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Monday, 9 September 1996
Page: 3016

Senator WOODLEY —My question is addressed to the Minister for Social Security. I draw the minister's attention to the budget announcement that a deeming rate of five per cent is to be applied to small bank balances held by pensioners and those who receive—

Opposition senators interjecting

Senator Alston —On a point of order: I am sitting next to Senator Newman. It is absolutely impossible for her to hear over this hyena and some of his colleagues. The matter of concern is that it seems to be a deliberate strategy. It is not accidental because it happens all the time. It is most unfair to Senator Newman, who is wanting to hear what Senator Woodley has to say. You ought to direct those on the other side to have the courtesy to allow questions. It is bad enough interrupting answers—we can't make ourselves heard—but you should at least allow the question to be heard in silence.

Honourable senators interjecting

The PRESIDENT —Senator Woodley, when it is quiet enough to hear you, I will ask you to commence your question again. Order! Would the clocks please be set again for this question.

Senator WOODLEY —Thank you, Madam President. My question is addressed to Senator Newman. I draw the minister's attention to the budget announcement that a deeming rate of five per cent is to be applied to small bank balances held by pensioners and those who receive a Social Security allowance. I ask: one, can the minister confirm that around 600,000 pensioners will have their pension cut because of this change? Two, can the minister confirm that, as well as aged pensioners, widows, carers, sole parents, the unemployed and the disabled will also be hit by this change? Three, is the minister aware that the interest rate that most of the banks are offering on small balances is currently around 0.5 per cent, meaning that the government will be deeming these people to be receiving an interest rate 10 times that which they actually receive?

Senator NEWMAN —Senator Woodley, I thank you for your question. The situation is that people who have low savings have been able to put them under the bed or have been giving a special advantage—

Senator Schacht —Are they putting them under there with the reds?

Senator NEWMAN —Madam President, could you please ask those people opposite to be quiet? Senator Woodley wants to know the answer.

The PRESIDENT —Senator Woodley is not able to hear the answer. Please be quiet.

Senator Sherry —How much will you raise?

Senator NEWMAN —Senator Woodley is not the only person who would like to hear the answer; I would guess that there are an awful lot of Australians who would like to hear the answer. The situation is that a lot of pensioners have been giving the banks a great advantage by allowing them to have the holdings of pensioners and allowees without paying proper returns on the investment.

That is exactly what happened when the previous government introduced extended deeming, which we supported. As soon as the previous government introduced that procedure, the banks at last started to give elderly people and other people on low incomes a fair return for their investments. We are saying that that was a good thing to do. Already there are two major banks, as I understand it, who are giving a deeming rate of five per cent. I believe that, with the new measures being introduced, other banks competing for business will be in the same situation.

It is a proper thing to maximise the income going to people on low incomes. I do not think that anybody would deny that that is something we should all aspire to to make sure that people on low incomes maximise their income from whatever source. I would expect the same support from other parties in this chamber that we gave to the extended deeming proposal. As to the specifics of the 600,000, I cannot give that answer to you now, Senator Woodley, but I will get you the detail.

Senator WOODLEY —Madam President, I ask a supplementary question. I thank the minister for her answer. I am aware of the pension deeming accounts. However, these are available only to aged pensioners. So I am wondering what advice the minister can give to all those other people on pensions and allowances who will also be hit by this change.

Senator NEWMAN —My understanding is that the basis of your question is incorrect and that it is not restricted to pensioners.

Senator Hill —Mr President, I ask that further questions be placed on the Notice Paper .