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Monday, 13 May 1985
Page: 1797


Senator GILES —My question is addressed to the Minister representing the Minister for Social Security. Now that the system of payment of pensions directly to the bank accounts of beneficiaries is in operation, can the Minister comment on the acceptability of this both to pensioners and to financial institutions?


Senator GRIMES —I have not had any very late reports on the operation of the direct credit system for pensions, but I do know that considerable progress has been made in the last few months by the Minister for Social Security and his Department in the development of this project. There is obviously considerable advantage, in terms of both costs and quality of service, in direct deposits. If this were to become the major normal method of payment for a majority of social security payments it would allow flexibility, it would eliminate the fear of people losing their cheques and it would also be a considerable advantage to the Department in overcoming fraud.

Some 600, I think, financial institutions have been in contact with the Department in the planning of details of the conversion to direct credit. As well as this, the Department has met with all the major banks, building societies and credit unions. There is a joint working party to clarify several critical operations issues which obviously come up.

About half of the financial institutions have agreed to offer concessions to the Department's clients. State and Federal taxes will not be met by the four private banks. However, State governments have agreed to exempt various social security payments from the financial institutions tax that they apply.

In January letters were sent to just over one million pensioners and a slightly less number of letters were sent to family allowance clients. The response has been good. About 60 per cent of the forms have been returned, which is a very high number for social security. I believe that the situation is well under control and that it is now working smoothly. Some of the fears that people had have been alleviated and further fears will be alleviated in the future. A similar situation happened years ago when the Department changed the method of social security payments from a book system to cheques. Whenever a change of this type is made there is some uneasiness. There is no doubt that, on the grounds of economy, efficiency and the avoidance of fraud, the direct deposit system is the best way to go. I will seek further information from the Minister for Social Security so I can give a more adequate report to the honourable senator and the Senate.