Address to Australian Institute of Company Directors, NFP Directors Lunch
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Thank you Phil. (Phil Butler, MC)
Ladies and Gentlemen, it is a delight to be with you today.
I’d like to take this opportunity to outline the Coalition’s approach to the civil society – and to place it in the context of some of the broader issues facing my Social Services portfolio. I use the expression ‘civil society’ because the term ‘not-for-profit’ fails to capture the holistic outlook of the sector.
As some will know, I’ve had a long personal involvement with the organisation of civil society, ranging from being an official of sporting associations through membership of hospital boards and ethics committees to active involvement in social services organisations.
And it’s this grassroots experience that formed my views about the critical role of the agencies and organisations that arise organically from the community in response to human need. It’s a perspective that has been reinforced by my experiences and observations as a Parliamentarian and Minister over the past two decades.
I have seen communities – both indigenous and non-indigenous – where the basic structures of civilised society have collapsed. Places afflicted by dire poverty where women and children are at constant risk of abuse. Places where dependency is the rule and self-sufficiency is the exception. Places where the only people employed are on the public or not-for-profit payroll and the last vestiges of individual initiative have long since evaporated, leaving behind the social residue of hopelessness.
It’s these cumulative observations and experiences that have forged my views about both the role of government and its proper limits. And I’ve generally concluded that while certain core functions of government are indispensible, we should strive to minimise the institutional footprint of the state wherever and whenever possible.
Then there’s the larger context in which government operates. And in the year 2014 that context is dominated by the need for fiscal constraint at home within the framework of a turbulent economy abroad.
Here in Australia we’ve so far managed to escape the worst of what some have come to call the ‘Great Recession’. I would strongly contend that our present good fortune stems from the past good fiscal policy of John Howard and Peter Costello. When the Coalition departed the Ministerial Wing of Parliament in November 2007, we left behind a budget in surplus and a cash nest egg of $45 billion in Commonwealth coffers. And that meant Australia was safe behind a solid fiscal bulwark when the global financial crisis shook the world in late 2008.
But we’d be very foolish to assume that merely because so far we’ve weathered the storm reasonably well, all danger is past. Australia is not immune to the economic realities that confront our peer economies throughout the developed world. For us – just as much as for them – serious structural reform of government is an absolute imperative. At the heart of that reform agenda is the proper balance between productivity and humanity. Or in other words – how do we build an Australia that both promotes economic vitality and preserves social responsibility? How do we accommodate the needs of an ageing population that deserves high quality medical treatment and first-rate long-term care without breaking the budget? How do we provide sorely needed support for the seriously disabled without borrowing our way into European-style fiscal oblivion? How do we ensure our children have a quality education to thrive in the face of fierce 21st century global competition without pummelling the private sector with job-killing taxes?
THESE are the pivotal questions of our time upon which turn our prospects for prosperity in the future.
The most up-to-date data from the Australian Office of Financial Management – for the September 2013 Quarter – reveals gross Commonwealth debt of $283 billion. That works out to over $12,300 for each and every Australian, including the newest of newborns. Before they can talk or they can walk, each Australian infant has been saddled with a $12,300 bill to pay for Labor’s disastrous home insulation and rort-ridden school hall construction schemes; for its massive blow-out in the immigration budget caused by the loss of control over border protection; for its botched NBN and Australia Network tenders.
Not only does this massive debt reflect monumental incompetence, but it also constitutes an act of intergenerational theft. An act of theft that prospectively picks the pockets of our children who’ll be left to pay the bill. It’s a raid on the future prosperity of young Australians, both born and yet-to-be-born, who’ll be saddled with the cost of Labor’s profligacy and ineptitude.
And if our current situation isn’t good, our future prospects are looking far, far worse. Less than five months ago the Abbott Government inherited a fiscal trajectory from its Labor predecessor that puts the Commonwealth on track to a projected debt of $666.6 billion in 2023 – nine years hence.
Last year the Department of Social Services and its associated agencies spent in excess of $110 billion – a sum that constitutes roughly 25 per cent of the Commonwealth Budget. This is serious business that must be addressed in a serious and sober manner.
Our fiscal circumstance can’t be wished away through an exercise in magic thinking.
A few statistics will illustrate the problem’s scope as it pertains to my portfolio. From 1992 – 2012 the number of Disability Support Pension recipients more than doubled, going from 378,558 to 827,460 – an increase of 118 per cent. Yet over those same two decades, Australia’s population only grew from 17.5 million to 22.7 million – an increase of just under 30 per cent. There’s clearly something wrong here.
And when current projections indicate that payments will total almost $18 billion by 2017, the DSP is clearly on an unsustainable trajectory. The same is true of the Newstart Allowance, whose recipients increased in number from 399,401 in 2008 to 549,772 in 2012. I should note this statistic does not include the single parents moved on to Newstart by former Prime Minister Gillard in 2013.
But the real problem will manifest itself, not over the next five years, but over the next fifty. As our population continues to grey and the ratio of working age to pension age Australians continues to decrease the challenge will become even more profound and daunting. And if we lack the moral fibre to make the hard choices now, we’ll bequeath to our children and children’s children an economy hobbled by debt. Their life options will be tarnished and their personal prospects diminished. They’ll curse us for our cowardice, and they’ll be right.
At all times we must bear in mind two inescapable laws of economics.
- that Government has no money of its own, but instead merely redistributes wealth generated by individuals and the private sector;
- And that a vibrant, dynamic economy and business community are essential to fund the social services we want, expect and deserve.
Thus the task of balancing economic vitality and social responsibility will require a willingness to entertain new ideas that some would deem bold and others might even think audacious. With apologies to Captain James T Kirk of the Federation Starship Enterprise, we must be prepared to go where no government has gone before. But we’re fortunate to have a very skilful pilot to help us navigate the shoals and eddies of social policy reform. Former Mission Australia head Patrick McClure has tremendous experience in the not-for-profit sector and government policy. He was deputy chairman of the Welfare-to-Work Consultative Forum in 2005-2006. And along with the Commission of Audit, the McClure welfare policy review will seeking ways to do what has to be done, more efficiently and effectively.
We’ll also be looking to make your lives easier by lightening the compliance burden inflicted by gratuitous and duplicative regulation. When it comes to red tape, we want to emulate Alexander the Great, whose solution to the challenge of the Gordian Knot was to slice it apart with his sword. Metaphorically speaking – of course. And we want to take a proverbial knife to the red and green tape that is stifling creativity and initiative in both the for-profit and not-for-profit sectors.
Our aim is to reduce the cost of regulation by at least $1 billion a year, every year. And for my part, the Department of Social Services will move towards a single comprehensive contract model with each organization that delivers services on its behalf.
We’ll simplify the auditing process so that only one financial report will be required annually from each contracting organization. We’ll work to streamline reporting arrangements, asking organisations to report on a small number of key outcomes through automated processes where possible.
And we’ll abolish the Australian Charities and Not-for-profit Commission, which in the view of this Government imposes an unnecessary and ponderous compliance burden on the sector. The Australian Institute of Company Directors does a superb job of promoting and supporting directors and boards operating in both the profit and the not-for-profit sectors. There’s no reason for a Government to reinvent a smoothly turning wheel. When it comes to good work already done by private-sector organisations, our job should be to facilitate it, not to duplicate it.
Those in Government must always be on guard against the temptation to think that their wisdom is equal to their power. For as Friedrich Hayek warned in The Fatal Conceit: The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.
Rather than a cumbersome top-down government-knows-best approach that quite frankly smacks of patronizing paternalism, we believe in bottom-up, grass roots enterprise. We believe in adept and adroit private not-for-profit organisations that can adapt to changing circumstances and evolving needs. We believe that no-one knows local communities better than local community members. They have the best grasp on the problems in their back yard and how to best address them.
And this bottom-up principle is the motivating force behind our decision to set up the National Centre for Excellence. The abolition of the ACNC and establishment of the Centre will move the focus from the stick to the carrot. We want to transfer the focus from coercive compliance and regulation to collaborative education, training and development.
I see the Centre of Excellence as a fount of both innovation and advocacy. I noted the comments on capacity challenges in your 2013 Social Impact Study. The National Centre for Excellence can play an important role in helping you to address these issues. The Centre’s mandate will include support for the range of organisations that make up civil society, regardless of size, type or mission. Its ambit will include charities, clubs and associations that focus on social welfare, the arts, environment, health, medical research, animal welfare, education, and more. And the Centre’s mandate will encompass both organisations that receive government funding and smaller local community groups that get little or no direct government support.
A one-size-fits-all attitude can never work because the needs in the tiny rural hamlet of Fitzroy Falls, New South Wales are vastly different from the needs in inner-urban Fitzroy, Victoria. And the requirements of a human service agency will be light-years away from an arts centre or educational institution.
It’s a fundamental tenet of the Coalition worldview that civil society is neither an instrument nor an agent of the state. You’ll always know your business better than we do and that’s why our ultimate aim is to transfer ownership of the Centre to the sector itself.
We also intend to resurrect a Community Business Partnership that will be chaired by the Prime Minister, with me as his Deputy. This is a body that was initially established under the former Coalition Government of John Howard and I’ll be providing additional details on the Partnership Mark II over the coming months. But at this preliminary stage, I can tell you this concept will be a direct reflection of our belief that empowering the community is more important than empowering government. The Community Business Partnership will bring together leaders from the business and community sectors to -promote philanthropic giving in Australia. Under former Prime Minister Howard’s leadership, the Partnership Mark I introduced the Private Ancillary Fund. This enables individuals, families and business to donate privately for the benefit of Australian charities into perpetuity. It’s very similar to the family foundation model in the United States. Almost 1,000 Private Ancillary Funds have been created since 2001 with some $2.7 billion invested. In 2009-10 almost $200 million was directly distributed to charities and other worthy organisations by these funds.
We know Australians are very generous. Australian Taxation Office (ATO) data for tax deductible donations tells us that in 2010-11, NSW taxpayers claimed deductions for $860 million, Victorians for $599 million and Queenslanders for nearly $332 million. Altogether Australia donated $2.21 billion in 2010-11 to deductible gift recipients registered with the ATO. And these figures don’t even include donations for which people didn’t claim tax deductions nor raffle tickets and fundraising dinners that aren’t classified as eligible for deduction.
This a good start. But we can and should do more. Philanthropy is a community-building exercise, not merely at the recipient end of the equation, but at the donor-end as well. The giving of charity promotes comity, unity and civic responsibility. And that doesn’t just mean giving money, but includes the giving of personal time as well. Australia has a strong history when it comes to volunteering. We see volunteerism come to the fore particularly in times of disaster and emergency. As many communities are at this time affected by bushfires, I’m reminded especially how much we rely on that volunteer spirit. A community that gives freely of its time and financial resources is one with strong cohesion and social capital. And this is the kind of activity that governments should be fostering rather than fettering.
We will seek to nurture the distinctive, generous, mutually supporting culture for which historically Australia is known. The object of our exercise is to reinvigorate the quintessentially Aussie grass roots energy that has made this the best place to live in the world.
This volunteering spirit is very well served by organisations like the AICD. As John Colvin noted in his forward to the 2013 social impact study, the AIDC plays a key role in fostering ‘world leading performance of Australian NFP boards and directors’.
Much of this work involves your members giving their time and I’d like to pay tribute to each and every one of you for what you’ve done, what you’re doing and what you’ll continue to do.
And working with you we want to implement policies that will put Government, not in the drivers’ seat of policy, but under the bonnet providing the power that will help you to steer a good Australia to an even better place. Thank you.