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Deeming fiasco: Richardson should stop playing politics



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SHADOW MINISTER FOR SOCIAL SECURITY, CHILD CARE AND RETIREMENT INCOMES

NEWS RELEASE

DEEMING FIASCO; RICHARDSON SHOULD STOP PLAYING POLITICS

Today's belated admission that the Government got it wrong on the 10% deeming rate is not good enough, especially as the 8% rate is probably too high given recent falls in interest rates and the prevailing market climate.

Unless Senator Richardson gives an undertaking that future half yearly adjustments will be made on the basis of a clear and

objective published formula, the process will remain open to political manipulation, providing an irresistible temptation for a fix-it Minister to play to his constituency by setting a figure

above market rates.

Senator Richardson's humiliating backdown is a recognition of a commercial reality which has been blindingly apparent to everyone else for the last 6 months - that interest rates were falling and that 10% was not sustainable.

The cave-in is also a direct result of the Minister's refusal to honour his earlier undertaking to the Senate Standing Committee on Community Affairs, with whom he promised in December last that he would consult before finally agreeing on a 10% rate.

But instead of doing so he chose to spend January swanning around Europe while the Department of Social Security proceeded to advise all pensioners that the rate would be 10%.

Having been comprehensively locked-in in his absence, the Minister spent the last 3 months trying to defend the

indefensible until the commercial pressure on the banks made the heat intolerable.

It is now abundantly clear that the 10% rate was unsustainable from the outset and was only grudgingly offered on a conditional basis by the banks after much political arm-twisting.

For further infoxrmation contact Senator Richard Alston on [06] 277 3605

8 May 1991