SENATOR THE HON ANNE RUSTON

MINISTER FOR FAMILIES AND SOCIAL SERVICES

MANAGER OF GOVERNMENT BUSINESS IN THE SENATOR

TRANSCRIPT

INTERVIEW WITH ALLISON LANGDON, WEEKEND TODAY SHOW

Sunday, 14 July 2019

Topics: Cut to pension deeming rates to boost payments for around one million pensioners.

E&OE……………………………………

‍Allison Langdon: While low interest rates might be great for those with a mortgage but for older Australian's it has had a dramatic and devastating impact on their savings. To counter this the government is today announcing plans to boost pension payments for around one million Australians by cutting the deeming rate which is used to calculate income from investments. Minister for Families and Social Services, Anne Ruston, joins us now from Adelaide. Minister a very good morning to you.

‍Minister Ruston: Good morning.

‍Allison Langdon: So just how much will pensioners get back and when will they see this money?

‍Minister Ruston: Okay. Well, up to $800 a year for single pensioners or up to, over $1000 for couples. It will be backdated to 1 July although we will take a few weeks to put the technology in place to make the payments actually occur. But it will be effective of 1 July, so everybody who - of the 25 per cent of pensioners that are affected by deeming rates can expect to see more money in their fortnightly payments. So it's some time in the coming weeks.

‍Allison Langdon: So I mean Labor has long accused you of short changing pensioners. We've seen five interest rate cuts since the deeming rate was last adjusted. Why has it taken so long to act?

‍Minister Ruston: Well, one of my first actions when I became the Minister for Families and Social Services a couple of months ago was to ask my Department to provide me with detailed advice on deeming rates. And having received that advice and now had the opportunity to consider it I would say that the current economic conditions and the current market conditions for financial investments show that it is appropriate for us to be cutting to reflect what is actually going on in the market place at the moment.

‍Allison Langdon: And the cost of living has never been higher. Is this rate cut enough for those who do rely on their pension?

‍Minister Ruston: Well, what we need to do is to realise deeming rates actually are. What it is is I suppose a simplified, streamlined way where pensioners no longer, or since this has been in place, have not been required to constantly report to Social Security or to Centrelink every time they might have received a dividend or payment from a share or an asset that they held. So instead of asking them to do that and constantly having the uncertainty of what their payment is likely to be every fortnight we deem what that return is likely to be on the basis of an estimate of what's going on in the market at the time. So it really is an instrument with a very specific purpose and the purpose of it is actually to make it easier and more streamlined for pensioners to be able to deal with Centrelink on a day to day basis.

‍Allison Langdon: Well, why not reduce it to actually match interest rates?

‍Minister Ruston: One of things that we are reducing to match interests but one of the things, I think, that's been out there in the public is that the overnight cash rate, that the RBA overnight cash rate is but one of the elements that are considered when you deal with the returns that you're likely to receive on financial assets - it is not the only one. So what we do is we look at a whole basket of different assets that people might be holding their financial assets in and come up with an estimation that we believe accurately reflects what the people could be able to get in the market place today.

‍Allison Langdon: What's the economic impact of this boost? Are you expecting that pensioners will go out and spend this money? And are you still expecting that your government will deliver a surplus after this?

‍Minister Ruston: Well, well certainly the surplus is not in any jeopardy whatsoever. The Treasurer has been very clear about the delivery of a surplus this year and into the future and this doesn’t change that. But obviously we would expect that pensioners are likely, with the extra money that they'll see in their fortnightly payments that they're likely to spend it but that's entirely up to them what they chose to do with it.

‍Allison Langdon: Alright Minister, thank you so much for joining us this morning.

‍Minister Ruston: My pleasure.

ENDS