A SOUTH-west bank has called out the federal government for maintaining pensioners' deeming rates above the Reserve Banks' successive interest rate cuts.
Official interest rates reached a low of 0.75 per cent this month. But the deeming rate, last lowered in July and a calculation of an individual's or couple's income that can affect their pension, is at 1 per cent for individuals and 3 per cent for couples.
Federal Treasurer Josh Frydenberg said it was "disappointing" banks had "not done the right thing by their customers" and passed on the RBA's cuts in full.
"The banks have decided to put their profits before their customers," he said.
But South West Credit chief executive David Brown said it was "disingenuous by politicians" to push the banks to pass on rates, while leaving the deeming rates above official interest rates.
"On the one hand politicians are bank bashing, on the other hand they are applying a deeming rate that has an impact on those in our community that should be supported," Mr Brown said.
"It assumes people who have funds are earning more than 3 per cent."
Mr Frydenberg defended the rates, which he said reflected returns available from a range of investments, and the RBA cash rate was one element considered when setting them.
"There continues to be returns available at financial institutions significantly above both the RBA cash rate, and the lower deeming rate," he told The Standard.
Mr Brown said the bank was yet to decide if it would pass the latest interest rate cuts on in full and believed the government needed a different approach to stimulate growth.
"What would be best for South West Credit would be a healthier economy and the government needs to consider other measures than simply cutting rates," he said.
"Both consumer confidence and business confidence is extremely low and in some part is caused by the government's slashing of rates,"
RBA governor Philip Lowe said in a speech last month there were signs the economy had "reached a gentle turning point".
"While we are not expecting a return to strong economic growth in the near term, we are expecting growth to pick up," he said.
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