest 10 per cent of Australians – more than is spent on either child care subsidies, government schools or the estimated $13.6 billion that it would cost the government to include dental in Medicare.

“The proposed changes would only affect around 0.5 per cent of people with superannuation and would have been a very small but vital attempt to redress the gross imbalance in the system,” it said.

Research from the institute shows the vast majority of people under 30 will never have more than $3 million in superannuation.

Greg Jericho, chief economist at the institute, said the government’s watering down of the changes by indexing the $3 million with inflation and ruling out taxing unrealised capital gains will be of great comfort to those who abuse the superannuation system to avoid paying tax.

“The tax system needs reform to make it fairer and to remove distortions such as the capital gains tax discount, which has greatly contributed to the housing affordability crisis,” Jericho said.

“These changes do little to rein in the massive inequality of the superannuation tax system. The government’s decision will embolden those who prefer a tax system that favours the rich.”

Shadow treasurer Ted O’Brien said Chalmers was forced into a “humiliating backflip” after he spent two years defending the legislation.

Although he claimed this is a victory for the “Coalition of Commonsense”, he also noted it will leave a $4.2 billion budget black hole over the forward estimates.

“And there is no doubt [the government] is cooking up all sorts of new taxes on everyday Australians to fill it.”

“After two years of chaos and spin, Labor has cobbled together a new model with multiple thresholds and other moving parts. Who knows what unintended consequences will be buried in the fine print?

“No amount of spin from the Treasurer hides the fact that this is a full knock-down rebuild of an utterly failed policy. We await the final details of the new policy, including how it will operate and who will be affected. Australians deserve stability and predictability in superannuation, not constant changes driven by a government in desperate search of higher taxes.”

A representative of shadow assistant treasurer Pat Conaghan said the Coalition will look at the details once they’re available.

“At the end of the day, this is essentially an entirely new tax. New rules, new rates, and the devil will be in the details. Labor has promised a Treasury consultation – and we’re hopeful it’ll be transparent,” he said.

“The exact mechanism for how this tax will be applied – to avoid unrealised gains – was a pretty big omission by the Treasurer in his announcement. We think this detail matters a lot.”

Xavier O’Halloran, CEO of Super Consumers Australia, said the changes nudge the system in a fairer direction, but they don’t address the root problem.

“The system still gives too big a ‘leg up’ in the form of tax concessions to people who don’t need it to live a comfortable retirement,” O’Halloran said.

He said the SMC has called for a broader shift in policy priorities, including:

• A meaningful increase to Commonwealth Rent Assistance, which would deliver real relief to older Australians in rental stress.

• Investment in independent retirement guidance, like MoneySmart, so people can confidently plan and make the most of what they have.

• Mandatory customer service standards and consumer protections, so people aren't left fighting their super fund in moments of vulnerability.

O'Halloran added: “Super can play a role, but it’s not a silver bullet. If we want a fair retirement for all Australians, we need a policy that’s designed for the people who need help most.”