‘Slap in the face’: row erupts over cuts to deeming rates for pensioners

Josh Frydenberg has ruled out setting up an independent body to set deeming rates as Greens push for Senate inquiry into pensions.

Treasurer has defended the government’s deeming rate cut. Picture: AAP

Josh Frydenberg has ruled out setting up an independent body to determine deeming rates as he says he will “not take lectures” from Labor on its handling of pensioners’ issues.

Deputy opposition leader Richard Marles said today that the Morrison Government’s move to slash deeming rates - used to estimate how much some pensioners earn on their financial investments - were a “slap in the face” to pensioners because did not go far enough.

Pensioner groups have welcomed the government’s decision to cut deeming rates for more than 630,000 older Australians but some still want an independent body to set the rate.

The Treasurer today said that power would stay with Social Services Minister Anne Ruston as he hit out at the attack from Labor, which was widely criticised by seniors over its franking credits policy.

“It the 1% it’s gone down to for the lower deeming rate, we think that’s a very good outcome. As I said, you can get a six-month term deposit for 1.75%. So even a term deposit is above the lower deeming rate,” he told the ABC.

“We think that the appropriate process is the current one ... it’s a process that has served the country well.

“And I note that the Labor Party have had mixed messages on this, because Linda

Burney is saying one thing and Jim Chalmers saying another. He supports the current process, just as we do.

“But what we will not take is a lecture from the Labor Party after their $45 billion retirees tax.”

“We're strengthening the arm of around one million welfare recipients” - Treasurer @JoshFrydenberg#Insiders #auspol pic.twitter.com/0Fqq4YuXnu

— Insiders ABC (@InsidersABC) July 13, 2019

Labor has blasted the Morrison government’s slashing of deeming rates, saying the extra $804 a year for pensioners is “far too little, far too late.”

Meanwhile, the Greens have called for a Senate inquiry into how the government sets the pension and welfare rates, with leading advocacy groups saying changes to the deeming rates don’t go far enough.

National Seniors Australia and the Combined Pensioners and Superannuants Association, want the government to explain how it arrived at the new rate.

“It’s too tempting to have the deeming rates controlled by governments who have been using this for too long as part of their budget balancing process,” NSA’s Ian Henschke said.

“Unless we have a clear understanding of the policy decision making process, this looks arbitrary and even if we do understand the process, it should be set by an independent authority.”

The Greens will refer the issue to a Senate inquiry when parliament resumes next week.

Labor’s family and social services spokeswoman Linda Burney said the Opposition had to consult the sector before offering support for such an inquiry.

She also said she is “agnostic” as to whether or not the rates are set by an independent authority, saying it’s a decisionfor the government. But Ms Burney said pensioners continued to be short-changed by the coalition. “This lowering of the deemingrates today is far too little and far too late,” she told reporters in Sydney.

“It has been four-and-a-half-years that they have been dudding pensioners by charging inflated deeming rate.” Council on theAgeing’s Ian Yates said the cut was needed as interest paid on savings and term deposits have been hurt by the central bank’sdecision to cut the cash rate.

“We look forward to further discussions on how the deeming rate might be set in the future to remove the current level ofuncertainty,” he said in a statement. Mr Yates also pointed out that deeming rates did not affect 75 per cent of pensioners.

The payments will start from the end of September, but will be backdated to July 1.

The move also affects people on the disability support pension, carer payment, the parenting payment and Newstart.

Earlier today, Deputy opposition leader Richard Marles called cuts a “slap in the face” to the pensioners.

“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 on Sunday morning.

“This is the first time deeming rates have moved … It is only a quarter of a per cent. This is far too little, far too late.

“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 on pensioners.”

.@RichardMarlesMP on deeming rate changes: This is simply not enough. Pensioners today will feel short-changed. We’ve seen five reductions in the cash rate since the deeming rate was last changed back in 2015.

MORE: https://t.co/aBdUk7fREL #speers pic.twitter.com/FItlHLVDUP

— Sky News Australia (@SkyNewsAust) July 13, 2019

The deeming rate on the first $51,800 of a single pensioner’s financial assets, and the first $86,200 of a couple’s, will drop from 1.75 per cent to 1 per cent.

The deeming rate for the balance will go from 3.25 per cent down to 3 per cent.

Affected pensioners will receive up to $40.50 extra per fortnight for couples and $31 for singles after the deeming rate cuts.

Social Services Minister Anne Ruston told the Sunday Telegraph her cuts to deeming rates showed the government had listened to angry pensioner groups.

“It will mean more money in the pockets of older Australians,” she said.

“(I have) made it a priority to be thoroughly informed on this issue to make sure that any decision made on deeming rates was appropriate and reflected the current returns on financial investments”.

“The decision shows the Morrison Government has listened to and acted on the concerns expressed by older Australians who receive a part pension.”