PVO Newsday with Peter Van Onselen

E&OE

PETER VAN ONSELEN:

I am joined now in Melbourne by the Assistant Social Services Minister Alan Tudge. Thanks very much for being there.

ALAN TUDGE:

G’day Peter.

PETER VAN ONSELEN:

What is going on with the GST? I mean, there is so much ground being laid by the Government it seems. We have heard it again today with the comments from the Prime Minister about fairness being an important prerequisite.

Is it fair to say, that one way or another, something is going to happen in this space, it is just a matter of what?

ALAN TUDGE:

Well, we are committed to tax reform, as you know Peter. We are trying to go through a considered journey, taking the Australian people with us; to outline firstly what some of the problems are; then putting up some of the options; and then coming down with a proposal which we could take to the Australian public.

We were criticised back in the 2014 Budget for, in some respects, springing ideas too quickly onto the Australian public and I don’t think we are going to make the same mistake in this instance.

We are going to go through a methodical process, discussed at length so that we can take the Australian people with us.

PETER VAN ONSELEN:

But at the end of that process – I understand what you are saying – I think that is obviously an important thing to do, one of the issues with the previous Prime Minister was this idea of there not being a sale job that went with the ultimate policies that were sometimes announced.

Is your point essentially – this is the sale job? We are going through that process and that might also include, obviously consultation on the way through?

ALAN TUDGE:

Absolutely Peter, we have already started. We undertook this consultation process from several months ago now, when we put out the tax white paper discussion paper. It outlined a lot of the current issues and it pointed out, for example, that our income taxes are becoming higher, relative to some of our competitor countries; that our corporate taxes are becoming higher relative to some of our competitor countries. And if they remain high then we are at risk of not encouraging people to work and at risk of not getting investment into our nation that we might otherwise get.

Now this conversation has now continued. We are obviously engaging cooperatively, constructively with the state Treasurers as well in the process. And of course we want to bring the Australian people along on the journey with us so that they understand why we are even talking about this, they can understand what the options are and have a preparedness therefore, to support a reform agenda.

PETER VAN ONSELEN:

So, when the Prime Minister said that fairness is an important component; you are not falling into the trap though are you, as a government of saying no one will be worse of.

I mean, by definition when you do any sort of reform, there has always got to be some cohort or quotient within society that are worse off. It is about fairness, even if that ends up being the case. Correct?

ALAN TUDGE:

Fairness is an important principle. The Prime Minister has already made a fairly strong statement that the vulnerable people in our society will not be worse off in the process.

That is a very important principle here, which means that any change is going to be offset by compensation, for example. Overall, the efforts that we are trying to achieve here is actually to put in place greater incentive so that…

PETER VAN ONSELEN:

Can I just jump in there for a second Mr Tudge? Sorry to interrupt but I understand that principle, but does that principle apply into a period of time?

So for example, the GST is obviously a growth tax because as we know, inflation renders it a growth tax. Would we be guaranteed, for example, that nay compensation was bound to grow at the same rate that the CPI grew, and therefore inflation and so on.

Or is there a risk over time that that compensation ends up being outweighed by the rises in the GST courtesy of inflation and therefore people do end up worse off in the lower socio economic groupings.

ALAN TUDGE:

Listen, all of the details are going to be worked out in due course, Peter. But the overall principal which the Prime Minister has articulated is that any tax reform proposal that we take will not make the most vulnerable people in our society disadvantaged in the process.

But let me just quickly get back to your overall point about…

PETER VAN ONSELEN:

But you understand my point though? Is it now, or is it in five or ten years?

ALAN TUDGE:

…I do understand your point. Now if you look back in terms of what has occurred in the past, many of the measures in terms of say, increasing some of the transfer payments – quite frequently they are indexed to CPI or they are indexed to average weekly wage growth rates or the like. But these details we worked out in due course.

But going back to your previous point – who is going to be better off in this case? I mean, the overall objective, Peter, is to actually grow the economy and to get more people into work in the process.

And by doing that, you actually have a wealthier society overall, where wages can be higher, where there is greater taxes to deliver the services which people have come to want and expect from governments.

PETER VAN ONSELEN:

Do you pinch yourself now that you have social services as a portfolio responsibility about just how much this debate has changed from when you first entered parliament, or from when we had the previous Prime Minister talking up his Paid Parental Leave scheme, we had Labor talking about a minimum wage scheme, we had this huge PPL that was being suggested by Tony Abbott.

It then got watered down it then got removed all together. We have now got a situation where working women that claim both and at work one as well as a minimum wage one have been described as rorting the system; things have really changed.

ALAN TUDGE:

Well, there is an old saying Peter, that a week is a long time in politics and some of these debates were a couple of years ago now. Clearly, there is a different dynamic with the new Prime Minister as well – Prime Minister Turnbull.

He has put slightly different priorities for us – much more talking about innovation and productivity and how we can grow the economy and create jobs through tax reform. Some of those started off, by the way, under Tony Abbott and under Joe Hockey as Treasurer.

But I think Prime Minister Turnbull has really given an impetus and a very strong focus for the moment. So I think people understand what we are trying to achieve and we are going through this process and I am confident that we can get there.

PETER VAN ONSELEN:

Well the other one that has really changed is, from the Liberal perspective philosophically, is the embrace now, of means testing. I remember in that first term in opposition after the 2007 defeat of the Howard Government, you would well remember it as well, means testing was something that was being philosophically railed against by the Liberal Party whenever it was trying to be introduced by the then Labor Government.

Yet here we are now, all these years later maybe because of the dire fiscal situation, means testing has become the new black.

ALAN TUDGE:

I don’t know if I would categorise it like that Peter. But obviously we are going through some pretty tough budgetary circumstances, so looking at every single aspect of the budget and trying to work out where it makes sense for government expenditure to be focused. And clearly with some of our social welfare payments, clearly they should be focused on the most vulnerable in society and we should be reducing welfare payments for those who can stand up on their own two feet and are not in need of it.

And so, we have made some changes already in government. There may be more changes in the future that will come in that area. For example, just in the childcare area, we have announced that we are proposing some further changes there which will again, further target where the assistance is given, primarily on those who need it most and I think that is a fair principle to implement.

PETER VAN ONSELEN:

Well with those changes in the Social Services portfolio area, Christian Porter, the Minister has described there as, in fact to me and Christina Keneally here on Sky News, he described there as being a lot of snakes as well as ladders in the changes that are being looked at.

Can you take us through some of the snakes?

ALAN TUDGE:

Well, the most important changes that we are trying to introduce in the social services area, led by Christian Porter, is to try to again change the incentives to encourage as many people who have the capacity to work to be able to do so or to be able to increase their work participation over time.

Because at the end of the day, the best form of welfare is a job and so when people have that capacity, can we create the incentives for them to take work where it is available and can we also work on the demand side as well to be able to create further opportunities for people to do so.

That is the overall objective of what we are trying to do, while of course having a very strong safety net still in place for those who are most vulnerable in our society. For those who, through no fault of their own, have an incapacity to be able to look after themselves and that is the reason why we have this social security safety net – to assist those people.

But for others that have the capacity to work, then we should be encouraging them to do so.

PETER VAN ONSELEN:

Just before we run out of time, I wanted to take you back 40 odd years, to the 1975 crisis. It has been written about in the Australian by my colleagues Paul Kelly and Troy Bramston. I well remember this very much used to be a partisan standoff, you know, Liberals would justify what Sir John Kerr did as well as Malcolm Fraser.

And on the other side, Labor railed against it and continue to do so and maintain the rage well after the Whitlam years had come and gone. It looks though, with their revelations, that increasingly, more and more Liberals are perhaps feeling more and more sympathy for the way Gough Whitlam was treated. What are your views?

ALAN TUDGE:

Listen, I think that Gough Whitlam was perhaps the worst Prime Minister that we have had in our nation’s history and there was an absolute constitutional crisis at the time as you know, where the Government…

PETER VAN ONSELEN:

…but was Fraser right…

ALAN TUDGE:

I think that at the end of the day Kerr did make the right decision. I was comfortable with that decision. It quickly went to an election very soon afterwards where the Australian people could ultimately make that decision and they overwhelmingly supported the decision to replace Gough Whitlam with Malcolm Fraser.

There was another election very soon after that and the same decision was made by the Australian people.

PETER VAN ONSELEN:

I have written similarly a number of times about this particular issue. But is it your view that this really should be an article of faith for the Liberals? I mean, it was a long time ago, but should good Liberals – if you like – continue to hold to the view that you share with me?

ALAN TUDGE:

Well, I mean, this is why we have the reserve powers in our Constitution: for constitutional crises exactly like this one. And at the time, we believed that John Kerr was exercising, quite rightly, those reserve powers which are in the Constitution and by doing so, broke a deadlock.

And hopefully Governors General don’t have to intervene very often – like that – but he did in that instance. I think it was the right decision. He gave the Australian people an opportunity to confirm that decision within months and the Australian people overwhelmingly did.

PETER VAN ONSELEN:

Alan Tudge, always appreciate your time on News Day. Thanks once again.

ALAN TUDGE:

Thanks very much Peter.