ABC 720 Perth

JOHN MCGLUE:

Minister welcome to Drive, good to have you here.

MINISTER:

Thank you very much John.

JOHN MCGLUE:

Kevin Andrews the mantra we’re hearing is that everyone should make a contribution but the figures are showing that lower income families are making a far bigger contribution proportionately than people on higher incomes, why is that?

MINISTER:

Well we’ve tried to be fair, as you suggested, to all Australians. We think the mess we inherited from the Labor Party, $123 billion worth of deficits, racing towards $670 billion worth of debt, repaying interest at the rate of a billion dollars a month and to put that in context, in the WA Budget the Perth Children’s Hospital is just $1.2 billion, we’d pay for that in just over a month, or the new Perth Freight Link $1.6 billion, you’d pay for that in about six weeks of interest payments that we’re paying at the present time. So we’ve got a real mess and we’re trying to tackle it in a cautious and fair way and higher income earners are going to get a special levy in terms of their tax payments so we’re trying to be fair to everyone.

JOHN MCGLUE:

But proportionately the people on lower incomes, indeed people on no incomes, are the people who are making a far bigger contribution proportionately in terms of the percentage of their revenue, or their income I should say, that is getting taken away by these budget measures. Why not have that equal across all people in the community?

MINISTER:

Well if you look at the measures, you take a single income couple with a couple of dependants aged say 6 to about 12, if they’re on the minimum wage of about $30,000 a year they’re actually still going to be getting more than $20,000 in government payments and that doesn’t include a whole range of other things they might get like childcare or rent assistance if they’re renting. You look at a sole parent on $30,000, that sole parent again is getting more than $16,000 in continuing government benefits, so there are very substantial and significant benefits. The total welfare bill in Australia is about $145 billion and a large proportion of that, more than 20 per cent of it, actually goes to family payments.

JOHN MCGLUE:

Well Minister I think there’s a fair bit of agreement in the community about the size of the financial challenge that your Government is facing and that Australians, if they think about it that they themselves are facing, because there are these big deficits and there is this mountain of debt you can’t climb over but it’s a question of how you tackle that and the balance of measures across the community. You quoted some figures just then about some people and how well off they will be or the fact they won’t get hit too hard in the budget but Professor Peter Whiteford, from the Australian National University, has crunched some figures and let me quote a couple back at you. He’s saying today that a two income couple, three children, three, six and nine, average wage for one of the people, one third of the average wage for the other, a pretty typical profile of a young family. They will lose $67 per week or 3.9 per cent of their disposable income, but a single person who is on three times the average wage will end up paying $24 a week or 0.9 per cent of their disposable income. So the further up the scale you go the percentage of the income which is being taken away by these measures is far lower than those at the bottom end and that’s where the fairness issue comes in. Do you think that’s fair and if so why?

MINISTER:

Well if you take that dual income couple with the 70:30 ratio with a couple of dependants then the amount that the government pays decreases as their income goes up. So if you’re just on $20,000 a year, you’re getting $34-$35,000 in Government benefits, if you go down to $100,000 well that then reduces to less than $10,000, so this is a progressive scale. We are asking all Australians to contribute and that’s because of the size of the mess that we’ve got.

JOHN MCGLUE:

Minister Chris has called the program; he’s got a question for you. G’day Chris. CALLER CHRIS: Hello, how are you? Not so much a question but a clarification…

JOHN MCGLUE:

Okay fire ahead Chris the Minister is listening. CALLER CHRIS: In relation to the age pension, the way I see it is the Government is proposing a change to CPI rather than wages growth. If this is correct and they’re adjusting it to CPI they might see that the inflation might outstrip wages for a very good time. Is that a good decision, and is that any reason or is there any relevance is what I’m saying to that decision.

MINISTER:

Thanks very much Chris. What Chris is pointing out is that there are various ways which you can measure increases in the cost of living. Pensions will continue to be indexed twice a year, in March and September, and until September 2017 they’ll be linked to the wages index. In fact in the March 2014, the most recent indexation increase, it was actually CPI that drove that pension increase because of slow wages growth. So in March 2014 we saw pensions increase by about $14 a fortnight for singles and nearly $11 a fortnight for each member couple, so in September this year pensions will go up again.

JOHN MCGLUE:

Chris thank you for the question. Minister, older Australians you mention there about, well we’ve been talking about the CPI wages link in terms of increases in the indexation for pensions. But there have been some major changes, not only in terms of the indexation, but also in terms of the pensioner concession funding which has been on the front page of our newspaper here today in Perth. So changes for age pensions, those people who need to go to the doctor a lot, have prescriptions filled, they’re all going to face increased charges, but you’ve left superannuation alone and that’s where there are generous tax benefits for wealthier Australians. Why ask the people on the age pension to cop the financial burden here but leave the super tax benefits alone. Can you tell me why that’s fair?

MINISTER:

Well the super arrangements are part of the broader taxation arrangements in Australia and the Government has already committed to a white paper process in the latter part of this year and next year, looking at taxation across the board. The reality is that taxation is an extremely complex area, that if you change one part of taxation it has an effect on other parts and that’s why we want to, together with the states and territories, look at the broad sweep of taxation through a process which the Treasurer will initiate later in the year. QUESTION: But if you come back to this point about fairness you’re… basically there are changes to the super rules, they will happen later. The impact on pensioners and the impact on funding for pensions is more immediate; why not do both at the same time?

MINISTER:

Because of the complexity of the situation in part but for pensioners, the age increase for pensioners means that anybody over the age of about 50 won’t be effected by the age increase up to 70, and secondly all we’ve done with pensions apart from that is to pour some of the indexation of those pensions but as I said earlier, in September this year people who are on the age pension will get an increase in their pension as they will every six months thereafter.

JOHN MCGLUE:

Kevin Andrews there’s been quite the backlash to this budget from Australians right across the board and many of these you will know are people who voted for you last September. What have you learnt from the last week, what have you taken away from it that maybe you might apply in the future?

MINISTER:

John reform is always difficult. Yes we’ve expected that there would be some change in the polls as has been reflected in the polls today. But whenever a government, doesn’t matter what colour it is what political hue it is if you look back over the past few decades, if they’ve made the reforms that they believe are important there’s usually some sort of immediate reflection of that in the polls, but the reality is that in the longer term people can see what the changes are and they understand why we’ve got to do this.

JOHN MCGLUE:

But this has been a backlash against the budget from so many quarters of the community, it really has surprised everybody in the political arena. Are you saying the government isn’t surprised by that and you haven’t learnt anything from it?

MINISTER:

Well we didn’t think this was unexpected. The reality is if you do things, which we’ve felt we had to do, if this was about popularity we wouldn’t be doing these things. We’re doing these things because we inherited a mess, we believe the only responsible thing to do is to fix this mess, and that’s what we’re going to do.

JOHN MCGLUE:

Thanks for your time today.

MINISTER:

My pleasure John. Ends