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Social Security Minister comments on government proposal to tax interest rates on pensioner bank deposits; unemployment figures; budget forecasts; Cabinet leaks; and factions

PETER THOMPSON: The Social Security Minister, Graham Richardson, has told our Canberra correspondent, Maxine McKew, that he's planning to stick by the Government's controversial decision to assess - for tax and benefit purposes - the interest on pensioners' bank deposits at a rate of 10 per cent. The move, designed to flush pensioner savings out of low interest bearing deposits, was initially greeted with confusion and concern when it was announced in the Budget. By late last year, Senator Richardson promised to review the rate, but in this interview with Maxine McKew, Senator Richardson explains why he has now decided to back his original Budget proposal.

GRAHAM RICHARDSON: My inclination is because if one looks at, say, the Commonwealth Bank, the National Australia Bank, the State Bank of New South Wales, the State Bank of South Australia - there are a lot of banks, now, which are offering this 10 per cent account.

MAXINE McKEW: But by doing this, some pensioners will lose part of their entitlements, won't they?

GRAHAM RICHARDSON: They'll lose part of their entitlements. It was always envisaged that they would. I think the reason we did it was to say: Look, there's several billion dollars worth of pensioner money hanging around in banks, getting paid off in nought per cent or 3 and 4 per cent, and if we could get them to put it in accounts at 10 per cent, then obviously, pressure on the taxpayer eases and those pensioners who are affected have more disposable income. And that really is the right kind of reform.

MAXINE McKEW: Could I just turn to another area of your portfolio, that is, unemployment benefits. Now, you acknowledged, late last year, that the number of dole applicants was rocketing up. Are you bracing yourself for more bad news with the next set of figures?

GRAHAM RICHARDSON: Well, clearly, the numbers have been going up and have continued to do so over the December-January period, so I don't think there's any doubt that they'll be going up for a little while yet.

MAXINE McKEW: And of course, higher outlays on unemployment are eating into the Budget surplus, now estimated to be down to half the Budget forecast. Do you think it's time the Government, perhaps, admitted some error? Perhaps the time to do that is when you announce the industry policy.

GRAHAM RICHARDSON: Well certainly, when the Government looks at some of the pronouncements that were in the Budget, some of the forecasts, they haven't been correct, and so you can say that you got some of the forecasting wrong. I don't believe, though, that any of the macro-economic settings, as they call them, have been wrong. You can argue only at the margin, and only in hindsight, so I don't think the Government's got to make any major admissions of error.

MAXINE McKEW: But is the Government being driven, with this industry policy, by a sense that you really have to try something new?

GRAHAM RICHARDSON: I don't think it's a question of trying something new, but when you've been in government for eight years and you've got two more years to go before the people get another chance to look at you, I don't think you can say: Look, we'll rest on our laurels, we'll never change; there'll never be a new initiative. Every Budget of every year has contained new initiatives, and when one looks at an industry statement which is being broadened a little bit by the Prime Minister, then it is time to reassess and to make changes. Economies aren't static. They change all the time, and governments have got to change with them and, hopefully, a bit before them so they can lead the change.

MAXINE McKEW: The problem is we haven't seen any details yet. All we've seen is a lot of scrapping about who is to present the policy.

GRAHAM RICHARDSON: Oh, we didn't have any scrapping, really. I read some reports in the paper about scrapping.

MAXINE McKEW: Yes, but those reports would not have appeared if some key Ministers, or their staffers, had not leaked their versions of what happened in Cabinet. Do you think it's time for a bit more discipline?

GRAHAM RICHARDSON: Well, I don't think that anyone who was at the Cabinet meeting would regard the reports that we saw in the newspapers as, in any way, accurate, and so I can't believe that anyone in the room leaked it. Perhaps it's a third hand leaking, telling someone who told someone who told a journalist, but whatever ....

MAXINE McKEW: Are you sure about that?

GRAHAM RICHARDSON: ... it was inaccurate, and that's very disturbing.

MAXINE McKEW: Doesn't it make the Prime Minister, though, look as if he's not running a tight ship, that he can't keep his troops in line? I mean, somebody was leaking.

GRAHAM RICHARDSON: Well, I mean, if one goes back over the course of my political lifetime, the last 20 years, it's very difficult to get 20 people in a room and have not one of them ever breathe a syllable of it, and that is something that's gone on, no matter who's been in government. But certainly, some of the leaks that have occurred in recent times are a matter for concern, and I didn't like reading what I read the other day and I am sure that my colleagues didn't either.

MAXINE McKEW: Senator, one other area. What about a report that you told the Prime Minister, before Christmas, that he no longer had the support of your faction?

GRAHAM RICHARDSON: Well, I just never told him that, and I find it pretty appalling that that sort of thing can be written. But, again, after 20 years, you get used to that sort of thing, so I don't think I'll worry too much about it. I'll ignore it.

MAXINE McKEW: So the Prime Minister still has the loyal support of the New South Wales Right?

GRAHAM RICHARDSON: Well, he's always had it. I don't think that the Prime Minister would be the Prime Minister if that support hadn't been there in the first place.

MAXINE McKEW: Well, why then, are key members of your faction still openly canvassing the possibility of Paul Keating taking over sooner, rather than later?

GRAHAM RICHARDSON: I don't know who these key members of my faction might be. I keep reading about these key members and what they're doing. All I can say is that there's no challenge on. Paul Keating has indicated, very clearly, that he doesn't see a challenge on. I don't see a challenge on and I talk to Paul nearly every day, so I just think this is all nonsense.

PETER THOMPSON: The Social Security Minister, Graham Richardson, with Maxine McKew.