Tony Abbott (Warringah, Liberal Party, Shadow Minister for Families, Community Services, Indigenous Affairs and the Voluntary Sector) Share this | Link to this | Hansard source

My question is to the Prime Minister. I refer the Prime Minister to letters now being sent to pensioners about the increase in deeming rates for seniors and retirees, which, of course, has the effect of cutting their pensions. Given that this cut, decided by his own minister, will affect over one million pensioners, does the Prime Minister stand by his guarantee to pensioners that they will not be a dollar worse off under his government? Does the Prime Minister really understand the impact of government policies on vulnerable people?

Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

I thank the honourable member for his question. As you know, deeming has been a policy which has been in operation now in this country for more than 15 years. When the previous government were elected, I understand they put in place new deeming arrangements from 1996. There are a range of changes for pensioners that come into effect from this Thursday, 20 March. They are as follows: (1) the first $125 payment of the increased utilities allowance, which pensioners will get every quarter; (2) the first payment of the increased telephone allowance, increased by $11 a quarter for those with a home internet connection; (3) indexation increases to the pension of 1.7 per cent or $9.10 per fortnight for singles; and (4) the deeming rates will increase by half a per cent, as the honourable member referred to before. Previous deeming rates have been changed over time by the previous government—both up and down. Let’s not try to gild the lily, shall we?

The net result on the pension rate will therefore depend on individual circumstances. If pensioners’ assets have reduced in value due to volatile share-market activity, this will be taken into account in their pension assessment. If the value of shares has decreased, Centrelink recognises that therefore the total value of an individual’s asset has also decreased, so the income able to be derived from that investment will be reduced. Deeming has been around for a long time. It was applied by the previous government at approximately this time each year to adjustments for those who are on the pension. These adjustments have been made consistent with the previous timetable.

I conclude where I began: in terms of these additional payments which will be made for the first time to those on the pension—in particular, the first of the $125 quarterly payments of the utilities allowance—our intention is to try and make the financial circumstances of those on these fixed incomes a little bit better. It is very tough out there, given the cost-of-living pressures they are under with groceries, petrol and a whole range of other things as well. This is intended as a modest measure to assist those who are finding the cost-of-living pressures from their weekly basket of goods difficult to handle, but a new $500 utilities allowance should help at the margins.