Sky News Kristina Keneally and Peter van Onselen
E&OE
Subjects: 2016/17 Budget; NDIS; Family Tax Benefits
PETER VAN ONSELEN:
Thanks very much for your company Mr Porter. You’re a former State Treasurer – would you have ever deemed it appropriate to hand down a budget with tax cuts over a ten year period that you didn’t release the modelling for? Surely not, surely not.
MINISTER PORTER:
Well in actual fact the rules for State budgets are very similar to rules for Federal budgets and ten year estimates on specific measures are never give out in those circumstances inside a budget. That was the case, as Penny Wong acknowledged under Labor, it’s the case under this Government, it’s standard practice to have those costings done internally but not released.
PETER VAN ONSELEN:
Standard practice or not though, I’m asking about you. Would you have operated that way or would you have chosen to open the doors to transparency and release the modelling thinking that was a better way to go?
MINISTER PORTER:
Well I mean, I’d read rules about budget for State just as I do in the Federal. And the rules are that those type of costings just aren’t released by Government’s and that was exactly the same position under Labor as it is under this Government.
KRISTINA KENEALLY:
Well about in this context – we’ve got a blow out in the NDIS, we’ve got an unfunded proposal in terms of Gonski – your Government’s not making any commitments as yet beyond the forward estimates yet when it comes to education and about the looming problem with health and an ageing population. Shouldn’t you be giving the electorate, just as they’re about to go into an election, shouldn’t you be giving them that information so they can make a decision about the quantum of money and how it is best spent?
MINISTER PORTER:
Well look we actually don’t have a blow out in the NDIS. The NDIS is being transitioned on time and on budget. What we do have in 19/20 is a funding gap – so a portion of the total funding, that Labor left unfunded, and part of this budget is a special savings account, and to find savings to move them into that account to fill that gap – that’s not a blowout.
KRISTINA KENEALLY:
I do want to get to the NDIS, but there is a gap there, there are other challenges as we look ahead into the decade, there are challenges in housing, education and disability services. Shouldn’t the taxpayer be able to make a decision about whether or not over the next decade the quantum money that is given in a tax cut to business and the quantum of money that is spent on those essential services?
MINISTER PORTER:
Well your point about the long-term affordability of all measure is a sound one. But, of course, that’s why the one costing that does appear over a ten year period in budgets, appears in this budget, and that is the outcome of all of the measures – the revenue measures and savings measures and expenditure measures which appears in the budget papers as they underlying cash balance. What that shows over ten years is that the company with tax reforms are fully paid for, they still allow for a transition into surplus and the maintenance of the surplus, and most importantly, they offer the entire nation a very significant uplift in terms of productivity and growth which of course leads to further jobs and that’s in the nature of $16 million dollars. So that one ten year figure, the one that is routinely published by Government does appear, and I think it can give Kristina and people comfort that it is affordable and indeed the right thing to do in terms of productivity and job growth.
KRISTINA KENEALLY:
Can we move on to the area in your budget with the, in Social Services. There are several so called ‘zombie measures’ in the budget and one is the ‘double dipping’, the so called ‘double dipping’ for Paid Parental Leave that props up your bottom line by about $1.3 billion dollars. Are you taking the ‘double dipping’ Paid Parent Leave policy to the election?
MINISTER PORTER:
Well I think that the saving is around about $950 million. But it is policy for Government to reform a system that allowed for a range of people who were getting the taxpayer funded Paid Paternity – Paid Parental Leave to also be able to access their employment based funding. So what we have tried to do is define, in as fair a way as possible, a system that won’t allow a person on a very high income, with a very generous private employer based parental leave to also access the $11,000 – the full amount of the $11,000 on the Government.
KRISTINA KENEALLY:
So I take it that’s a yes. You are taking that policy to an election.
MINISTER PORTER:
It is a part of Government policy – it’s a policy that we’ve been negotiating with the crossbench. Obviously we’ve had difficulties getting that through the Senate, but I think it’s a rational and reasonable policy and it’s one that we will continue to negotiate.
KRISTINA KENEALLY:
Can I ask one more on the so called ‘zombie measures’? And that’s just on the Family Tax Benefits. I think that’s somewhere in the neighbourhood of $4.2 billion dollars – you can correct me on that if I’m wrong…
MINISTER PORTER:
$4.1 billion, you’re very close.
KRISTINA KENEALLY:
$4.1 billion, thank you. Again, is that part of the election pitch that you’re going to make to families? That you’re taking those Family Benefit cuts to the election?
MINISTER PORTER:
Well yes. Except the pitch to electors is that those Family Tax Benefit restraints which relate to the end of year supplements, which are no longer fit for purpose, are going to be overwhelmingly reinvested into reform of childcare – into making childcare more affordable, simpler and enliven them into the workplace and give them greater opportunities. Now the question was asked in Parliament yesterday, why have the childcare reforms been pushed out? The reason is because, unlike the Opposition, we can’t fund them with fantasy. We have to fund them with real money and that involves making real savings. So the FTB savings are directly linked to the childcare expenditure and the reforms to make the system more sustainable and cheaper.
PETER VAN ONSELEN:
Christian Porter you said a little earlier in this interview about the comfort that it would give voters, some of those surplus estimates going out beyond the forward estimates of the budget, in that graphic that’s contained in the budget. I’ve got a question about that though – I know that Steve Ciobo earlier in the afternoon that the Government has a priority of returning the deficit to a surplus and then once getting into a surplus, paying down debt. Here’s my question – how can it be once you get to a surplus according to those estimates, in the five years beyond, five or six years beyond the forward estimates – how can it be that you sit on a really low paper thin surplus? We’re talking about less than half a percent of GDP. If you’re serious about paying down debt, how can you not be looking to increase the surplus year on year over that five to six years, rather than leaving it as the kind of surplus that if you get a 0.25 per cent change in economic, guess what? You’re back in deficit.
MINISTER PORTER:
Well I guess the answer is that budgets accumulate on each other. That is the projection, the global projection, for the underlying cash balance going forward for ten years based on all of the measures in this budget. Now there are further budgets that further Government’s will deliver, and we hope to be those Government’s. But let me simply say to you Peter, that if the Australian people want a Government who can return the nation a surplus, and return health surpluses, then there’s only one choice and that is Coalition.
PETER VAN ONSELEN:
Here’s the issue though Christian Porter, I mean, what you say about comparing it to Labor, and it may well be that you are the lesser of evils on what I’m asking about. But isn’t it as simple as this, if you’re getting to surplus and then over a five or six year period are projected to only just be sitting above it. That tells us those future budgets that you hope to deliver will have to do one of two things – they’ll either have to contain a hell of a lot more cuts or they’ll have to contain a hell of a lot more tax increases. Because without either of those, you are not going to be able to do your promise of paying down Labor’s debt.
MINISTER PORTER:
Well expenditure restraint, being efficient, closing loopholes is an ongoing task of Government, it is doesn’t stop with this year’s budget. Of course that will ongoing. I of course have responsibility for around about 35 percent of the expenditure in the Federal budget and it’s growing at a fairly high rate. So we are constantly looking for ways to be more efficient, to try and reallocate funds amongst a hierarchy of purposes. That’s one of the reasons why we have found savings with respect to ending the Carbon Tax compensation – closing that and investing the money back into the NDIS. And that’s part of an ongoing process that occurs every year, in every budget, in every MYEFO. So you would always hope to improve upon the situation that you’re in at present.
KRISTINA KENEALLY:
Can I pick up on that with the Carbon Tax – removal of the compensation, because you’re only removing it for new entrants to the welfare benefits system. Does that change require legislation?
MINISTER PORTER:
It does. So of course we need Parliamentary support for that. And we’ve made a decision to try and find the right balance. We’ve looked at the McClure Report which noted that one way in which you can lessen impact is to, what they call, grandfather. So make the payment unavailable for new entrants, which is what we’ve done. That saves around in total $1.4 billion dollars that we can reinvest into the care for Australians with a disability.
KRISTINA KENEALLY:
So if that change is not approved by the Parliament in the new Parliament, presuming you win the election, what will you do? Will that delay the implementation of the NDIS, the way that the childcare changes have been delayed, or will you look for savings elsewhere?
MINISTER PORTER:
Well, we aim to get it passed through Parliament, I think it’s eminently reasonable, and I think most Australians would, as a matter of considering, whether you should be compensating, or us compensating ourselves for a tax that didn’t happen, for electricity prices that didn’t increase, whether we should do that, or have the money spent for the care of Australians with a disability. I think people will overwhelmingly think that this is a fair measure and, by virtue of their support, we should be able to get this through Parliament.
KRISTINA KENEALLY:
But Christian Porter…
PETER VAN ONSELEN:
Can I ask you a separate question, I want to ask a question about the PaTH Youth Employment Scheme, there’s a bit of confusion about this Mr Porter in Senate Estimates earlier today I think, can you just clear this up, is the scheme mandatory for young people who are on the dole?
MINISTER PORTER:
Well, they’ll be assessed for it, but my understanding is that the second part of the scheme, which is the internship, involves the person volunteering into the internship. So what we do is; stage one, training and preparation, stage two is the internship, and stage three, we hope, is the business picking up the person into the employment. But stage two, the internship, involves $200 being offered as a payment on top of youth allowance, or the other welfare that the young person might be receiving, as an incentive to enter into the internship. So in that sense, it’s a voluntary system at the internship level, but of course people will be assess across the board for their applicability (INAUDIBLE)
PETER VAN ONSELEN:
There’s been a real change by the government in relation to the approach to dealing with youth unemployment and so forth, it was much more, you could characterise it as a ‘stick’ approach in the 2014 budget, now it’s much more of a ‘carrot’ approach, and the sector, right across the sector I might say has gotten behind the government largely, on this being a better way to go about trying to get people into work. Can I ask you, is this your doing as the Minister coming into Social Services? Or is this policy that was left on the cutting room floor when Scott Morrison was the Social Services Minister, and just couldn’t get it past the then Prime Minister?
MINISTER PORTER:
Well, largely it’s the efforts of Michaelia Cash in Employment, of course supported by myself and Scott Morrison, the Treasurer. But, the Treasurer and I both thought there were ways in which you could leverage the payments of NewStart or youth allowance, so the dole in effect, to try and assist people into employment, which is what we’re doing here, by adding the $200 on top of that payment, incentivising entry into internship, so I think, it’s always a collaborative effort, but I’ll give warm congratulations to Michaelia Cash for what I think will be an excellent program.
KRISTINA KENEALLY:
Can I go to the budget overall, and the issue of unemployment, because as we’ve often heard from people on your side of the Parliament, the best form of welfare is a job, but this budget only projects a minor drop in unemployment, and sees it really flat line in at 5.5%. Is that a rather uninspiring job figure, particularly if we do have a nominal GDP growth at 5%?
MINISTER PORTER:
Well, as the Prime Minister and Treasurer have said on many occasions, we are an economy in deep transition, there are challenges related to that. Job growth has been very strong, but of course people are moving in between job paths, there is more part-time employment, so I think the estimates are conservative, but there’s a lot to hope for here, particularly with this most excellent plan on moving young people into an internship and giving them a proper pathway into employment.
KRISTINA KENEALLY:
Can I just stick on this for a moment, because Michaelia Cash has been citing job creation figures, and they’re not bad, I’ll give her that, but real GDP in this budget is only forecast to go to 3%, and most economists would say we need it at 3.5% to be creating enough jobs to just keep pace with population growth. So are we really going to see this budget deliver jobs and growth, because the projections don’t really seem to suggest that?
MINISTER PORTER:
Well, when you compare Australia’s growth to international comparatives, we are doing very, very well, yes that is 2.5% predicted to rise up to 3%, but in any international comparator that is a very, very good outcome. Is that going to generate the jobs we want? I think it is, but we’ve instituted in this budget, particularly with the staggering in of businesses into reduced company tax rates, the ability to incite and enliven investment in the Australian economy, and that where jobs will come from.
PETER VAN ONSELEN:
You mentioned the forecast around unemployment were conservative and deliberately so, I think that’s probably not unfair for what it’s worth, for my two cents worth, but what about those nominal GDP figures? 5%, you’ve got to be joking. Would you like to place a side bet on that?
MINISTER PORTER:
Well, I mean, I think that you made a comment earlier Peter about the difficulty in projecting forward, their estimates of course. I think they’re very reasonable ones in the circumstances, but of course we’ll have to wait and see.
PETER VAN ONSELEN:
When you say they’re reasonable in all the circumstances, why be conservative about the unemployment figures, but be a little bit more bullish about the nominal figures? It’s a bit of egg on the face of the Treasurer wasn’t it, that we then had the Reserve Bank turn around and be bears on the economy and drop interest rates while journalists were in the lock-up?
MINISTER PORTER:
Well no, I’m not sure that that is, necessarily presents bearish approach to the Australian economy, I think they are looking at inflation which of course has a number of drivers, so I’m not sure I’d accept the premise of the question, but…
PETER VAN ONSELEN:
One of which is the oil price which has seen deflation
MINISTER PORTER:
Yes, but of course they have a measure on a basket of goods right across the economy, and they are reacting to inflationary pressures.
KRISTINA KENEALLY:
Minister Porter, can I ask you about another projection in the budget, and that’s a spending cut of $1.9 billion, projected for the year 1920 (sic), this is a decision taken by the government, but not yet announced. Now, given the size of your portfolio, and I think it’s something like 27% of government spending, we might reasonably assume that this cut could be taken place in your portfolio area. Can you tell us whether or not that includes the NDIS, that cut? Does that affect the NDIS?
MINISTER PORTER:
Can I just note, if you’re referring to the same budget paper that I think that the media has referred to, I’m not sure that the best characterisation of that is actually that it’s a $1.9 billion cut, it’s preceded in the budget items by expenditures, but in answer to your question…
KRISTINA KENEALLY:
That’s a fair point, but there is still there in the fourth year, big lumpy negative number of $1.9 billion.
MINISTER PORTER:
In the answer to your fundamental question, one thing the government can’t be criticised of is hiding savings. Where we make a challenging decision to make the savings inside the budget, restraining expenditure growth, we have been absolutely open about it…
KRISTINA KENEALLY:
But you haven’t announced this one that’s why I’m asking…
MINISTER PORTER:
But you’re asking are there, does that represent further hidden savings inside my portfolio? My answer to that is no.
KRISTINA KENEALLY:
So not in your portfolio at all?
MINISTER PORTER:
Not in Social Services.
KRISTINA KENEALLY:
Ok.
PETER VAN ONSELEN:
Can I ask you, does it have to be revealed, in your understanding by the time of PEFO? We spoke, Kristina and I spoke to a senior treasury official in the lock up, and he said as long as it’s not around national security issues, or commercial in confidence, it would have to come out in PEFO, can you tell us if it’ll therefore be in PEFO?
MINISTER PORTER:
What I’m putting to you is that, when you read this it’s not actually what you think it is. It doesn’t represent a $1.9 billion hidden cut, it’s simply not that, because when you round out expenditure before it, it’s a movement in and out of consolidated revenue. To your question about PEFO, yes PEFO, if there are unannounced measures, the effectively get announced through the PEFO process. Equally where Labor makes calls on expenditure, such as in foreign aid budget that Mathias Cormann was talking about this morning, they get counted through the PEFO process, so that’s why PEFO will reveal exactly what we say exists, which is a $62 billion gulf between expenditure and revenue that Labor have given themselves by promising the world to people.
KRISTINA KENEALLY:
Christian Porter, we’re going to leave it there so you can get to Question Time. The last one before the election, thank you for joining us on To The Point.
PETER VAN ONSELEN:
Thank you for your company.
MINISTER PORTER:
Thank you.