MONDAY, 8 JULY 2019
SUBJECTS: Age pension deeming rates
MATT DORAN: Linda Burney, thank you for joining ABC News.
LINDA BURNEY, SHADOW MINISTER FOR FAMILIES AND SOCIAL SERVICES: Thank you
DORAN: Now, for people at home who don’t understand what the deeming rate is could you explain it for us?
BURNEY: Sure. The deeming rate is the amount or what the government deems you as a pensioner are earning off your savings and secure investments. And that determines what your pension amount will be. And that’s why it’s so important. So many people who are deemed by the government to be earning too much to get a full pension are placed on a part pension. And the issue is that the deeming Rates assumed by the government is 3.25% which is well above the reserve bank has now moved to in terms of the cash rate. And it’s also importantly well above what any secure investment, be it a long term deposit, actually delivers to a pensioner.
DORAN: How many people do you think are impacted by the fact that that deeming rate hasn’t shifted for some four years I believe.
BURNEY: It’s four years, and there are two deeming rates. And it depends on how much savings and what your circumstances are. And it has not moved since 2015. And there is an urgent need for the government to move in terms of the deeming rate. It’s hypocritical for the government to say oh well the reserve bank has set the cash rate at one percent, and the government is demanding banks hand on that one per cent to mortgage holders, when their own deeming rates is well above anything that a pensioner or part pensioner can earn. In terms of numbers, our numbers were about 627,000 people. That’s a lot of people. I noticed in one of the newspaper articles today, they were talking about 770,000 people directly affected by inflated deeming rate.
DORAN: We’ve heard from the new Social Services Minister Anne Ruston. She has suggested that an announcement of a shift is imminent. She ordered this review as soon as she came into office. Are you expecting any quick turn around here, any quick change in the system?
BURNEY: Well I met with Minister Ruston and I have to say I think she’s a very practical, pragmatic person. And Labor would welcome a move in terms of deeming rates. But the question is when will it happen? By what mechanism would that rate be determined? And importantly, what that rate would be? They’re the questions that we’ll be watching very carefully. There’s no reason for the government to wait to September or as the suggestion could be, march next year.
DORAN: Have you done any calculations to suggest how much if you were to deeming rate to that point – or you know a point closer to the RBA’s official cash rate, how much that would cost the budget?
BURNEY: The Labor party has done some analysis with the resources that we’ve got available. And we’ve published those. And they’ve been well reported in the papers today. Depending on your personal circumstances, it could be something like $65 a week or it could be much more than that. I think the important thing is to say that it’s actually the government that has the resources to be able to work out what these amounts are. I noticed that there’s a lot of commentary today around changing the deeming rate and what that would mean to the surplus. My response to that is the government has been short-changing pensioners and part pensioners for years. And what is the cost to those people?
DORAN: Linda Burney thank you for your time.