GRACosway Weekly Wrap Up: Deeming rates, private health insurance & APRA capability review

19 July 2019
  • Prime Minister Scott Morrison addressed a ‘Bush Summit’ in Dubbo, announcing the Government will establish a parliamentary select committee to look into the needs of rural and regional economies.
  • The Government has lowered deeming rates, benefiting around one million people.
  • A Grattan Institute report released this week has called for urgent reform of the private health insurance system.
  • Minutes of the latest Reserve Bank meeting released this week suggest the RBA has left the door open to further interest rate cuts, amid concern about jobs and the lack of wages growth.
  • The Treasurer released the Australian Prudential Regulation Authority (APRA) Capability Review.
  • There have been further developments in relation to press freedom, including revelations that the Australian Federal Police requested the fingerprints of two ABC journalists earlier this year.
Treasurer Josh Frydenberg announced that deeming rates have been lowered, benefiting around one million welfare recipients, including more than 600,000 pensioners. The lower deeming rate for financial investments of up to $51,800 has been cut from 1.75 per cent to one per cent, along with a smaller cut to deeming rates for financial assets over the threshold. Deeming rates are used to assess income generated from financial assets and assume a set rate of income, regardless of actual returns. Deemed income is then included in the income test when Australians apply for a pension. The Treasurer explained that the changes, backdated to 1 July, will deliver an extra $800 for singles and more than $1,000 for couples per year. Despite criticism from Labor and the Greens, Mr Frydenberg said the Government supports the current process for determining deeming rates and ruled out establishing an independent body to set the rates.

The Grattan Institute published a report on the private health insurance system this week, which urges the Government to conduct a review of the sector amid rising premiums and falling membership rates. Grattan Institute health economist Stephen Duckett said there is confusion about whether private health insurance should complement the public health system, or serve as a substitute. In response to the report, Health Minister Greg Hunt said the Government is undertaking the “most significant reforms to private health insurance in over a decade” and consulting with the healthcare sector on the next round of proposed changes. Labor reiterated calls for a Productivity Commission inquiry into the private health insurance system.

Treasurer Josh Frydenberg released the Australian Prudential Regulation Authority (APRA) Capability Review this week, which was triggered by the Hayne Royal Commission. Led by an expert panel chaired by Professor Graeme Samuel, the Review made 24 recommendations – 19 to APRA and five directed to the Government. Recommendations include new powers to object to the appointment of executives and directors at regulated entities; a greater focus on competition; more “strategic and forceful” communication; and the creation of a new superannuation division.

Press freedom has remained topical this week, following revelations that the Australian Federal Police (AFP) wrote to two ABC journalists in April, requesting their finger and palm prints and stating they were suspects in relation to three alleged offences. The request came two months before an AFP raid on the ABC’s Sydney office. It was also reported that the AFP planned to raid News Corp’s offices on June 6, with suggestions the raid was called off following public backlash over raids in previous days on the ABC office and the home of News Corp journalist Annika Smethurst.

The Federal and SA Parliaments will sit next week. Budget Estimates will take place in SA and Queensland.

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