Independent body must set deeming rate: Centre Alliance
Centre Alliance Member for Mayo, Rebekha Sharkie, has called on the Federal Government to set up an independent agency to set the deeming rate used to calculate the fortnightly payments for more than a million Australian pensioners, including about 6500 recipients in Mayo.
The call comes after two consecutive interest rate cuts by the Reserve Bank in as many months leading to many pensioners receiving cuts to payments that are not reflected by the worth of their investments.
It also follows a statement by Prime Minister Scott Morrison in Question Time yesterday when the PM said the Minister for Families and Social Services had made a submission to the Expenditure Review Committee to review the rate.
“Asking for a review is welcome, but frankly it doesn’t go far enough and pensioners are out of pocket because we have a system that relies essentially on a rate being set at the whim of a Minister,” Rebekha said.
“Since winning office, I have consistently called for the Government to establish an Independent Social Security Commission whose job it would be to set payments such as pensions and part-pensions to keep up with the cost of living AND changes in Australia’s economic circumstances,” she said.
“The Government needs to act immediately on the deeming rate and then set in place a fairer and more equitable system so we avoid situations like this into the future.”
The deeming rate is an ‘assumed’ rate of return on investments such as term deposits that is set by the Government for the purposes of assessing incomes for a range of pension payments including aged, disability and veterans.
Many pensioners are allowed to earn up to $172 a fortnight before their government payments are reduced, depending on their income tests. Different thresholds apply for couples depending on their circumstances.
The deeming rate for singles is 3.25 per cent for their assets over $51,800 and 1.75 per cent for those under that level.
This rate has had an impact on assessed returns on term deposits thanks to the latest record low interest rates.
There are about 1.1 million part-pensioners affected by the deeming rate in Australia, including about 630,000 people who receive a part-rate aged pension.
The most recent data from Mayo is from September 2017 which showed about 6500 aged pensioners receive a part-rate.
“Social security payments of all descriptions are falling behind community expectations and falling behind the ever-rising cost of living,” Rebekha said.
“But our aged pensioners, in particular, do not have the option of working more hours to overcome shortfalls in their fixed incomes because of the vagaries of Government policy and volatile economic circumstances,” she said.
“Older Australians have paid taxes and contributed to our economy throughout their working life and should be supported, not penalised by our pension system.
“We need an independent body to respond quickly and transparently to set mechanisms such as the deeming rate.”
In August 2018 Rebekha seconded a Private Member’s Bill by the Independent Member for Indi Cathy McGowan to set up an Independent Social Security Commission.
In her first week in the 46th Parliament, in response to community alarm about the deeming rate and interest rate cuts, Rebekha lodged questions in writing.