Sky PM Agenda
E&OE
PRESENTER:
One of the biggest gripes that Australians have with the Budget is they say it isn’t fair. But new modelling from the National Centre for Social and Economic Modelling spells out, perhaps, why. It divided the community as you can see in this graphic into five segments based on disposable household income and then it tried to work out how much each segment was contributing to the Budget. It found the bottom segment, there on the left of the Screen as Q1 Total, that’s the poorest 20 per cent of Australian households, will lose $2.9 billion over four years or 2.2 per cent of their disposable income. The top segment, the top earning segment, those with $88,000 or more after tax and benefits will forego $1.78 billion but with the scrapping of the carbon tax and other measures, they’re actually .2 per cent better off. To discuss this and other issues in the Budget, I spoke to the Social Services Minister, Kevin Andrews a short time ago.
Kevin Andrews, thank you for your time. NATSEM modelling today shows that the poorest 20 per cent of households are contributing over a billion dollars more to the Federal Government’s Budget savings than the richest 20 per cent of households. Is this Budget inherently unfair?
MINISTER:
There are very significant payments going to households at the low and middle levels of income. If you take a household that has an income of, say, $30,000, around about the minimum wage, then they are receiving by way of Government payments, somewhere between $20 and $30,000 dollars a year, depending on the number of children that they have. Even at the income levels of $50 and $60,000 people and families with children, can be earning by way of government additional support, some $10 to $20,000, so a very significant continuing contribution to families.
PRESENTER:
But the impact of any cuts or savings that the Government makes on lower income families is much greater proportionately, than those on higher income and this is only compounded by the fact that one of the key measures for higher income earners, the temporary debt tax is just that, temporary, whereas the changes to Family Tax Payments and other benefits for lower income families are permanent.
MINISTER:
The higher income earners also pay a very significant amount of tax already so the additional levy is on top of what they’re paying. If you’re on $150,000, then the reality is you’re paying about $46,000 in tax currently, and the levy is on top of that, so this is still a very significant contribution from higher income earners who contribute a large proportion of income tax in Australia.
PRESENTER:
You say the pain is spread through the community but is the pain spread differently, are those on smaller incomes being asked to contribute more?
MINISTER:
Well, we’ve tried to be fair about this, we inherited a mess, the $123 billion worth of accumulating deficits, $667 billion trajectory for the Commonwealth debt, that’s $25,000 for every man, woman and child in Australia. So we have recognised that we have to do something about the mess we inherited and we’ve tried to do it in a way which all Australians contribute to getting us out of this mess and back on a trajectory to a Budget surplus and ultimately, to bringing down the Commonwealth debt.
PRESENTER:
The GP co-payment is not included in those NATSEM numbers, we’re hearing from the AMA that people are already skipping visits to see their doctors and yet the co-payment is still more than a year away, that’s assuming it even gets through the Senate, which is looking kind of unlikely at the moment. That’s going to sting lower income people again more severely than those on wealthier or bigger pay packets isn’t it?
MINISTER:
We should remember that when the Hawke Government was in office, I think it was Brain Howe then as the Health Minister from the left of the Labor Party, when the average number of visits to a doctor, I think was about four, they were proposing a co-payment at that stage. The average number of visits now I believe is somewhere around about ten or eleven and we’re taking the same approach to that but there are safeguards built into it there for people who have for example Pension and Concession Cards and for children under the age of 16.
PRESENTER:
I suppose the big question is how to get this through the Senate, it seems to be one of the most controversial measures and it looks unlikely, as I mentioned earlier, of making it through the Senate. There is a safety net for pensioners and children and the like whereby if they see a doctor more than ten times a year, then they don’t have to pay the co-payment anymore but would the Government consider a complete exemption for concession holders in order to ease this through the Senate.
MINISTER:
Look at this stage, we will put the relevant pieces of legislation to the Parliament, we expect that obviously they would go through the House of Representatives and then we will send that legislation to the Senate and we will be appealing to all members of the Senate, whether they are members of a major party or one of the minor parties or independents, to look at the mess we’ve got at the present time, this galloping deficit and debt situation we’ve inherited and to say, you know, we’ve got to deal with that because the reality is if we don’t deal with it now and allow things to go on the way they are going on the trajectory that they’re on, then we’re going to face a bigger problem in the future and the problem from Labor and those who are saying, you know, this is unfair, is that they’ve got no solutions.
We’ve got a plan, it’s to get us back into a Budget surplus and to bring down the Commonwealth debt, to grow the country, to invest $50 billion in infrastructure in Australia. All of that is about getting Australia back on the right track and we would appeal to all Senators, regardless of their political affiliation to get behind this plan to get Australia back into real prosperity.
PRESENTER:
The Senators that matter though have already put on the record that they’re not going to allow this through, so will the Government give any ground?
MINISTER:
Look, I’ve seen statements over the 20 years or so I’ve been in Parliament David from people, taking some position and then when the reality of the situation faces them… but the question for everyone in the Senate, just as it is for all of us in the House of Representatives is what’s the plan, what’s the solution, what are the alternatives to the mess that we’ve got and nobody has come up with any other viable alternatives. There’s been lots of criticism, but we’re the ones with the plan, we’ve got the only plan on the table, and it’s a credible plan, economists haven’t knocked it, there haven’t been any black holes in this Budget, the reality is that this is a way of ensuring that we have prosperity, not just in the next few years, but most importantly, for the next generation of Australians. The problem with Labor is they didn’t borrow for the future, they borrowed from the future.
PRESENTER:
Your crackdown on the Disability Support Pension for younger Australians got some pretty prominent coverage on the front of the Daily Telegraph today which described recipients as slackers. Are they slackers?
MINISTER:
The problem with the DSP and this has been the case for years, probably decades is that it’s been a set and forget payment, people have been put on the DSP and that’s been the end of it and they can stay there for years or decades. We’ve said, look we should be looking at the capacity of people, when I visit and meet with disability organisations, they generally say, we want to work, we want to be in the workforce, but we’ve got this system that doesn’t encourage that at all so for under 35s who currently have to complete a participation plan, but they don’t have any obligation to actually follow through with it.
What we’re saying is not only should you complete the plan, but if the plan means getting some training, getting some skills, doing some work experience or the like, then there should be an obligation to follow through with it because if we can get people off welfare and into work, even part time work, all the research, all the study shows that’s better for them psychologically, for their physical health, for their mental outlook, for, you know, their wellbeing in life.
PRESENTER:
According to the Budget Papers though, the crackdown is actually going to cost money, $46 million over five years. Are you expecting to see some dividends in the long term, because otherwise it could be, arguably, just an ideological push?
MINISTER:
Well, if it was an ideological push then we would be going beyond the 35s. We’re not. We’ve taken a reasoned, informed decision about this and that is that if people have been on the pension for more than five or six years the research indicates that they are likely to have deteriorated psychologically if not physically and therefore there’s not much point in reassessing people after that period of time, but we also know that people under 35 have got the best chance if we can give them some skills and give them some assistance to actually get into the workforce and this is a longer term investment. We know that if a person is on welfare at the age of 35, there’s a very high chance or likelihood that they were also on welfare at the age of around about 20, so if you can make an investment in younger people, not only is it going to help them in terms of their personal lives, it actually has an economic return for the nation, not overnight, not over the forward estimates but down the track over perhaps a period of 15-20 years.
PRESENTER:
But that’s not a benefit, dividend that you can put a figure on at this point?
MINISTER:
No, but I was in New Zealand recently where they have an investment model to welfare over there and they were saying that if you can work out what investment you make in an early intervention, preventive type way, that’s not only good for the individual but it is actually something that you can empirically work out how much better that is for the economy overall because if people are in employment, they’re contributing to the economy, they’re likely to be paying taxes, versus somebody who’s on long-term welfare who is being paid by the taxpayer and the New Zealand approach is one that we’re looking at, but certainly in terms of this immediate measure, looking at the under 35s, it makes sense to put some investment into those people in the hope and indeed the expectation that some of them will be able to participate in the workforce.
PRESENTER:
As you yourself mentioned just a couple of minutes ago, the Budget as a whole has been subjected to a whole lot of criticism, how do you think that the Budget sales job is going?
MINISTER:
Look our task is to continue to explain, patiently, calmly, carefully to the Australian people, why we need to do what we’re doing. I mean the reality is that if this was about popularity, well then obviously that’s not the answer. The fact that….
PRESENTER:
You’re running out of time [inaudible] because eventually people’s views or opinions calcify, don’t they?
MINISTER:
Oh, look we’re out there, we’re all patiently explaining, like I am now, to the Australian people, that we inherited a mess, we’ve got a plan to get out of this mess, nobody else has got a plan, nobody else has got a solution, we’re doing this and we’ll get on with the job.
PRESENTER:
Kevin Andrews, we’ll have to leave it there, thanks for your time
MINISTER:
My pleasure