Sky News – Richo + Jones
E&OE
ALAN JONES:
Yes, welcome – I hate it when they say in television “welcome back” because, in fact, the audience have never gone anywhere. Richo is not with us tonight but I think you’ll enjoy what’s coming up because the new Turnbull Ministry assembled in the Parliament yesterday for the first time at Question Time – many new faces. One that you’d better get used to, it’s the 45 year old West Australian, Charles Christian Porter. Now, there’s some history to this. Before he was elected to the Federal Parliament, he was a West Australian MP, first serving the Parliament there at 38 years of age, following the death of the sitting member in the seat of Murdoch, Trevor Sprigg. Then, he was elected immediately to the new seat – or, after that – to the new seat of Bateman at the 2008 general election, and immediately after that, when the Liberal Party formed government, he was appointed Attorney-General. 2010 he became the Treasurer and held both portfolios until June 2012, when he resigned from state politics to contest the 2013 Federal election. Now, as I said to you, there’s a bit of history here. His father, Charles Porter, or Chilla Porter, kept Australia glued to the television sets in those early days of television in 1956. The Melbourne Olympic Games, it was the opening day, and Charles Porter in a titanic struggle with the American athlete Charles Dumas, brought the nation to standstill. Long after the Olympics had ended for that day, the high jump continued; Porter versus Dumas. Only one person had ever cleared seven feet – Charles Dumas in June that year, it was a world record; 2.15 metres or 7 feet and a touch. Well, it was Melbourne, November 23, 1956, Porter and Dumas into the darkness were both level at 2.10 metres, which is about 6 feet 10 and a half inches. They both cleared it. The bar went to 2.12 metres, which is cigarette paper below seven feet. Dumas cleared it, Chilla Porter didn’t. But, he became a magnificent silver medallist. Well, this is the son. A graduate of the University of Western Australia, a Bachelor of Arts with First Class Honours in politics; no dunce, this bloke. He completed a Bachelor of Laws degree. He later studied at the London School of Economics for a Master of Science degree in political theory, he graduated top of his year with distinction. He was formerly a lawyer with Clayton Utz, he worked in WA in the Office of the DPP as a Senior State Prosecutor. Before entering the State Parliament in 2008, he was a lecturer also at the University of Western Australia while retaining his position as a Senior Prosecutor at the DPP. Now, without giving Christian Porter the kiss of death, you may well be looking at the next Liberal leader here. He now, though, has the very difficult portfolio as Minister for Social Services, which basically means Minister for Welfare. At a time when the welfare card legislation has been introduced into the Senate, this is the instrument that will replace cash in the welfare system. It will be a trial period, but it will be fitted – and we’ve talked about this before on this programme – with technology enabling the card to block certain purchases and cash withdrawals. In other words, it couldn’t be used to buy alcohol or withdraw cash at a casino. Well, the Greens – not surprisingly – won’t back it, Labor originally said they would, but they now appear to be reneging on that undertaking. Aboriginal elders from the Ceduna community in South Australia – one of the proposed trial sites – are 100 per cent behind the welfare card. Believe this, the assault hospitalisation, assault rate in Ceduna is 68 times the national average. The town’s sobering up centre had 4,667 admissions last year from a population of about 4,000. This is the minefield that Christian Porter has to navigate. The commission of audit last year told us that within a decade, the cost of sustaining the age pension in its current form will reach $72 billion a year; twice the spending of any other area in the budget. Christian Porter’s predecessor, Scott Morrison, made the simple point that of the 10.1 million Australian income tax payers, 8 million pay so that we can fund the $150 billion welfare bill that the country carries. So, in other words, of the 10.1 million taxpayers, everything paid by 8 million pays the welfare bill. So, if we keep going the way we are, the welfare bill alone will eventually exceed all personal income tax raised. Now, the Chris Bowens of this world and the Labor Party don’t understand that, all they understand is debt. 800,000 Australians in this glorious country are on a disability support pension. More than 2,000 a week apply for it. It costs $16 billion a year. So, we’re going to spend $146 billion this year on welfare, Christian Porter is in charge of that, 35 per cent of our entire budget – welcome to government. Christian Porter joins us from Canberra. Christian Porter, good evening, thank you for your time.
MINISTER PORTER:
Alan, it’s a pleasure, thank you.
ALAN JONES:
Many people are seeing this man for the first time. What do you know – obviously you weren’t born – what do you know, though, what have you heard as you grew up as a boy about your dad?
MINISTER PORTER:
Well, not too much from him, he’s a fairly modest chap. My grandfather when he was alive told me quite a few stories. But, in those days, Alan, like in 1956 when he was jumping at the Melbourne Olympics, and as you say they were jumping near-on seven foot doing the western roll – they were landing in sandpits. So, my father had a ten year, very successful athletics career relatively injury free. But he was jumping consistently at just under 7 foot into a sandpit, so, they did it tough in those days.
ALAN JONES:
Absolutely, were you any good at track and field, or high jumping, or…
MINISTER PORTER:
No, having a father who was a great athlete I was a terrible disappointment because I was interested in cricket, so…
ALAN JONES:
Not a bad thing, were you any good?
MINISTER PORTER:
No, double disappointment because I was terrible at that as well. But… I was okay.
ALAN JONES:
Well, congratulations, you’ve just become a dad, so dear Chilla has got a grandson, a granddaughter?
MINISTER PORTER:
Yeah, he has a grandson. Lachlan Porter was born – I got sworn in on a Monday, flew home Monday night, first baby born Tuesday morning. So, it’s been an interesting couple of weeks.
ALAN JONES:
Well, it’s more interesting ahead of you. Now, this is a big task, isn’t it? I mean, it is frightening isn’t it, when you say that 10.1 million Australian taxpayers but 8 million of them are needed to pay the welfare bill?
MINISTER PORTER:
Yeah, and I think that – I mean, your introduction summed up some of the parameters of the problems we are dealing with very well. The reality is that the DSS, the Department of Social Services, its budget is about a third of the Commonwealth budget – last year, $137 billion dollars. And it is a budget growing faster than any other single budget in government. So, if this nation is to plot a credible path back to surplus, which we have started the process for, this department and this portfolio has to be a contributor to slowing the growth of expenditure down. And you mentioned some of those growth centres, so you’ve got things like the Disability Support Pension, over the last decade that’s been growing at about 7 per cent per year in real terms, and that is just not sustainable into the future.
ALAN JONES:
Interesting today that, one question I thought summed up the philosophical difference between the government and the opposition. Obviously, the opposition were trying to trap Scott Morrison as to whether he was across his portfolio, and, to be fair he had some difficulty. But they asked him basically what the gap was between the revenue projected in the budget and the revenue now because a whole heap of expenses have been incurred again. But, inherent in the question was the notion oh well we’ve got to raise revenue rather than cut expenditure. Philosophically, where do you stand?
MINISTER PORTER:
Well, when I was first married to my wife, we had a private joke, which was to the effect that it wasn’t that we spent too much, as that we didn’t earn enough. And the reality is that Australia spends too much and, yes, there have been revenue write-downs based on our projections because, of course, we have suffered the biggest downturn in terms of trade that this nation has seen post-war. With iron ore prices plummeting, that has a feed-through on a whole range of revenue measures in the budget. But the solution to our problem is not to either, a) hope that things turn our way internationally, or b) the Labor solution, which is to increase the rate of a variety of taxes or create new taxes and, therefore, grow your revenue. The solution has to be to slow down expenditure growth so that when you’ve got segments of a budget as they are in social services – another example is the Carer Income Support that the taxpayer pays. Over the last decade that has been growing at 14 per cent a year. Now, it doesn’t matter what good luck you have on revenue or, indeed, whether you choose to increase taxes, any rational government has to try and get a handle on that kind of expenditure growth and restrain it, and this is not a government that believes in new taxes or greater taxes. Fundamentally, it is a spending problem.
ALAN JONES:
That being the case though, there’s going to be some bitter medicine to swallow or, alternatively, people like you have got to accept the responsibility to communicate – while it is a tough message, but nonetheless, an important message – for all Australians. Do you believe that Australians understand a) the problem, b) the need to do something, and are looking to say to someone “listen, tell us what we have to do, sell the story to us, and we’ll buy it”?
MINISTER PORTER:
I think it is explicable, it can be explained to Australians at large, but I need to stress that it needs to be explained in ways that people understand. And, at the moment, Australia is paying a billion dollars a month in interest on the inherited borrowings of the Labor Government. So, what we are is the equivalent of a household who is paying their mortgage on their credit card and when we hear that siren song of fairness, which is always played out in every decision that a government makes around spending, what is the most unfair thing a government can do is expect a future generation of tax payers to pay for today’s welfare bill by virtue of the fact that we are borrowing today to pay the welfare bill, which has to be paid back by taxpayers of the future. And that kind of intergenerational unfairness is, I think, something that people understand. So, to use an example, Alan, we’ve made some very difficult decisions around the pension in the last budget to change the asset test, which took a range of people with very solid liquid assets plus full ownership of their home, off part pensions and I think that was explained well, I think that people ultimately accepted that, and it resulted in a very significant saving and slowdown in the growth of something that was previously unsustainable. So, you have to pick the issues, you have to explain them well and in simple terms, but there are precedents to show that it’s possible.
ALAN JONES:
Have you had a chance – I mean, you’ve only been there for five minutes – the McClure Report, which recommends that welfare payments be simplified. Now, Australians will be staggered to know that there are 20 different welfare payments and 55 different supplements, and McClure says, well we should reduce them to five payments and four supplements. Are you heading down that track?
MINISTER PORTER:
Well, in fact I just got off the phone to Patrick McClure before this interview and was discussing with him some of the finer points of his report. But, I mean, it’s impossible to imagine a system that is more complicated than the one we have. And, as you point out, 20 payment categories, 55 different sets of sub-payments, indexations that sometimes occur twice a year, sometimes once a year, on a range of different measures. I mean, it is excruciatingly difficult and what the Productivity Commission said very recently in a report is inside those complexities there are welfare-to-work traps. So, as you move off payments because you are employed, quite often you are not much better off or, potentially, at certain points worse off moving into the workforce. So, this is an excruciatingly complicated system that needs to be reformed. That process had been underway and Scott Morrison, as the previous Minister, has legislation before parliament with respect to child care which would condense a very complicated system of subsidies and payments into one far more simple system. So, that work is already underway, you have to tackle it segment by segment but we cannot go on the way that we have been with a system that is so complicated that it’s not navigable by anyone who actually needs it.
ALAN JONES:
Just taking that point that you made about childcare. Now, there are philosophical issues here. People say, well, why should people who have no children be taxed to pay for people who do? And if then we were to accept that that’s valid, they’re saying well, how is it that you have to get to $250,000 a year combined income before we start cutting back on childcare subsidies? I mean, that’s an awful lot of money.
MINISTER PORTER:
Well, it is, and you are right that childcare subsidies are very generous. There are of course caps at $10,000 that we’re proposing for higher income earners in terms of the amount of subsidy that they would get. So, we have tried to tackle that end, and that legislation is before parliament at the moment, and unfortunately at this stage not being supported. But…
ALAN JONES:
Sorry to interrupt you there, Christian, if I might. There was a proposal prior to this government, in the Abbott government, for these subsidies to be changed, as you say, but then to be paid to the childcare centre. Are you going to go ahead with that? Because if that was the case, a Christian Porter of this world with a little girl has got to go to a childcare centre, presumably tell that childcare centre all the status of his income and whatever and the childcare centre will determine what kind of childcare subsidy the child gets – it’s a bureaucratic nightmare, isn’t it?
MINISTER PORTER:
Well, and this is why Scott Morrison when he was the former Minister condensed the payments and subsidies that were available and has changed them to one payment. Because what we did find was that the previous system was quite inflationary and childcare was increasing in its cost all the time because the subsidies flowed in a way that incentivised constant price increases. But, I think, look – the great virtue of subsidising childcare inside a budget such as the federal budget is this: the one way that has been shown over time, and this has been tracked in very detailed studies that have been run in the UK and Australia, is to have a mother return or enter the workplace, and that is the case whether it is a single mother or in a family where there’s a mum and a dad. The reality is that the way in which Australian families – whether they’re single mums or mums and dads – have increased family wealth, have provided better education and outcomes for their children, is to have mums going into and returning into the workforce. What childcare does, as a publicly subsidised system, is enhances that process and what the reforms do, which we have before parliament, and which we very much want support for, is ensure that we can incentivise the return to work for mothers, which we know as a matter of fact increases family wealth and opportunities for children.
ALAN JONES:
Yeah, I noticed that your government continue preaching that line, Professor Judith Sloan argued earlier this year that the philosophical rationale justifying childcare, namely that it gets women into the workforce, is a myth and she argued that most women won’t return to fulltime work until the children have started school and that grandparents look after more children than childcare centres. Are we spending very significant subsidies for a minimal result?
MINISTER PORTER:
No, I don’t believe so and I think Judith Sloan does some fantastic work, I don’t agree with that observation. And when you track the percentage of mothers in the workplace from the 1970s through to today, it has increased very, very dramatically both in single mother families and in mum and dad families, and you can see that increase track alongside the availability of childcare, particularly publicly subsidised childcare. So, I just think as a statistical matter, that’s not correct. But, look, the point you make, I think, at large, is that the Australian government, through the auspices of the taxpayer, runs a very generous and very targeted, in most respects, welfare system. But, it is a welfare system at the moment that is growing well beyond the capacity of the taxpayer of today to deal with it. And the difficult reality that we face, and whether that is with childcare, or legislation as we have before the parliament at the moment to try and restrain the grown in Family Tax Benefits, which is another massive area of expenditure in excess of 20 billion dollars worth of taxpayers’ money a year – if we cannot allow for these things to grow at reasonable rates, not at seven, or ten, or fourteen per cent, then we have a country that will find it very difficult to practically return to surplus. And we cannot keep…
ALAN JONES:
No. And we have governments who will find it difficult to reform because currently 48 per cent of Australian taxpayers pay no tax if you take the churn – that is, they do pay tax, but they get back in welfare more than they pay in tax, so they virtually are paying no tax to the government. 48 per cent, when that gets to 52 per cent you’ve got no hope of cutting back on what they’re getting.
MINISTER PORTER:
And this is the question of sustainability and as the new Minister for Social Services, I understand my job as providing a system and an architecture for a system that’s sustainable. It’s no good paying for Disability Support Pensions in 2015 off borrowed money that has to be paid back by a future taxpayer in 2025 when that future taxpayer and the future generation of Australians will have their own welfare system that they are going to have to administer, that they are going to have to pay for. The future generation of Australians should not be paying for the welfare system that we are operating at the moment, and while we are in deficit, that is precisely what they are doing in large measure.
ALAN JONES:
Well, look, let me just take one issue that you mention there, that is disability. The people that are watching you tonight, the bulk of them can roll up their sleeves, ought to be able to provide for themselves. The disabled can’t march in the streets and protest and, often, they don’t have a voice. Now, if we don’t look after them in what we call sheltered workshops, and I’ll keep using that term, then if those jobs are removed and don’t exist because we’re asking the employer to pay too much to a group of people who are very happy with the circumstances they currently have, then they go onto further welfare. Now, this is complicated, but you are aware of that language. I mean, I struggle to remember it, it’s called the Business Services Wage Assessment Tool. Now, there was a Federal Court judgment in 2012, and it was only applying to a couple of people who were disabled, but it argued that sheltered workshops weren’t paying those disabled workers what they were quote, unquote, entitled to. And, therefore, that created the whole sheltered workshop problem. The government, the federal government, then went and sought an exemption from that, or a stay of execution so to speak, so that they could continue to pay what they were now paying. That ended in August this year. So, as I speak to you, there are so-called advocate groups for the disabled who, I believe, don’t have the disabled’s best interests at heart, they’re quite militant, and are saying that these people ought to be paid the way you’re paid and someone else is paid, when basically, the disability families say, “look, they don’t – the last thing they think about is money, this gives them dignity, it gives them friendship, something to look forward to, they’re happy, the sheltered workshops are doing a terrific job”. What is to happen here, are these people’s sheltered workshops going to be put out of business? Are the disabled workers going to be put out of work, because some nut is going to the Federal Court and the Human Rights Commission arguing they must be paid more?
MINISTER PORTER:
So you’ve explained the situation very well, there’s one added layer to it, which is there is presently on foot a class action, which mirrors the basis upon which the initial action was argued, and that is live at the moment. So, the challenge that the government has, and the challenge that I have as a Minister is two-fold. One is that, depending on what happens with the class action, there could be a requirement for people who have previously worked in this area, but more importantly, what you’ve described as sheltered workshops and what I think the modern terminology is Australian Disability Enterprises, ADEs. We have to devise an appropriate and proper wage system going forward that aligns with the Court’s ruling, the Court has made a ruling, that is what it is, but we have to work a way forward that preserves the ability of disability enterprises to employ Australians with a disability because, as you point out, for a long time that system has worked, worked incredibly well – provided wages, yes, but more importantly, dignity, friendship, social relations. So, the challenge for the government is to ensure a way in which wages and remuneration can be sustained in a way that accords with that judgment that you’ve spoken of that doesn’t basically, if I can put not too fine a point on it, put disability enterprises out of business.
ALAN JONES:
But it will. So you’re saying we have to try and abide by the Court decision. You may well have to legislate to invalidate that court decision because if these disability enterprises are forced to pay disabled workers more, they go out the door, there are no margins here, they go out the back door because, as you know, the number of staff required per disabled person and so on is very significant. They go out the door, the disabled are unemployed, they go on welfare, the welfare bill goes up, you’re trying to reduce it. What guarantee can you give that disabled workers who are currently employed in disability enterprises will not lose their job? And what guarantee can you give for these quote, unquote, sheltered workshops are not going to go broke as a result of this court decision?
MINISTER PORTER:
So, there are different ways to approach the problem, but the solution which the government is committed to is this: disability enterprises have to be a feature of the Australian disability employment landscape going forward. They simply do too much irreplaceable good to be allowed to flounder because of a court decision. Now, as you point out, that is going to involve some difficult decisions for government, they’re certainly things that I’m working through. I want to do that in a way that impacts the budget in the lowest possible fashion but there may be some form of budget impact going forward. But, these disability enterprises have to be a part of the future landscape for Australian employment for people with a disability; they’ve simply done too much good to be put out of business by a court.
ALAN JONES:
Just one final point, as you know, the exemption from that court ruling that higher wages must be paid ended on August 31, your government went to the Administrative Appeals Tribunal to seek an extension of the exemption, the Administrative Appeals Tribunal refused that extension. What is the status, therefore, of the disability enterprise now, the sheltered workshop, what wages are they paying, or are they obliged to pay?
MINISTER PORTER:
Well, the original decision made a determination which went like this: that it had been the case previously that people who worked in a disability enterprise were paid on the basis of both competency and productivity and it was found that one of those was an unlawful basis for payment under the disability discrimination legislation and the relevant section. At the moment, disability enterprises make their decisions based on the law as to what they can pay and yes, some of them are under significant stress. Yes, it is the case that the government has a policy job on its hands, you would be probably unsurprised, Alan, to find out that this issue was in the top five briefs that were sitting on my desk right as I came in. I think there are ways through this, and they will involve the government working in partnership with disability enterprises to ensure their sustainability and I won’t go further than that tonight, but rest assured that I share your view that these disability enterprises have to have a sustainable future in Australia, they simply do too much good to disappear from the landscape.
ALAN JONES:
Just one final issue before we go, this question of superannuation. Now, that most probably was part of the brief as well, that basically if you or I tip money into superannuation, we only pay 15 cents in the dollar tax on it, whereas a marginal rate would be 48 cents in the dollar, so we’re getting a discount of 33 cents in the dollar. If, on the other hand, you’re on 35 or 36 thousand bucks, you’re paying 19 cents in the dollar, your discount on your superannuation is only 4 cents in the dollar. Do you and I, as people within the Australian community well paid, need the taxpayer to provide us with a tax incentive to save?
MINISTER PORTER:
Well, I mean, I think probably I can answer that this way. There are a variety of views on, first of all, what kind of revenue might be attaching to any changes in this area of superannuation concessional rates, there are a variety of views as to what the secondary effects on people’s behaviour would be if that were to change, and these are all things which have to be modelled very, very carefully and very well understood before you even start approaching the types of questions that you’ve asked. But, certainly it is the case that the Treasurer hasn’t ruled out anything along these lines at this stage. We have a number of reviews going on, particularly the Tax White Paper Review. It seems perfectly reasonable and sensible that the types of questions that you’ve asked are subject to thorough-going analysis and considered by the Treasurer, and he’s not ruled matters of that nature.
ALAN JONES:
So they’re big ticket items, 45 million bucks, I mean, to get the kind of money were looking about to retire the debt. I mean, one way of course is to chase down international outfits – this is not your bag but you know all about it because you were a WA Treasurer – who don’t pay their fair share of tax. Then you’ve got these incentives for people who ought to be able to provide for their own retirement, part of the $45 billion subsidies, then you’ve got the $150 billion welfare bill, if you can cut 10 per cent out of that, you’ve got 15 billion. So, you’ve got your job, you’ve got your hands full here haven’t you? I mean, are you confident you can sell all this stuff to the Australian electorate?
MINISTER PORTER:
Well, I think that necessity is the mother of all good selling and I keep coming back to this point: that when you are in deficit and working very hard to restrain your expenditure to track back to surplus, you are in a position where you are borrowing money to fund the day to day operation of government and that is simply unsustainable. Now, if you accept that fact, then I think that you accept the fact that you have to consolidate your fiscal position and you have to find savings. I would offer this cautionary note about the type of revenue projections or quantum that you’ve raised, I have rarely, at either a state treasury or federal level seen those types of predictions ever come true. And you will recall the mining tax which was supposed to be some wonderful golden goose laying piece of revenue, it just didn’t materialise. So, I think all those types of things have to be very cautiously assessed but, ultimately, there has to be a real effort to face reality, slow down expenditure growth and save money. And unfortunately what we have encountered is every time we attempt to do that, the Labor Party will, unfortunately, not back us and indeed, knock back billions of dollars in the savings that they themselves proposed in opposition. And yet, Chris Bowen in a speech not that long ago suggested that the type of fiscal consolidation that we attempted even in the first budget is something that Labor would have to face up to as well. So, in the year of Labor ideas, there have been perilously few ideas but none of them have been ideas about how you save money and how you slow down expenditure growth and, you know, if they’ve got some ideas, I’d like to see them.
ALAN JONES:
Good one you, yes, they’re driving down both sides of the road. Now, it’s great to talk to you, I want to say to you though, on behalf of this programme, if there are times in the future where there’s something you need to sell or you need to explain, you’re always welcome here. We wish you well, you’re in a very, very critical and important portfolio in terms of our future and I think Australians are willing to support you in whatever you seek to do. So, Christian, good luck, thanks for being with us.
MINISTER PORTER:
Thanks Alan, all the best to Graham.
ALAN JONES:
There he is, Christian Porter, the new Social Services Minister, first time you’ve heard from him, first time you’ve seen him. I think the bloke’s got gears. We’ll take a break.
(ENDS)