National Press Club Q and A
E&OE
Subjects: Welfare; NDIS
CHRIS UHLMANN:
We will go straight to our questions from the floor. We’ll begin with Australian Associated Press.
QUESTION:
Minister, thank you for your speech. Daniel McCulloch at Australian Associated Press. I wanted to ask about the middle income tax cuts that were floated by the Prime Minister this week. I wondered whether you anticipate being asked by the PM to find additional savings in your portfolio? I also wonder whether you think there is much more fat to trim in the welfare portfolio, and at what point you start hacking at bone? And now that the conversation is shifting to middle income tax relief, I wonder whether yourself or any colleagues at the Cabinet table will be calling for an increase in the basic rates to Newstart and other working-age payments?
CHRISTIAN PORTER:
Perhaps if I answer that this way, by noting that I guess the central point of my address today is that the best way to decrease spending on welfare is to decrease the need for people to be in the welfare system. So the business tax cuts that have been vigorously opposed by our opposition are a critical cog in a wider machine that produces job growth that allows us to produce those, what I think, very substantial results. If someone’s able to flip back to that slide. So in answer to your question, the efforts to find fair and appropriate savings in the welfare budget go on, but central to those efforts, under myself and under Scott Morrison before me, are creating the conditions that drive less demand for welfare.
So, you see, had the Labor spending at 9.1 per cent been maintained, rather than the 2 percent that we’ve achieved, the difference there – my eyes are terrible – but I think it is about $8 billion, and then out to 2021 the difference would have been $22 billion. Cumulatively, the extra spending in there is $83 billion. So the inverse answer to your question, whether the Prime Minister is asking for extra savings, I mean, we are always looking for ways to make the welfare system more sustainable and find reasonable savings. But the inverse answer to the general question, how would you pay for middle income earning tax cuts in Australia, is to say that it would have been utterly impossible to ever do anything like that if you’d had to spend an extra $83 billion on welfare.
CHRIS UHLMANN:
And is there an argument for raising the basic rate of Newstart?
CHRISTIAN PORTER:
I addressed this last year, and I guess my open answer to you is at the moment I don’t see that there’s a strong case for that. The case for that is put on the fact that Newstart is a modest payment and that it is hard to live off on its own, but the reality is that the overwhelming majority of people on Newstart receive multiple payments. So they might receive family tax benefits or Commonwealth rent assistance. So, the Greens put a motion in the Senate to spend an extra $55 per person on Newstart. The cost of that was in the vicinity of $7 billion-plus, I recall. Labor voted against it, I might note, and our policy is not to adopt that sort of a change, because we think that when you drill in the detail of the system, the multiplicity of payments that people get means it is a workable system.
CHRIS UHLMANN:
Canberra Times.
QUESTION:
Thanks Mr Porter. Nick Stuart from the Canberra Times. … of praise, terrific accomplishment that you’ve have managed to achieve. You’ve freed up a lot of the bureaucracy that was obviously tying down this area in the past. Now, ironically you- that’s the hedgehog idea, that you’ve really been able to free this up and that’s produced marvellous outcomes. Ironically, in your own department you’ve got the NDIA, which is bureaucratically setting amounts throughout Australia that people on disability will receive. When are you going to actually- and I don’t want you to be a fox here and dart around and not give an answer…
CHRISTIAN PORTER:
Of course not, I’d never do that.
QUESTION:
What’s a date for you actually accepting the Productivity Commission’s recommendation to allow that area to be freed up?
CHRISTIAN PORTER:
So it’s a very good and fair question. The way in which- in the NDIS, because we are increasing expenditure in or about 2020 from $11 billion to $22 billion, we are creating a massive new market in the provision, supply, and receipt of services for Australians with a disability and for physical things like assistive technologies, and because the new market that we’re creating is so large, the plan has always been – and the blueprint that was left by Labor, with which we concur – was that you would have a system where the Government in effect controls the pricing for the initial period. This is from recollection, but I think the blueprint in effect considers that 2023 will be the year that you will move from what are basically pegged prices to a full market system. Now, the reason that you have pegged prices is because simply creating a market from scratch has a whole range of risks and dangers associated with it.
I think the other part of your question which I can answer this way is that in the interim, we in the NDIA are paying very close attention to pricing. We have a pricing review underway, obviously the Productivity Commission full report considered this issue, and we want to get pricing right. We want to make sure that service deliverers are keen to enter the market, that they can deliver a service efficiently, still do so in a way that makes their business sustainable, and the way in which the NDIA is conducting a pricing review is for all these innumerable heads of service delivery making sure we’ve got the prices right. But my observation is the same as Labor’s observation, is that before 2023 or thereabouts you have to have this floated system of pricing because the risk of a completely open market, which was a brand new market, was simply too high. But all of us want to transfer to a market-based system as soon as possible.
CHRIS UHLMANN:
How much money has been wasted in the ride? It seems to be a bonanza for consultants at the moment.
CHRISTIAN PORTER:
Well, Chris, you’re being very unfair in presuming that every dollar that goes to a consultant is wasted. I mean…
CHRIS UHLMANN:
Then, as previous consultants.
CHRISTIAN PORTER:
The consultants bill is high, but it was always anticipated that when you’re engaging in a reform the scale of the NDIS, where we are moving from 30,000 people at trial to 460,000 people as an estimate inside three years, that the NDIA itself is going to need to be buttressed in those early years by the expert advice and analysis of consultants. I accepted that’s a reality. Now, I know the new CEO of the NDIA, Rob De Luca, is very keen to scale that use down over time as the NDIA’s capacity builds up. But I guess the answer is that getting these things right around pricing, which is one of the areas that consultants deal with amongst many others, means we are setting the foundations to have a sustainable system that won’t cause us cost blowouts down the track. And the Productivity Commission full report noted that we are inside costs, and that whilst there are a range of cost pressures that we are aware of, that they are being managed.
CHRIS UHLMANN:
Radio 2CC.
QUESTION:
Minister, Tim Shaw, Radio 2CC Canberra. My listeners are very generous of heart because they do understand that a strong social safety welfare net is really, really important. What they don’t understand is how young Australians can so easily jump onto welfare. Do you support the idea of familial responsibility, particularly for 15 to 21-year-olds? When I first came here to Canberra there were 5894 Canberrans on Newstart. Now, that number has reduced, and when I’ve investigated, ACT Government says, well, we are hiring lots of people. Two points: should there be familial responsibilities so that when a young person wants welfare, that we get to meet mum and dad as well and look at those familial circumstances? And point two: do you see that when they are jumping from education subsidy onto social welfare we do a checks and balances; have you got a driver’s licence; are you employable, some of those basic things that make that young Australian more employable?
CHRISTIAN PORTER:
Yeah, I guess working backwards, those very significant heads of expenditure that I described that particularly target young Australians who are finding it difficult to get into employment do very often address those practical things, like drivers licences and basic skill preparation and having a workable, acceptable curriculum vitae and things like that. So we are trying to spend the money in ways that achieve the most practical results, and the whole point about the priority investment approach data is that what we will do is that every time we apply expenditure, a program, an initiative, a policy to a group, we measure the trajectory of that group against a control group who have similar characteristics, but potentially not the benefit of the expenditure or project or program, and see whether or not we’re increasing the rates of employment. That will indicate that the program is worth growing and franchising out, if you like, and it also gives us a line of sight to things that aren’t working and that we would be better off redirecting the expenditure to another area.
In answer structurally to your question, it is complicated, the welfare system, but generally speaking it has fairly rigorous asset and income tests and we do consider family assets and incomes in some circumstances for young people. I won’t try and unpack that now because it’s immensely complicated. I might also give you the good piece of news, that group of young mothers that has decreased. In Canberra, I think, in ACT, the decrease was 20 per cent. So, you know, it’s working.
CHRIS UHLMANN:
The West Australian.
QUESTION:
Minister, thanks for your speech. Phoebe Wearne from The West Australian. I also wanted to ask you about the NDIS in WA. The Federal Government is yet to come to an agreement with the state WA Government on how to proceed in terms of the model. So firstly I’m wondering if you are frustrated it has taken so long to reach that agreement? Can you give us and the thousands of people with disability an indication of when that deal might be announced, and has that ongoing uncertainty, in your view, caused any problems with the rollout in that state?
CHRISTIAN PORTER:
So again, not foxing, yes I’m very frustrated that it has taken a little bit longer than it should have. Two, when is it likely? It is very soon. So we’re negotiating the final points of the bilateral agreements, and I met with Stephen Dawson earlier this week. It is very soon. Three, it has, I think, had an effect – that is undeniable – in the states for the people that we are meant to be servicing. I don’t think that that is dire or dramatic, but it is unhelpful. One thing that I would note as an observation, though, is that the experience that we’ve gained on the east coast in the first 18 months of the rollout to full scheme is going to be invaluable in WA. So yes, WA in effect will come in slightly later, but they’re going to be the great beneficiary of all of the learnings that we have managed to engage in from things that have not gone as well as we would have liked in some areas at some times. So a little bit frustrated; it is very soon, and when it does hit the ground, WA’s going to be the beneficiary of all the knowledge we have gained on the east coast – just as it should be.
CHRIS UHLMANN:
WA learns from the east coast.
CHRISTIAN PORTER:
Exactly.
CHRIS UHLMANN:
Fairfax.
QUESTION:
Stephanie Peatling from Fairfax Media. Thanks for your speech, Minister, and for also the charming picture of you and your colleagues as foxes and hedgehogs. I really appreciated that, and also not referring to members of the press gallery as a particular sort of animal. One of the more fox-like ideas you’ve had is the idea of a trial of drug testing welfare recipients. That seems to have stalled a little bit in the Senate, if I can use that description. Now that the Senate has two more weeks to go, but one of those is dedicated to the discussion of the same-sex marriage legislation, that leaves one week for the Senate and there seem to be noises that the crossbench isn’t happy with that particular aspect of the omnibus welfare reforms. I was wondering if the omnibus is still going through in that form or if you are now considering splitting the bill. I note that you made a plea to senators to say they will be definitely looking at that. And if you are going to split it, are you looking at changing the date from the original January time period for when you wanted that trial to begin?
CHRISTIAN PORTER:
Yeah, sure. So, I guess three parts of an answer I would give you. The first is just a little bit general. I first sort of became attracted to the idea of drug testing as a means of compelling treatment through being a Crown prosecutor and working in drug courts. I think that when people say that there is no evidence, I think that what they are doing is not counting evidence in one context as relevant to the context of welfare receipt.
The New South Wales drug court merit program resulted in employment rising amongst the people who were compelled into it from 20 per cent to 27.5 per cent. There are similar results in other states. I have worked in the drug court in WA. I do earnestly believe that this is well worth trying and there is sufficient evidence to try it. I think it will work actually.
I guess this goes on to the second answer to your question, is that in dealing with the crossbench in the Senate, we are a government that is actually producing results in this area. I think quite remarkable results. We are doing that because we are willing to take risks, whether it is on business tax cuts or other sort of more singular welfare initiatives. I think governments should be allowed to try things. My plea to the crossbench senators is we are giving you results. We are giving Australians results. We are moving 140,000 people away from welfare into work. Let us continue that work, and if it doesn’t work – and we will measure this rigorously – then we will move onto something else. That is the way in which we have approached this problem.
Just as a matter of a third part to the answer, which is just what we do with the legislation, the sticking point fundamentally in the legislation has been the drug testing trials for welfare recipients. That represents about seven pages of a 200-page bill. The bill is critical.
So the welfare compliance system that we have at the moment is near to dysfunctional. The reality is that there are 100,000 people who routinely miss appointments. Two-thirds of everyone in the Newstart system do precisely the right thing and do not miss more than one appointment in a six-month period. And you know what? The correlation between that group and the group that move off quickly into jobs is very, very high. Then there is a group of 100,000 who perennially miss and persistently miss appointments; about half of those we have identified as having barriers to employment, and the other half appear to have no barriers to employment.
That is a measure of a compliance system which is too slow, which is too heavy-handed at the end, and which is just not fit for purpose. So the bulk of that bill, which reforms the compliance system, is so critical to what we are trying to achieve that I wouldn’t want to sacrifice the bulk of that, in terms of timeliness, while we are still negotiating around drug testing. I have got to say, as people may have noted, the complexion of the Senate is changing rather rapidly and I’m always willing to talk to new senators about this and I think that there is a mounting case to let us have a go at this.
CHRIS UHLMANN:
Guardian Australia.
QUESTION:
Hello, Minister. Katharine Murphy. A more general question, if I may, and then a specific one – I will be greedy and take two. Today we have heard quite a lot from you about reducing welfare dependency, which is absolutely fair enough and it’s obviously a preoccupation of yours, but some of the big emerging debates actually here and internationally in your portfolio are, in fact, the opposite. They are countenancing a greater role for government in providing and maintaining people’s basic living standards in an environment where major technological disruption is happening to work patterns, where we are in a period of sustained low wages growth. There are debates around the world; I’m sure you’re familiar with concepts like universal basic income and other debates of that nature. I don’t imagine you’re a big UBI fan …
CHRISTIAN PORTER:
No, I am not.
QUESTION:
… but still, nonetheless, I am interested in that more broad-ranging perspective from you about the role of government, given where work trends patterns are going, because I don’t think I have heard you address that – forgive me if you have and I’ve missed it – and then the specific question is just very straightforward. Obviously we have a conscience vote on same-sex marriage coming through the Parliament very shortly. How will you vote?
CHRISTIAN PORTER:
On the second part of the question first, I have outed myself as a yes voter a long time ago, so I’ll be voting yes. I do have concerns about the way in which we adequately protect religious freedoms, but my concerns in that respect are more confined to the actual organised doctrinal observance of religion, if I can put it that way. But I am operating as a parliamentarian, so I will wait to see what comes down from the Senate, and unbound by being a member of the executive on this particular vote, I will, as a good lawyer, look at it, make sure that I am satisfied that the protections are appropriate and well drafted, and then I will vote yes.
On the issue of universal basic income, I guess I am intellectually very interested in the idea. I don’t think it is a good idea, but I am intellectually interested in it. And it seems that there’s two groups driving the idea of universal basic income: people in Silicon Valley who have this conception that the new economy is destroying the jobs of the old economy and so how to deal with people in the old economy, if I can put it that way; and I think there is also an intellectual left, if I can describe it that way, who see this as a way of – as I described in my speech – liberating people from work and creating an environment where wealth is distributed in a way that people do not actually have to work if they don’t want to.
For the reasons that I gave in the speech about the benefits of work, I think the intellectual left drive for universal basic income is completely wrongheaded. I think there are a lot of examples around the world where a guaranteed basic income, particularly with Native Americans who benefitted from casinos as part of deals of land ownership, what it was effectively universal basic income, often of a very substantial quantum, and ended up having quite terrible outcomes, because the passive receipt of those amounts of money actually did not do anything to improve those societies. So I don’t like the intellectual driver of the left for universal basic income.
This idea that it is needed because of the generation of new jobs being different from old jobs; there was a very interesting observation and analysis by Bernard Salt, who basically put a view that for every- he said approximately 700,000 jobs have been created in Australia since the year 2000. I’ve run the equation: for every job we’ve lost, we’ve created 10 others. I mean, I’ve given you the statistics about what this Government’s achieved in job growth. If universal basic income is argued is necessary because there is not a lot of job growth, I just absolutely don’t accept that.
Getting back, indeed, to the issue of the NDIA and NDIS, we will generate, through that application of taxpayers’ money quite appropriately to disability care, 60,000 jobs in disability care over the next three years. They are great and worthy jobs in and of themselves, but they are also a great platform and entry-level jobs for people moving into the workforce for the first time.
So I think intellectually there is a huge hole in the universal basic income argument, and I think that the economic argument for it, equally, is, I find, utterly unconvincing.
CHRIS UHLMANN:
Sky News.
QUESTION:
David Speers from Sky News. Minister, thanks for your speech. I just want to go to your headline claim here that you have been able to reduce overall spending growth across the whole of government in payments in this financial year to 1.9 per cent down from 3.5 per cent under Labor. That sounds like quite a significant reduction in outlays. How much of that is due to freezing family payments, and does it also include the amount that you’re then going to spend in childcare? Is that included in that figure?
CHRISTIAN PORTER:
So I think that figure was used by the Treasurer at the time of the last budget. So I will have to give you an educated guess without having the list in front of me. It includes everything that was in the last budget, so it includes that – I would imagine – that extra expenditure on childcare, and it includes all of the changes we’ve made to the family tax benefit system.
David, yes, the family tax benefit system is another one of those payments that we have shown and can demonstrate very substantive reduction in overall expenditure growth. In fact, I think from recollection that the expenditure growth in family tax benefits is now negative. So the changes that we have made to family tax benefits is actually shrinking the amount of family tax benefits paid out every year.
I might also add though, that was a trend to give Labor the credit that started under them. Because going back to the Howard years, and then the changes that Labor made, family tax benefits were being paid out to families on $150,000 a year. That is obviously now no longer the case. Part of those changes were Labor and part of them were ours.
But, you know, we have not merely restrained expenditure overall, and inside that there are movements up and down. I have been a great supporter of the changes to the childcare system, because at their very core they link the provision of taxpayer subsidies to childcare to workforce participation. And the test that Simon Birmingham has devised to ensure that people get access to the subsidy is I think a reasonable and fair test, which is effectively that you have to be engaged in volunteering work or preparation and training for work. That seems to me to be a sensible way to drive the outcomes that we are having.