Transcript by Hon Kevin Andrews MP

Relationship Assistance, Age Pension, DSP

Location: Adelaide

Program: 5AA Breakfast Show


David: One new thing which the Government will actually provide is free relationship counselling for brides and grooms before they walk down the aisle. Joining us now is the Federal Minister for Social Services Kevin Andrews. Good morning Minister.

Minister: Good morning David.

David: What is the annual cost of divorce to the Australian economy?

Minister: There was a study about a decade ago which put the direct cost, which is family court, welfare cost etc at over $3b and suggested that if you add in all the other indirect cost it is probably in the order of about $6b a year. That’s consistent with overseas studies, for example there was a study just recently in the UK which put the cost at ?44b a year in that country

Jane: Minister I feel a little bit uncomfortable about the Federal Government kind of meddling in personal relationships, is that a new role you’d be taking on?

Minister: No it’s not a new role Jane. The Federal Government under both political parties, Labor and the Coalition, have for probably close to 50 years funded a range of organisations that provide marriage education, counselling, parenting programs, mediation. So in South Australia organisations like Relationships Australia, like Anglicare, the various church bodies and others provide these services, so this is just a new way to try and attract more people to participate in them given that two thirds of couples getting married in Australia today get married not in a religious ceremony, not in a church or synagogue or temple but indeed in a civil celebrant ceremony.

Jane: Would it be compulsory to get your marriage license, would you have to do some sort of course leading up to the actual ceremony?

Minister: No absolutely not, this is entirely voluntary. There was a small trial of this some years ago in Perth and Northern Tasmania and what that showed was that about 75% of couples actually took up the offer. Currently in Australia we think about 25-30% of couples undertake some form of pre-marriage education, lesser numbers do parenting courses and counselling if problems arise.

So if we can get these numbers up to even 50% that would be a good outcome because there are studies, including one actually done by the University of South Australia, which showed that couples who participate in a pre-marriage education program that about 5% of them actually call off the wedding because they realise they are not suited to each other.

David: Better to do it then later down the track I guess Minister?

Minister: That’s right David because we know if you take that $5-6b figure that means that each divorce in Australia, and that’s not counting separations where couples haven’t formally married, each divorce is costing somewhere well over $100,000. So we save money for the community but we also save a lot of personal trauma for the couple and if they have kids, obviously their kids as well.

David: Minister the May budget is coming up, I just want to play you a quick grab from something which Tony Abbott said last year before the Federal election.

No cuts to education, no cuts to health, no change to pensions, no change to the GST and no cuts to the ABC or SBS.”

David: Now we’re not going to bombard you with questions falling under every single one of those categories you’ll be pleased to hear but look specifically on the issue of the pension we’ve been discussing that a lot on our show for the last few days, obviously Joe Hockey is talking publicly about the unsustainability of the age pension. He has canvassed the prospect of going beyond this increase from 65-67 and looking at whether we actually raise the retirement age to 70. It does sound very much like the Government is going to be going down that path.

Minister: Well put this in context David, firstly the previous Government and we supported this, have raised the pension age or are in the process over a long period of time of raising the pension age to 67. It was I think 60 or 61 for women and 65 for men and it’s going up for both to 67 so there is precedence for doing that. Secondly I think what we need to do is have a national discussion about how we pay for a larger, older population. The great baby boom generation have just started to enter into retirement so there’s going to be a huge expansion in that older cohort of Australians, the dependency ratio in terms of the number of workers to the number of dependants is going to change markedly, people are living longer and the question is how do we pay for this in the future?

Now you can pay for it by borrowing from the future which basically means burdening the next generation or two with the costs of providing services today or we can look at a sensible way of trying to pay for some of this today. So that’s the discussion that we need to have in the context of probably the greatest demographic transition that this country has ever had.

David: That conversation has also included looking at the sustainability of keeping the age pension indexed to wages rather than inflation. Now as the Social Services Minister you could be the guy who ends up carrying the can for any kind of change to the way the pension is calculated that could actually result in the increases being lower than they have been while it has been linked to annual wages growth.

Minister: Well Governments of both political persuasions have known for a good 20 years that there has been a gap growing between pensions and allowances.

Pensions have been indexed at one level, allowances at another level and that leads to all sorts of perverse incentives in the system, for example the disability support pension is indexed at a higher rate than the Newstart or the unemployment allowance meaning there’s an incentive for people to try and get off Newstart onto the Disability Support Pension.

So it would make sense from a policy perspective to try and get rid of these perverse incentives in the system and have one form of indexation that applies to all payments and that must be part of the national discussion, otherwise the gap between the two will continue to grow into the future and that will mean that there’ll be not only the perverse incentives in the system but also huge costs into the future.

David: You mention the DSP, I was reading up about that last week for a column I did. The number of people on that went from 500,000 to 800,000 in about two decades and on current projection it’s going to top a million people by the end of the decade. I mean it doesn’t pass the front bar test, it’s not like that many Australians are suffering from the type of disabilities that prevent them from being gainful and productive members of the workforce.

Minister: Well it’s true that it’s a very large number and it has been growing, although to be fair to the previous Government they introduced different impairment tables a year or so ago and that has slowed down the rate of people going onto it but my current figures are there’s something like 2,500 people apply each week to go onto the DSP and over 1,000 are going on it each week in Australia. The biggest growth in recent years has been people who have psychological and mental disorders or problems and I think we have to look at that again.

One of the problems is that if people have been on the DSP for a number of years the chances of them ever coming off it are fairly remote. What I think we’ve got to do it is look at that group of people who prospectively might go onto the DSP and look at whether or not we can provide some more services, support to them so with that support they may be able to stay in the workforce, at least on a part-time basis rather than going onto the DSP. The problem with the DSP is historically, again regardless of who has been in Government in the past, it’s seen as a dead-end payment, people get put on the DSP and they stay there for the rest of their working lives.

Jane: Minister just before you go, the Paid Parental Leave is that still lurking in the background, it seems everything else is getting cut back, but are you going to help out the more wealthy to have their families?

Minister: Well that will go to the Parliament and obviously whatever the Parliament decides will be the fate of the paid parental leave system, but this is not a welfare measure. In the context of what we were talking about earlier, this huge shift in the demographics of Australia, one of the things we know is there will actually be a shortage of workers into the future so our challenge will be for families, how do we encourage families to be in the workforce, and that tends to be women in particular, but also how do we encourage them to have children so we can maintain the population growth. How we resolve this tension in the future will have a lot to do with our future prosperity.

David: Kevin Andrews, Social Services Minister, thank you so much for joining us on 5AA this morning.

Minister: Pleasure to be with you David and Jane.