Transcript by The Hon Christian Porter MP

ABC News 24 with Greg Jennett

Location: Capital Hill

GREG JENNETT: Well we saw him there, the Social Services Minister is Christian Porter and he joins us now in our studio. Welcome Minister. Now you were asked in that media conference how many would be worse off as a result of the Family Tax Benefit changes. Just leaving aside the benefits that come with childcare, do you have a figure on that now?

MINISTER PORTER: Well, I mean you probably wouldn’t be surprised to hear me say that depends and it depends on secondary effects of people who choose to work or work more. The payment system that we have is complicated and it interacts with the income tax system. But what we have done in trying to transfer this money firstly to child care, but secondly back into FTB-A, is to provide families with this incentive to move back into the workforce. So, no one need be worse off if this decision to move back into the workforce, to work or work more, can be taken up with encouragement and incentives. But underneath that, look unequivocally as you note in the introduction, we are phasing out and removing an end of year supplement which was money that people otherwise received. We are mitigating against that by increases in Family Tax Benefit A but that supplement goes eventually.

GREG JENNETT: That was just seen in the end, was it, as a boom-time bonanza for people but not intrinsically necessary for welfare. Is that the view?

MINISTER PORTER: It certainly is. In hindsight I think that’s a view that can be fairly called. We made some jokes about what was going on in 2004, but in 2004 it was Costello’s ninth budget. He was predicting a surplus of $13.6 billion. Preceding 2004 there had been this problem, which is much larger than it is today, of people under-estimating their income and then ending up with this debt at the end of the year. Now that problem is lower and we think can be largely eliminated through technology into the future. So people are being paid an amount of money to pay – which was meant to pay – for a debt that they no longer have.

GREG JENNETT: It is important, isn’t it, because you are relying on technology to eliminate that problem. Let’s just imagine a scenario where it doesn’t quite be eliminated. How are families going to deal with debts that arise from mis-estimations. There is no buffer. There is no luxury account any more to help with that?

MINISTER PORTER: There are three things going on here. We will never be able to totally eliminate this problem but we can very substantially decrease the problem with what’s going to be known at the single touch payroll system. The second thing is the debts aren’t monstrous debts, they are debts that occur and are paid down with some regularity. The third thing is there is always an element of individual self-responsibility in reporting your income to receive benefits. But the bottom line is that the technology that we will have available in the single touch payroll, which will seamlessly transmit data about income to Centrelink and ATO, can really substantially decrease this problem. And there is no point in applying a very large payment to a problem that in substance no longer exists.

GREG JENNETT: It has been a political problem in the past because it fuelled many questions in Parliament about woman X who has got this debt. Minister what are you going to do about it – do you think this is still an ongoing risk?

MINISTER PORTER: Well there are always risks in policies. Let me put it you – I think it will be more difficult to phase out and remove the payments than it was to give the payments in the first place. In 2004 that was no doubt a very popular move but what we are saying now that in substantial part the payment is no longer fit for the purpose for which it was designed. So we want to take it and move it somewhere where it actually increases productivity. It can increase workforce participation rather than just be an add-on to pay for debts, which overwhelmingly the recipients of these end of year supplements do not end up with debts. Overwhelmingly.

GREG JENNETT: Alright. There is a fair bit in this package. There is also a change to Youth Allowance for a sub-group, I think between 13 and 16.


GREG JENNETT: Explain what you are doing there because at least on face value, some end up worse off there.

MINISTER PORTER: Well what happens is that there are a problem of alignments in the system, so people in similar circumstances will have different payments depending on the nature of the payment. We are increasing the FTB-A payment per-child by $10. Then if there is a child who is on an equivalent payment in Disability Support Pension or Youth Allowance, we are increasing those payments so that they align with the per-child payment in FTB-A. So that what we want to stop is these incentives to move in and out of the home or in and out of study to collect a higher or slightly higher payment in one or other payment system. By aligning we get rid of these disincentives and it’s part of a major ongoing reform programme.

GREG JENNETT: And that is going to cost you about half a billion dollars?

MINISTER PORTER: Yes $535 million I think is being applied to increasing the FTB-A per-child payment by $10 per fortnight and the DSP payment and the Youth Allowance, but what we have considered after listening to the crossbench and indeed to people generally, is that the Family Tax Benefit system – the fortnightly payments are meant to alleviate pressures in that regularised fortnightly cycle where people encounter bills. It is better we think to have that cycle given attention, increased rather than this end of year bonus cycle simply go on in this additional way for a purpose which it is no longer fit for.

GREG JENNETT: And is there another category of people who are being cut in that – was the youngest child, 13 to 16 – who are coming from a rate of just under $3,000 down to $1,000 now?

MINISTER PORTER: So Family Tax Benefit B is applied per family. Previously, depending on study or not, it was available until the child was quite old. The original version of the measures on FTB had a cut-off point of 6 years, we are now increasing that to 13. Unless you are a grandparent carer or a single parent in which case you will get $1,000. But for other groups there will be a diminished amount once the child turns 13. The point of that, in alignment with the childcare package, is that when children turn 13 the ability for a parent to re-enter, or enter in a more substantive way, the workforce arises and that’s what we want to encourage because all families will be better off if this trend of work force participation can increase.

GREG JENNETT: Now you have moved to rule a line under so many aspects of the 2014 family payments system. What about more recent initiatives though? Double-dipping of paid parental leave. Where are you at with that?

MINISTER PORTER: I am going to try and tackle one problem and issue at a time. But yeah, there are two other legacy issues, the four week waiting period for Newstart and also the paid parental leave system where parallel payments have been able to be received. Now there are appropriate reforms to be made here. I think that what we have suggested is not unreasonable. Negotiations with the crossbench have been ongoing. Again, as I said – improvise, adapt and overcome. We are listening. It may be that we have some tweaks around those things but those negotiations are ongoing.

GREG JENNETT: You’re not holding up the white flag to use a military expression again?

MINISTER PORTER: No, not at all. Let me just give you this example. With the four week waiting period for the dole effectively for people under 25, there are so many exceptions to that four week to try and protect vulnerable people, that in actual fact our policy will see more people exempted from the policy than to which the policy would apply. So I actually think that it is very reasonable. Now it may be that we can negotiate around some of these exemptions, but I do believe it is a reasonable thing that people are required to do things that help them get into a job and wait for a very short period, subject to a number of exemptions for vulnerable people – and I think the taxpayer would view that as reasonable.

GREG JENNETT: You mentioned the word negotiation. Where to with today’s package. Returning to that – do your best hopes lie, do you think, with Labor coming on board with much or all of it, or turning to the crossbench in the Senate?

MINISTER PORTER: Both. I mean I already look forward to a cup of tea with the Member for Jagajaga in due course. Look, the product of the package is the product of negotiations and the product of listening and adapting to the views that have been put to us by the crossbench particularly. We have had some preliminary negotiations at an officer level with the Labor Party. I think that this package may well garner some broader support but we will have to wait and see. But negotiations as they say, are ongoing.

GREG JENNETT: Alright. Just quickly because you are a Member of the Senior Economic Leadership team – Joe Hockey delivered his farewell speech today and he did back in some changes for the future, broadening and increasing the GST, negative gearing to be refocussed towards incentives for new housing stock and tax concessions on super. Are all of those, to use the current Government’s expression, on the table?

MINISTER PORTER: Look my observation with Malcolm Turnbull as our new Prime Minister is that we are entering a new period of debate. What has been really unhealthy – I have only been here for two years – but what has been really unhealthy is the rule in, rule out style of both politics and journalism. So sensible ideas should be looked at, modelled, the data should be interrogated – there are a range of ideas out there. Now some of them may prove to be less sensible than others, but I think that open minds is a good way to proceed.

GREG JENNETT: Alright. Christian Porter, no doubt we’ll be talking to you again before all of this is finally delivered into law, but thank you.

MINISTER PORTER: Thanks for that. Cheers.