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EMMA ALBERICI: Returning to Federal politics now and the Government’s attempts to sell the merits of its Budget against accusations that the pain involved in bringing down the deficit isn’t being spread around fairly.
The Social Services Minister, Kevin Andrews, is responsible for the groups considered to be hardest hit by the Government’s proposed spending cuts: families, children, seniors, people with disabilities.
The Minister joined me from our Parliament House studio.
Kevin Andrews, welcome to Lateline.
MINISTER ANDREWS: Thank you very much, Emma.
EMMA ALBERICI: We hear today that the Government is about to launch a campaign to sell the Budget. What form is that likely to take?
MINISTER ANDREWS: Well, as the Prime Minister pointed out in question time today, that is simply not true. We are not launching some media campaign, mass-market campaign, to sell the Budget.
In fact, we believe that the Budget is being reasonably well received by people who understand that we’ve got a massive financial mess to clean up from the last Government and we’ve got a plan to do it.
EMMA ALBERICI: I think his message today was that there would be no large campaign, which left sort of the door open for some kind of message to be delivered via an advertising blitz of some sort, perhaps pamphlets or something like that. Are you suggesting nothing at all is being considered?
MINISTER ANDREWS: My understanding is: no, we’re not going in for some mass-marketing campaign. Obviously we will provide information to people who are affected by changes, such as pensioners about their pension arrangements in the future, people who are in receipt of family tax benefits, but that will be just done through the normal channels of the normal correspondence that people receive from Government agencies.
EMMA ALBERICI: Okay. What do you say to the single parent earning $50,000 with two children of school age who by 2017 will lose more than 10 per cent of their disposable income as a result of your Budget, while someone earning $180,000 loses nothing?
MINISTER ANDREWS: Well, you have got to put in this context. Somebody earning $180,000 is already paying about $60,000 or more in income tax and on top of that they will pay an extra two percent levy. So that is on the one hand.
On the other, the single parent that you’re talking about with a couple of kids: depending on their income level but would be receiving somewhere in the order of $10,000 to $20,000 worth of family benefits, tax-free, from the Government in addition to their income. And that doesn’t take into account other payments such as child care payments or if they’re in rental accommodation and they’re eligible for rental assistance.
So there is still very substantial Government payments going to a person on $50,000. And even in terms of family tax benefits: if they’ve got two or three kids they will be in receipt of family tax benefits for up to a period of a decade.
EMMA ALBERICI: It’s more about what they’re losing as a result of this Budget, as opposed to what they retain. And under the Labor trajectory when you take into account the cost of living increases that you’re taking away, the single parent on $50,000 loses something in the order of $6,000 by 2017-18.
MINISTER ANDREWS: And as I said: still in receipt, depending on the age of their children and the actual configuration of the family and the income, could be still in receipt of up to $20,000 worth of tax-free benefits from the Government, effectively from the taxpayer.
So these are still very generous benefits for families. Look, the reality is: we as I said are in a financial mess. We have inherited six deficits from the Labor Party. We are galloping towards a $670 billion Commonwealth debt and we have to do something about it. Otherwise that family and that situation and particularly those children will end up paying more in the future than us taking the cautious, planned approach that we are taking at the present time.
EMMA ALBERICI: When the family tax benefits were introduced by John Howard, you supported the idea that these were not welfare payments but, rather, tax breaks for couples who have young children; a recognition of the high costs of raising children. Has that changed?
MINISTER ANDREWS: Well, what happened over time was: it was expected – and I remember being part of these discussions with John Howard and Peter Costello back at the time – that this was meant to be in effect a taxation measure.
But what has happened over time is that they’ve effectively morphed into welfare payments. Most people take them by way of welfare payments rather than through the tax system separately. And the reality is at the same time things have changed.
We need both more children and more workers in Australia and we think that drawing the line at when the youngest child turns six – remembering if there’s in a typical family two or three children that means 10 years of those benefits that most families would get – when the youngest child turns six, that is an appropriate time that we’re encouraging people back into the workforce because we do need more workers in the future with the shrinkage or the contraction of the growth of the workforce over the coming decade or so in this country.
EMMA ALBERICI: You talk about the need to pay down the debt and the deficit. You say there’s an urgent need to do so but you somehow can afford to do things like fund $20 billion medical research, $25 billion for Joint Strike Fighters, $8 billion for the Reserve Bank and $20 billion for a paid parental leave scheme. Can you understand how some people might find that confusing?
MINISTER ANDREWS: Well, each of those are quite defensible. The defence of the nation is the number one priority of a national Government.
A paid parental leave scheme is about what I was talking about and that is how we can get the right balance between having children, having population growth which is necessary for any country in any economy but also having the workers which we will need in the future.
A Medical Research Fund is very important in terms of an ageing population and dealing with the increase particularly in chronic disease and episodic disease into the future.
So each of these measures is entirely defensible. What we have tried to do is to come up with a balanced approach to the Budget, have a plan. We’re the only party that’s got a plan.
The Labor Party created this mess and, you know, refuses to say anything that they would do to get us out of the mess they created in the first place and we are doing it in a cautious way that over time we can bring the Budget back into the black, we can start to pay down the debt and we can ensure prosperity for the future generation of Australians.
EMMA ALBERICI: Budgets are about choices, though, and people might be inclined to ask why you chose to target single parents and the young unemployed rather than, say, removing the superannuation tax concessions which cost the Budget $32-odd billion this year, $45-odd billion next year and negative gearing that takes about $5 billion out of the Budget.
MINISTER ANDREWS: Well, can I say that this is the start of the reform process, not the end of it. As you may know, the Treasurer has plans for a green-white paper process both on Federation and taxation. So obviously there’s an opportunity for some of these other issues to be still looked at in the future.
But if you take the measure in relation to the under 30s and unemployment: all we are saying there is to somebody who is able-bodied they have to be able to work more than 30 hours a week, that is six hours a day, so we are talking about somebody who effectively can work full-time, that if you are not in work we want you in training so that you can get a job in the future.
We know there is a high connection between people on welfare at the age of 35 and who were on welfare at the age of 18, 19, 20. And so we have got to break that nexus and the way to do that is to ensure that we encourage young people who can work to be in work or be in training.
EMMA ALBERICI: But in defence of your policy, you recently said it’s not as if people have no options. But if someone already has a qualification, don’t have family support and can’t find a job, what options do they have?
MINISTER ANDREWS: Well, there are options in terms, for example, of moving to where jobs are. Let me take an example. In Tasmania the farmers there, the horticulturalists in Tasmania can’t find workers.
We are having to get seasonal workers in, backpackers from overseas, to come and pick crops in Tasmania and yet we have got higher unemployment, particularly youth unemployment, in Tasmania than in other places. So there is a real disconnect between jobs being available and people apparently not willing to take some of those jobs.
Now, when I started work, I took a voluntary job for I think it was about a month and I worked in a business. I didn’t get paid for it but that was…
EMMA ALBERICI: But presumably you had family support.
MINISTER ANDREWS: Well, I was just out of university. I didn’t have much support. Yes, I had a few dollars in the bank and I worked part-time as well. But that gave me the exposure to a business who said, “Yes, I think you are going to do a good job,” and they put me on.
EMMA ALBERICI: But Minister, can I ask you: were you living at home with your parents?
MINISTER ANDREWS: No, I wasn’t. No, I wasn’t. I came from… I was one of those young people who moved. And there are hundreds of thousands of young people who move. And I did that from rural Victoria to Melbourne, got an education but still didn’t have a job at that stage, worked part-time on Friday nights and Saturday mornings in a jeweller’s shop, took a job on a voluntary basis for three or four weeks and that got me a job.
EMMA ALBERICI: So two days a week of work paid your rent?
MINISTER ANDREWS: Well, I got by. And that is the way it is for a lot of people.
You look at New Zealand, for example, where I just visited: they have a different approach. They don’t pay anybody unemployment benefits when they turn up at the equivalent of Centrelink. They say, “Go away, fill in your r?sum?, get that done, go to a seminar on work. You know, four in 10 people do not come back to Centrelink. So…
EMMA ALBERICI: Sorry to interrupt, but do you accept that on the issue of horticulturalists and their needs for workers, that’s seasonal employment and not something a young person could rely on all year round to pay the bills?
MINISTER ANDREWS: No, no, I accept that and there are provisions in what we’re putting together when the detail is sorted out that will take account of seasonal workers. But I’m just using that as an example: that if you juxtapose where there are high areas of unemployment, often there are demands also for employees. And so it’s not as if there are no jobs out there.
But in the end we are saying if you’re able-bodied, if you are capable of working, you can basically work full-time, you are not in training, then what is your excuse? And we should be encouraging young people to get a job.
EMMA ALBERICI: On the issue of the Medicare co-payment: in devising this policy, what did the Government of which of course you are a senior member, what did you see as the key purpose of introducing the co-payment?
MINISTER ANDREWS: Well, there’s a couple of purposes. One is, as you know, much of this actually goes to establishing a major medical research fund in Australia. And medical research is important not just because of the ability to overcome individual illnesses that people have and may have in the future. It’s also a major industry in this country as well. And so that is something that is worthwhile us encouraging.
But secondly, the number of times that people go to the doctor on average has increased quite substantially. When the Hawke Government looked to introduce a co-payment, they argued at that stage that people were going to the doctor four times a year on average. Today people are going the doctor 11 times a year.
EMMA ALBERICI: Can I stop there? Because I think there’s been a number of fact checks on that and I think they have come up with 5.6 visits a year as the Medicare statistics show, not 11.
MINISTER ANDREWS: Well, I won’t take up the time arguing with you, Emma, because I am relying on what the Health Minister tells me. And we all rely on each other in this.
But whether it’s gone from four to 11 or it’s gone from four to roughly six ,there’s still been an increase in it; there’s been a 42 per cent increase in the amount of money that we spend on these things. If it’s okay to ask people as we have done for a long time to make a small co-payment for their pharmaceuticals when they go to the pharmacy or the chemist, then why as a matter of logical principle it is not also okay to ask them to make a small co-payment in going to the doctor?
EMMA ALBERICI: If the Medicare co-payment is about making the health Budget more sustainable, why is the money being used to fund medical research?
MINISTER ANDREWS: Well, medical research is very important for the future, both in terms of, as I said…
EMMA ALBERICI: But it doesn’t seem to be solving the problem which you cited as the one meant to be being fixed by this?
MINISTER ANDREWS: Well, I said what were the reasons you asked me behind it and I said: one is that this endows a major fund which is for the good of this country. It employs people in this country.
It may well lead to major breakthroughs and, therefore, a major investment in pharmaceuticals in the future.
But secondly, there is an element, just as the Hawke Government explained when I think Brian Howe was the Health Minister at that stage, that making a contribution can make the difference between people being serious about going to the doctor; that is, that they have got a real reason to go to the doctor.
EMMA ALBERICI: The new head of the Australian Medical Association, Brian Owler, has warned that the $7 co-payment will particularly hit the working poor. Is that cause for concern?
MINISTER ANDREWS: Look, you’d expect the head of the AMA to say that. It doesn’t surprise me that you get that sort of comment. Obviously we will continue to monitor this but…
EMMA ALBERICI: Why would you expect him to say that?
MINISTER ANDREWS: Oh well, he represents the medical profession, or part of the medical profession in Australia. Of course he is going to make that sort of argument. I have no problem with that. That is the reality of the democracy in which we live in.
EMMA ALBERICI: But isn’t it in the… I would have thought that it was in the interests of the medical profession as business people to have more people going to the doctor and paying them money because $2 of the $7 stays with them.
MINISTER ANDREWS: Many medical practices in Australia have basically closed off their books. They’ve got as many people as they can actually take.
Remembering: we are keeping bulk billing. It is up to the doctor what they actually charge. It’s always been the case and will remain the case. Bulk billing will remain. So that is all in the hands of the individual doctors. But, you know, there are many, many, medical clinics, many medical practices in Australia where essentially they have closed off their books because they can’t take any more patients. They can’t take any more people.
EMMA ALBERICI: Just quickly, because you referred to it earlier: on the paid parental leave scheme the Commission of Audit thought that the $5 billion a year would be better spent on helping families pay for childcare. What is your view?
MINISTER ANDREWS: Well, the Productivity Commission is looking at the childcare issue at the moment and we will wait on their report.
But the paid parental leave scheme is not a welfare measure. It’s a workplace measure and it is essentially saying that, as I said earlier, we have to get the balance right in the future between parenting, having children, bringing up families, encouraging population growth in the country and ensuring that we have enough workers.
In 2004, the net growth in the Australian workforce was 175,000. For the entire decade 2020 to 2030 it’s been estimated that it will be just 125,000 for the entire 10 years. In other words: we drop from 175,000 on average in 2004 to about 12,500 for each year from 2020 to 2030. That means that there will be a requirement for more workers.
So how we get that balance is what we are trying to achieve in this in terms of, you know, one of the most massive demographic shifts that this country is seeing.
EMMA ALBERICI: I understand that your Department has conducted a review of the paid parental leave scheme. When will you be making the findings of that review public?
MINISTER ANDREWS: As far as I know that is coming out fairly shortly. I haven’t seen the final timetable for that but I think it’s coming out shortly and I think it’s quite positive.
EMMA ALBERICI: All right. We are out of time. Thank you so much for coming in for us.
MINISTER ANDREWS: My pleasure Emma.