Radio National – Breakfast
E&OE
HAMISH MACDONALD:
Christian Porter is the Minister for Social Services, he joins me now. Good morning to you, Minister. Where will these $2 billion dollars’ worth of savings come from?
MINISTER PORTER:
There’s essentially three things that we’re doing. First of all, we’re identifying debt, so we know that there is a very large amount of debt out there, but we also know that there is debt that we’ve not yet been able to identify. So, we’re identifying debt and then moving to recover that debt. Also, with respect to existing debt, we’re engaging in a range of compliance measures. And I think the third broad description I give to you, Hamish, is that we’re applying more stringently means testing across a range of benefits as a savings measure, so that we’re ensuring that where we are paying out welfare benefits – which as you know from that introduction are very generous – that we’re applying them to the people that need them the most.
HAMISH MACDONALD:
So, what will be the split of those three things? What will take up the bulk of the $2 billion savings in welfare?
MINISTER PORTER:
Well, it’s a good sort of even division between the means testing and the identification and compliance measures. I can give you a couple of examples if you’d like. So, with respect to existing exemptions for newly arrived residents, all people who arrive in Australia, before they can enter the welfare system are subject to a long waiting period. The only exemption to that is refugee and humanitarian arrivals, but there’s one other very curious exemption which has existed for a while and that is that if an Australian citizen or resident goes overseas and marries and brings back in a wife or a dependent child, then the wife and the dependent child, prior to this budget, had been able to enter the welfare system straight away without engaging in the wait that every other newly arrived migrant has to wait and go through. So, we are ending what’s been known as the family member exemption for newly arrived residents.
HAMISH MACDONALD:
So, how much does that save?
MINISTER PORTER:
That saves $224 million over the four out years. So, a very, very substantial saving.
HAMISH MACDONALD:
In May Scott Morrison announced that non-compliance measures would save the budget $1.5 billion. How much more are you able to save in non-compliance now?
MINISTER PORTER:
Well, there are three basic non-compliance measures. They’re enhancing welfare payment integrity on non-employment income data matching, there’s another one with respect to income data matching, and then there is actual enhanced welfare payment integrity, expanding our existing debt recovery. So, they are $330 million, $704 million and $157 million. Now, I guess the central question that you ask is, are those savings achievable? I absolutely consider that they are and yes, you’re right, there were previous savings initiatives that were announced in the previous Budget, and in the not too distant future we’ll be announcing some figures around the success of those. But, needless to say that we have been, inside government, impressed with our enhanced ability to use new technology and data platforms to actually work out where the debt is and then recover the debt. But in this MYEFO we’re also doing things we’ve never done before. I’ll give you another example –
HAMISH MACDONALD:
I’m interested to hear that, but just before you go in that direction, why were these measures not introduced back in May if you knew this was possible?
MINISTER PORTER:
Because what we’re doing is testing the efficacy of the new platforms and data matching techniques that we’ve got and –
HAMISH MACDONALD:
Okay, but then why haven’t you shown us the evidence that it is working?
MINISTER PORTER:
That will come very soon, we’re just not doing it here on your show, that’s all, Hamish. But, it is working and we’re absolutely assured that these are achievable figures and be mindful that if I in social services come up with policy designed to recover debt, that policy goes through the churn of Treasury and the ATO and, at arm’s length, they tell us what, based on precedent, is acceptable in terms of a figure and what’s achievable. I’m absolutely sure that this is achievable and more than that, it’s the right thing to do –
HAMISH MACDONALD:
But other than you saying that you’re absolutely sure, this is a bit of a “trust me”, isn’t it, that you’re giving us? We’ve not seen anything to be able to trust the idea that you can do this and use that as a principle for doing more of it.
MINISTER PORTER:
Previous measures that we put in place are starting the bear the fruit, and will give proper announcement to those through Stuart Robert, the Human Services Minister in due course. But that evidence is available inside Government, but it is not about trusting me as a Minister. These figures are worked through, at arm’s length through Treasury, through the ATO based on their recent experience and the application of new technology they’ve got. But it’s also clear new policy issues, if I can give you another one, we are for the first time ever going to apply a general interest charge to the debts of ex-recipients of social security and family assistance payments. So, if you have previously been receiving welfare of that type, but then become engaged in the workforce and employed and leave the welfare system, what we do know is that there are a very large number of outstanding debtors in that category. Up until this point, we have not, in my observations, taken proper measures to give those people an incentive to pay back their debt. What we are doing now is applying an interest charge to their debt to, in effect, give them an incentive to enter into time to pay arrangements with the Government. Now if they don’t enter into time to pay arrangements, the interest charge applies, the interest charge doesn’t apply if they do enter into those time to pay arrangements. And that is a very new policy we say that will recoup $416 million dollars. That is very substantial obviously, but again something that has never been done before. And some people might consider it a firm policy and I would suggest it is.
HAMISH MACDONALD:
There are newspaper reports today that the Federal Government will spend an extra $36 million dollars on Paid Parental Leave. Does that mean that the Government now accepts that parents who receive payments from their employer and from the Government are not double dipping?
MINISTER PORER:
There is one thing that I can certainly confirm that is going with respect to Paid Parental Leave, and that is we are changing eligibility rules so that women in dangerous professions, jockeys for instance is an example that has come forward, in the mining industry, who have to leave employment at a certain date, previously have fallen into this lacuna in the law where they’ve not been able to get paid paternity leave. So we’re changing those rules, yes, and I am in negotiations with the crossbench about a reconfiguration of the previous policy that came out in the 15-16 budget. We will be going through some formal announcements about that, but people have clearly noted that the savings listed under PPL are somewhat diminished in the MYEFO document. That is because we are reconfiguring that policy. But that is a matter for announcement into the near future, we are pursuing our negotiations with the crossbench on that policy.
HAMISH MACDONALD:
You’re tantalising us.
MINISTER PORTER:
Yes.
HAMISH MACDONALD:
Now, the Government has had to reduce or revise down the price, and estimates for the price of iron ore from $48 a tonne in the May budget to $39 per tonne. And the forward projections are obviously based on that. How can we have any faith in the projections, going ahead, that they will be correct given that nobody in the market is willing to say that this price will be the bottom?
MINISTER PORTER:
Well, I mean in any budget, whether you’re in a corporation like BHP or the Government, you have to have estimates around major prices that affect the bottom line. Now, we do that just as any other company does do that. If you’re saying, can we absolutely guarantee in four years’ time that the price of iron ore will be as it’s listed in the out years of the budget – that’s a near-on impossibility, not only for government but for any organisation, but –
HAMISH MACDONALD:
But we can’t have much faith in this idea that we’ll return to a balanced budget in the year 2021?
MINISTER PORTER:
Well, I think your arguments, with respect, aren’t terribly consistent because what you’re noting is that we have very, very realistic and low estimates of things like the iron ore price. We have very realistic estimates of growth, and yet, even in the context of those very, very realistic estimates, we are tracking back and grinding our way back towards surplus. And as noted in the introduction to your show, yes – there’s been a slight increase in the projected deficit for this year, but then we grind our way back through the out years to a deficit in the final year of $14.2 billion or 0.7 per cent of GDP. So, everything is tracking in the right direction, notwithstanding that we have very realistic estimates on a range of parameters in the budget. Now, they are estimates, naturally, so we’re not guaranteeing that the iron ore price will be at the budget estimate in four years’ time, but it is a very low estimate.
HAMISH MACDONALD:
Christian Porter, we’ll have to leave it there. Christian Porter is the Minister for Social Services. Thanks for your time.
MINISTER PORTER:
Thanks, Hamish.
ENDS