SENATOR THE HON ANNE RUSTON

MINISTER FOR FAMILIES AND SOCIAL SERVICES

MANAGER OF GOVERNMENT BUSINESS IN THE SENATOR

TRANSCRIPT

INTERVIEW WITH LAURA JAYES, SKY NEWS

Monday, 15 July 2019

Topics: Deeming rate cuts to boost pension payments for around one million Australians.

E&OE……………………………………

Laura Jayes: Retiree groups are pushing for the deeming rate to be set by a more independent body. This comes after the Government made a decision over the weekend that will put up to $800 more in the pockets of retirees. Joining me now is Minister Anne Ruston. We see, Anne Ruston, that retiree groups are somewhat happy, but are still pushing for more. So how did you arrive at this deeming rate decision at the weekend? And what dictated it?

‍Minister Ruston: I didn't arrive at the decision on the weekend, this has been a process that I've been working through since I was first appointed as the Minister for Families and Social Services a couple of months ago. But what I did was I considered a number of things. Firstly, obviously, the broader economic situation that Australia finds itself in. But particularly, I looked at a suite of financial assets from the more liquid, sort of easy access end of term deposits or at call accounts, right the way through market-linked assets like superannuation or ASX 200 stocks. But I also looked at how currently people who are impacted on deeming are holding their assets. And so that was what was the driving force behind the changes, both to the lower and the upper rate. Certainly, my research and the information that I got indicated that there was definitely a case to be made for both rates to be dropped, but there was a very strong case for the lower rate to be dropped by the more significant amount.

‍Laura Jayes: And so, were you in part guided by the cost to the budget as well?

‍Minister Ruston: Well actually I didn't take into account the cost to the budget in determining what I thought was a fair and reasonable reflection of the deeming rate as it related to the kind of returns that you could expect to get for the assets that people are currently holding as part of their portfolios. We looked only at the people who currently are impacted on by deeming, I didn't look more broadly than that, because obviously this is the cohort of people. So my primary focus was on what is a fair return, and how do people currently hold their assets? But obviously, you always need to look at this and the broader economic conditions that exist within the Australian marketplace.

‍Laura Jayes: Yeah. Under the Howard Government, the deeming rate used to [inaudible] …with the official cash rate. Now, I take your point that you just made, that things have certainly changed and you've got to look at a number of complex areas of investment that all kind of coincide with each other. But how did you arrive… there's two streams here. One is a 1 per cent deeming rate for investments below 50 grand; above 50K is now being set at 3 per cent down from 3.75. Why did you arrive, why was there only a short or a small change in that higher deeming rate? Because that's, I think, what seems to be retiree's groups, and the Greens, others seemed to be a little bit perplexed about.

‍Minister Ruston: Well certainly, what we need to realise first of all is that the lower deeming rate impacts everyone. So everybody has the benefit of the lower deeming rate for the first $51,800 if you're a single or $86,200 if you're a couple. But the financial assets that tend to be held by people who have got higher amounts of financial assets, they do have a much greater proportion of them held in things like superannuation or other market linked assets as opposed to people who have a much smaller amount are perhaps a little risk-averse or need to have their money much more easily at call, so that was why the two different rates. But we've seen over - particularly over the last twelve months - we've seen some very strong returns in the superannuation area and our stock exchanges remain quite strong. So it was really, it's a case of looking at the assets they held, looking at the likely returns they were going to get. But what I would also say is that if people are concerned that they're not realising the kind of returns that we're suggesting that perhaps they should do, Centrelink actually has a free financial information service, I attended it last week and I thought it was very, very good and very informative. So if people would like a little bit of information about how they might be able to get better returns on their investments, then that free service is available to them.

‍Laura Jayes: Is this a set and forget approach from you or are you building in a review biannually or annually and are you still keeping open to the idea of having an independent body set this deeming rate?

‍Minister Ruston: Well in terms of an independent body, no, because I actually do believe that the people elect us to make decisions. I believe I had the information that I needed to make the decision that has been made and I'm very comfortable about the decision and the fairness of the decision that was made and announced yesterday. And also, we all need to remember we've backdated it to July 1 which means that recipients will get a full year's benefit out of this, it's not just going to start in September as it otherwise might. But one of the things that I will give an absolute commitment, and I've already spoken to both Ian Henschke and to Ian Yates, the two people at the head of major bodies that represent older Australians and said that I'm open for a discussion about any issues they think [audio skip] develop good policy on. So I'm very much open to further discussions on any area for older Australians. But in the case of the deeming rate, there are many things that impact on the deeming rate, sometimes we can go for years without any great changes which we saw recently when the…

‍Laura Jayes: So will you schedule in a review to do this every six months or every twelve months, would that be prudent?

‍Minister Ruston: Well look, certainly I'm more than happy to keep it constantly under review, but there will be certain things that happen in the marketplace that are more likely to trigger a need for us to make a change. If we don't see much change in movement in terms of returns on assets, there is probably no need for us to go back and look at it. But if we start seeing changes in the marketplace, then that probably should be the thing to trigger any change or any review.

‍Laura Jayes: Okay. Just finally, Newstart - it is back on the agenda and actually COTA has put this back on the agenda. Will you look at that in this term of parliament? $40 a day and you know COTA is not the only group that's calling for this to be increased.

‍Minister Ruston: Well the Government's position remains unchanged in relation to Newstart but one of the things that I'm very, very keen to do is to work with my colleagues at the Department of Jobs as well as within my agency, because I have responsibility for the Disability Employment Service, is to make sure that we are putting in the best possible pathways so that people who currently are without a job, that we can get them back into the workforce. I mean you've probably heard it a million times and you're going to hear it a million again, the best form of welfare is a job.

‍Laura Jayes: Yes we have. Anne Ruston, we appreciate your time this morning, appreciate it.

‍Minister Ruston: My pleasure, thank you.

ENDS