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CANBERRA - Authorities were working to fix the problem of frozen investments in non-bank fund management companies, the Australian Government said yesterday.
Investment management funds and mortgage funds have frozen billions of dollars in funds because of a flood of redemptions since the Government guaranteed deposits only in banks.
Respected institutions such as Challenger, Perpetual Investments, ING, AXA Asia Pacific and Australian Unity, among others, have all been forced to suspend redemptions by freezing some A$11 billion ($12.2 billion) in deposits.
The Opposition accused the Government of making policy on the run and blamed its initial decision to guarantee bank deposits without any cap on amounts for the escalating crisis in non-bank institutions.
However, the federal Government late on Friday imposed a A$1 million voluntary threshold on the deposit guarantee and announced some other measures in a bid to ease the situation.
It also said yesterday that while the funds had frozen the lump sum investments, regular income streams were still being paid.
Finance Minister Lindsay Tanner said the Treasury was working with the Australian Securities and Investments Commission to see what more could be done to get the situation back to normal.
He backed Treasurer Wayne Swan's comment that people who had found their savings frozen should seek help from Centrelink.
"I understand that there are some snobbish elements in the Liberal Party that shudder and shake whenever they have to utter the word Centrelink," Tanner told Network Ten yesterday.
"But the truth is that a very large proportion of Australians ... do access entitlements through Centrelink."
Opposition treasury spokesman Julie Bishop said last week the Government had bungled the guarantee.
But Assistant Treasurer Chris Bowen defended the Government's performance. "The Government's handled this issue particularly well all the way through," he said.
Bowen said the decision to change the scheme was in response to emerging circumstances.
The Government had acted flexibly in response to "hourly developments".
- AAP
