Labor MP slams $800 aged bonus for 1 million retirees

One million Aussies will get an $800 cash bonus, after the government bowed to political pressure. But not all are praising the move.

Deputy opposition leader Richard Marles is calling the Morrison Government’s move to slash deeming rates - putting another $800 in the pockets of 1 million retirees - a “slap in the face” to pensioners because it did not go far enough.

“Pensioners today will feel short-changed. We’ve seen five reductions in the cash rates since the deeming rates last changed,” Mr Marles told Sky News.

“I think pensioners today can feel like this decision is a slap in their face. This is a government which is trying to balance the books on the back of pensioners.”

“It’s far too little, too late,” Deputy Labor Leader Richard Marles said of the deeming rate changes. Picture Kym Smith

His criticisms come after the Federal Government, bowing to political pressure to reduce tax on savings and investments, announced this morning that one million older Australians will score an immediate $800 annual bonus.

The Minister for Families and Social Services, Senator Anne Rushton, told the Today show the bonus would be backdated to July 1, reaping the benefit for more than 600,000 pensioners.

The Government will boost pensioner payments by cutting the deeming rate, which affects earnings on shares and interest rates.

But Mr Marles wasn’t alone in blasting the government’s decision. His colleague, fellow Labor MP Linda Burney, slammed the decision on Twitter just hours after the announcement.

“The Gov has been using pensioners to prop up their budget for years. It’s not good enough,” she posted.

Pensioners will be disappointed by today’s announcement on deeming rates. Interest rates are at record lows and the Gov has been using pensioners to prop up their budget for years. It’s not good enough.

— Linda Burney MP (@LindaBurneyMP) 14 July 2019

Others were quick to agree with the Shadow Minister for Families and Social Services, sharing and re-tweeting her.

One Twitter user expressed concern that the decision wouldn’t benefit those who truly need it.

Yes, it is disappointing, but for the govt to say that changing the deeming rate, to be closer to the current interest rate, is a pension increase is false.
Only pensioners with assets/investments that earn interest will benefit. People who rely solely on the pension get nothing.

— Deb Kirby (@DuchessFrida) 14 July 2019

Linda Burney argued the deeming rate should be more in line with the Reserve Bank interest rate, which is currently at 1 per cent, telling ABC, “This is too little too late, and seniors groups and retiree groups are saying very clearly this morning: the way the Government has moved and the amount the Government has moved is simply not good enough.”

“It’s not good enough,” said Shadow Minister Linda Burney of the bonus scheme. Picture: AAP/Paul Braven.

Prime Minister Scott Morrison’s government has come under fire since its May election win as interest rates have fallen yet again and the rate at which pensioners are “deemed” to earn income has remain fixed.

Asked on the Today show why it took so long to act on the rate, Senator Rushton said deeming rates was one of the first things she looked at after the election.

“The current economic conditions and the current market conditions for financial investments showed it is appropriate for us to be cutting them to reflect what is actually going on in the marketplace at the moment,” she said.

“The cost of living has never been higher.”

She said deeming rates made the lives of pensioners “easier and more streamlined”.

Minister for Families and Social Services, Anne Ruston speaks on Today.

“Because of deeming rates, pensioners were not … required to constantly report to social security or to Centrelink every time they might have received a dividend or a payment from a share or an asset they held.

“Instead of asking them to do that and constantly having the uncertainty of what your 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.”

However, the Government has stopped short of reducing the deeming rate to match interest rates because pensioners with sizeable assets were assumed to get better returns through investments other than savings accounts.

The changes mean single pensioners will see up to $804 extra a year in their pockets, and couples $1,053. Picture: istock

Asked why she was not reducing the rate to match interest rates, Senator Ruston said pensioners and others relied on several different income streams.

“One of the things … that’s been out there in the public is that the overnight cash rate that the RBA (sets) is but one of the elements that are considered when you deal with the returns that you are likely to receive on financial assets,” she said.

“It is not the only one.

“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 would be able to get in the marketplace today.”

Senator Rushton said she expected the flow on effect of the cash bonus might include increased spending among older Australians.

She said the outlay by the Government would not jeopardise its promise to deliver a surplus this year.

Aged pensioners whose income is assessed using the deeming rate will receive up to $31 extra a fortnight or $804 a year and couples will receive $40.50, or $1053 annually.

[e-mail]