Deeming rates cut as the federal government moves to further stimulate the economy.
Deeming rates have been cut for the second time in less than 12 months as the federal government moves to further stimulate a sorry economy savaged by the coronavirus.
Along with a $750 one-off payment to pensioners and those on JobSeeker and Carer’s Allowances, deeming rates have been reduced after the latest rounds of Reserve Bank cuts to official interest rates.
The lower deeming rate has been reduced from 1.75 per cent to one per cent for financial investments up to $51,800 for single pensioners and $86,200 for pensioner couples, and the upper deeming rate has been reduced from 3.25 per cent to three per cent for balances over those amounts.
Official interest rates now sit at 0.5 per cent and the best bank deposit rates on offer are 2.25 per cent.
Treasurer Josh Frydenberg announced the cuts yesterday as part of a package that will cost the government $17.6 billion.
“In addition to the stimulus package, the government is lowering the deeming rates at a cost of $600 million, to reflect the recent changes in interest rates,” Mr Frydenberg said.
“Both the lower and the higher deeming rates will be reduced by half a percentage point, benefitting around 900,000 Australians, including 560,000 aged pensioners.”
The stimulus package was announced as the World Health Organisation declared the coronavirus a global pandemic.
“These are challenging times, but the Australian people and the Australian economy are up to this challenge,” Mr Frydenberg said.
“Our economy has continued to grow and our economy remains resilient.
“The genesis of this economic shock was outside of our control but our response is not, and our disciplined and careful budget and economic management over the last six years has put us in a position that we now have the fiscal flexibility, we now have the financial firepower to respond to this shock.”
In other news affecting Centrelink customers, income streams including Newstart, Sickness, Wife Pension and Bereavement Allowances will be axed next week, with the majority of those welfare recipients to be transferred onto JobSeeker payments.
The JobSeeker payment will be the main income support from 20 March for eligible Australians who are at least 22 years of age but under Age Pension age.
A spokesperson for Services Australia – formerly known as the Department of Human Services – said the changes were “part of the government’s commitment to making Australia’s welfare system simpler and fairer”.
The JobSeeker payment and the Widow, Partner and Sickness Allowances will increase marginally from 20 March, from $604.70 per fortnight for singles aged 60 or over (after nine months) to $612 per fortnight, and from $504.70 per fortnight to $510.80 per fortnight for each member of a couple.
The JobSeeker payment, previously known as Newstart, has been the subject of fierce criticism over in recent years and labelled totally inadequate as a means of support for anyone seeking work.
Services Australia says that about 7834 Wife Pension recipients were expected to be affected by the changes, half of whom would transfer to JobSeeker payments, while the remainder would move to other payments, including the Age Pension and Carer’s Allowance.
“Wife pensioners who transfer to JobSeeker payment will not have mutual obligations until after they attend a transition interview with Services Australia, where it will be determined whether an exemption is appropriate,” a department spokesperson said.
Sickness and Bereavement Allowance recipients will not be able to make new claims after 20 March.
All those on the payments will continue receiving funding until their exemption or bereavement period expires, the spokesperson said.
“Where a person’s partner dies on or after 20 March 2020, they will be able to claim bereavement support through the new JobSeeker payment or Youth Allowance, depending on their age,” she said.
“Bereaved partners will be exempt from waiting periods and mutual obligation requirements for the period of bereavement. Bereaved partners will receive an upfront lump sum payment in addition to their first fortnight’s entitlement based on their circumstances.
“Services Australia has written directly to all affected recipients advising of the upcoming changes and has information available on its website and telephone lines.”
Australian Council of Social Services CEO Cassandra Goldie told InDaily she wanted to ensure those who needed income support understood that they could still access payments.
“A key concern is that people won’t know that there is an allowance for bereavement or an allowance for illness once the payment becomes known as the ‘JobSeeker payment’,” she said.
“We urge the government to ensure that there is clear, easy-to-access information out there for people who need these payments.
“We also urge the government to review take-up of these payments over time to detect if there has been a decline in claims, and quickly address any decline.”
Are you relieved that deeming rates have been cut but concerned that the 20 March changes will make allowances difficult to access?
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