Welfare system – 774 ABC Melbourne
E&OE
JON FAINE:
The still freshly in office Abbott Government are dealing with welfare reform as we kick off the new political year. Kevin Andrews is the Minister for Social Services in Tony Abbott’s cabinet and ministry.
Mr Andrews, good morning to you.
KEVIN ANDREWS:
Good morning, Jon. Happy New Year.
JON FAINE:
Thank you and likewise. We’ve heard you in the news and on AM this morning saying that the nation’s welfare system is unsustainable. What’s unsustainable about supporting people who need help?
KEVIN ANDREWS:
We should support people who need help, Jon, and we should do it in a way which we can sustain it into the future and that has to be looked at in the context of a fairly rapidly ageing population which has two immediate consequences. One, a larger group of people who are dependent, largely older people, and secondly, a very significant shrinkage in the growth of the work force.
JON FAINE:
So if you means test more government handouts if you’re more careful in spending money where it ought not be spent – and obviously this morning Saul Eslake has put negative gearing in its cost to the economy right up there as well- if you were more careful there’d be more money to spread around.
KEVIN ANDREWS:
Well, we’ve got to balance these things, but the reality is that the demographic change is something which will continue at a pace and we have to look at all these things in the context of that demographic change. What we’re looking at is not about sort of the immediate future, but about how in the medium to long term we can ensure that we don’t end up on the pathway that some other nations in Europe have over the last decade or so.
JON FAINE:
Can you assure the listeners that people will not – anybody, no one will be worse off under the reforms that you’ve got in mind?
KEVIN ANDREWS:
Well, this is not about taking people off welfare who are on welfare, it’s about saying firstly where people are capable of working, can we encourage them to work, but into the future can we ensure that we do have a safety net which is sustainable, that there is a welfare system in place which is sustainable, but at the same time how we can ensure that we continue to grow the economy, have the workers that we need in the future, and be able to afford all of this.
JON FAINE:
So you can’t assure people that they – some of them won’t be worse off
KEVIN ANDREWS:
Jon, you know, this is a favourite sort of question of people like yourself. Can you assure this or that in the future [indistinct]…
JON FAINE:
[Interrupts] Well, you didn’t answer my question so I assume that if you decline to take the opportunity to give that assurance that you’re not prepared to.
KEVIN ANDREWS:
Well, John, I’ll answer it this way, this is not about removing people on welfare from welfare at the present time. This is about having a look at how we can prudently sustain the system into the future so that…
JON FAINE:
By sustain it you mean make it cost less. That does mean taking some people off the sort of payments that they’re getting now.
KEVIN ANDREWS:
If I can finish, that means that ensuring that in the future this system is sustainable. People who need welfare, who deserve welfare, will get welfare and income support, but at the same time ensuring that address this in the context of a rapidly ageing population.
JON FAINE:
Well, let’s not mince words. By sustainable you mean cost less. If the system is to cost less in future, that means governments want to give less money to the people getting it now or some people don’t get anything.
KEVIN ANDREWS:
That’s a very simplistic way of looking at things, Jon, and unfortunately…
JON FAINE:
How else is there a way of looking at it?
KEVIN ANDREWS:
…unfortunately government is much more complex than that, and what I’m saying is what we are looking at is, in a prudent way, just as we did back in the Howard Government, looking at in the future are there ways, for example, of ensuring that people who can are able to get a job. So, for example, if you look at some of the measures we’re putting place, if you’re under 30 and you move from, say, a metropolitan area to a regional centre to get a job and stay in that job for 12 months you’ll get an extra $2500, if you stay for two years you’ll get another $4000, and if you have a family, you’ll get, in some circumstances, even more than that. If you’re an employer and take on someone who’s been on benefits for six months or more who’s over 50, then you’ll get a payment of $3250. These are the sort of incentives or encouragements that can help people who are capable of working to get a job and to be in work and I think that’s very important into the future.
JON FAINE:
Your predecessor, Jenny Macklin, got into hot water when she was in charge talking about how she would be able to sustain herself and even, if necessary, people in a family on the sort of welfare payments that the government provides. I’ll issue the same challenge. Do you think you could live off the sorts of payments that you’re in charge of distributing?
KEVIN ANDREWS:
I think it’s very difficult to live on some of these payments in the long term. I think she was specifically asked, as I recall about this time last year, about Newstart, and there’s been a debate about the adequacy of Newstart. The reality is that a very significant number of people who receive Newstart do for a short period of time, up to about six months, in which they use it to find another job. And one of the difficulties is that we’ve treated everybody on Newstart as one homogeneous group. There’s a group who use it for a very short period of time, relatively short period of time, and then there’s another group who seem to be stuck on Newstart for a longer period of time, and I think we need to be looking at different cohorts rather than just treating these people all the same.
JON FAINE:
Is – the system is so complicated, Minister. Anyone’s who’s been involved is usually put through a testing initiation to try and understand the peculiarities that have evolved over the years. I would seem, reading between the lines, that your appointment of the former head of Mission Australia, Patrick McClure, to review the system, might lead to a simplification. Is that what you’ve got in mind?
KEVIN ANDREWS:
Look, these are systems that have been put together bit by bit in often an ad hoc way over not just years or decades, and to give you an example of one of the things that’s resulted from that is that the payments such as Newstart are indexed at a different rate to the pensions such as the disability support pension. The result of that is that over, what, a number of decades now, the difference in the amount of payment that people receive on Newstart versus the DSP has grown quite significantly. That creates, in some circumstances, a perverse incentive for people to get on to the DSP, which has largely been regarded in the past as a kind of set and forget payment. Once people are on it, they’re on it, and that’s the end of it.
JON FAINE:
Well, you’re permanently incapacitated for work if you’re on a disability support pension.
KEVIN ANDREWS:
Well, there’s been changes to that and the Labor Government made some changes which we supported in the last term of parliament, which has reviewed the disability [indistinct] and that’s starting to come into effect now. So these things are changed over time, but to come back to your original point, yes, it’s a very complex system and it would be better if we had a much more simple system, but that can’t simply be done overnight.
JON FAINE:
No, it can’t be done overnight, but is it your overall intention, because so much money is spent administering the system, if you cleaned it up there’d be more available for the intended beneficiaries.
KEVIN ANDREWS:
If we could have a more simple system in the future then I think most people would say that’s desirable, even the people who are in receipt of income support. I mean, particularly – we’ve been talking about on elderly – old – an ageing population, well, for older people to be able to negotiate all the rules and the ins and outs of this system I think is becoming increasingly complex for them as well.
KEVIN ANDREWS:
Alright, and as I said in my introduction, your announcement comes at the same time as the newspapers have got hold of a submission made by Saul Eslake. A private submission, not in his capacity as adviser for one of the big banks, but he has made a submission to the Senate Economics Reference Committee saying, and it’s a fairly scathing assessment, that government housing policy for 20 years has been a complete failure and there are two things he says, things like first home buyers grants, all just force the market up – and this is his economic analysis, not a political opinion – and also that, for instance, negative gearing forces new home buyers out of the market.
JON FAINE:
Now, negative gearing is one of the most expensive subsidies that governments provide through taxation to the middle class. Why not review that?
KEVIN ANDREWS:
Well, I’m not reviewing that. Mr McClure is not looking at negative gearing.
JON FAINE:
Well, it’s outside of your – but the Government could.
KEVIN ANDREWS:
Well, Government could do lots of things, Jon, but in this instance we’re not doing that. Mr McClure’s basically looking – going back to his report of a decade ago, looking at that, looking at what’s occurred in the meantime, and will give us some advice in a month or so about it and we will then consider that advice.
JON FAINE:
So you’re prepared to have a far reaching review into government expenditure in an area where the most vulnerable people may be affected, but the Government’s not interested in reviewing government expenditure of a similar proportion where the mostly upper middle class beneficiaries interests’ are affected.
KEVIN ANDREWS:
Well, there are more beneficiaries than that. I mean, if negative gearing wasn’t in place you wouldn’t have the same investment in property which occurs at the present time and with an increasing number of people who choose to rent for a variety of reasons, that actually assists that market in terms of providing a lot of the rental accommodation in Australia.
JON FAINE:
People who choose to rent or have no choice but to rent, Minister?
KEVIN ANDREWS:
Many people choose to rent for a variety of reasons, Jon. I’m renting.
JON FAINE:
But most people would love to get into the housing market and as Saul Eslake and others have noted and time and time again it’s been remarked upon, they can’t get into the market.
KEVIN ANDREWS:
Yeah, and I acknowledge these are complex issues, but my simple answer is that what Mr McClure’s looking at the present time doesn’t include negative gearing or housing.
JON FAINE:
What a pity. Thank you for your time this morning.
KEVIN ANDREWS:
My pleasure, Jon.
JON FAINE:
Kevin Andrews, Minister for Social Services in Tony Abbott’s Government.