ABC RN – Drive

Interviewer:

Patricia Karvelas

E&OE

PATRICIA KARVELAS:

Christian Porter, welcome back to RN Drive.

MINISTER PORTER:

Patricia, good to be here and great to be back at my old stomping ground.

PATRICIA KARVELAS:

How does it feel? What sort of memories do you have of this place?

MINISTER PORTER:

Makes me feel old.

PATRICIA KARVELAS:

Pretty much that’s what returning to university does.

MINISTER PORTER:

I was very, very fortunate to be here from 1987 on and it was a great period of time in my life and a great place to be.

PATRICIA KARVELAS:

Let’s get to what you are doing now – a small brigade of new ministers were sworn in today and in social services you are surrounded by a whole new team. Alan Tudge, Jane Prentice, Craig Laundy. You just lost Stuart Robert as Human Services Minister due to his ill-fated China trip, holiday, whatever you want to call it. It’s not the ideal start to the year with so many reforms in limbo is it?

MINISTER PORTER:

Well Stuart had done a great job in advancing two really important areas of reform for us in government. One was debt recovery in the social services system. So there is a very large amount of money that is owed to the Australian taxpayer from people who have been in the welfare system, who remain in it, but also a bunch of people who have been in the welfare system and have moved out of it. And so he had brought in a whole range of integrity measures which are going to contribute to budget repair and getting the nation back to surplus and do the fair thing which is get money off people who owe it. The second thing that Stuart had started, and a process that Alan will no doubt continue, is a range of measures designed to strengthen mutual obligations, particularly with respect to people who are on Newstart - so unemployment benefits. They’re turning up to the required mutual obligations job interviews and the like, we are trying to make that as stringent as humanly possible and as fair as possible. But they were two big jobs of work that Stuart started I’m really pleased to have Alan in that position and I’m sure that he will continue those with great economy and speed.

PATRICIA KARVELAS:

On the welfare reforms, before the Christmas break you were looking to try again with changes to family tax benefits. Have you made any progress getting the Senate support you need?

MINISTER PORTER:

Well we’ve had some progress in so far as Labor did agree to at least part of the changes.

PATRICIA KARVELAS:

But you had to split the Bill.

MINISTER PORTER:

Correct. We did have to split the Bill, but we will take whatever agreement from the Labor opposition we can. And what they did agree to was in effect that family tax benefit would end for families when their oldest child turns 16. Now that is not all we wanted but we have agreed with that and those savings have moved through the Senate. And you are right the rest of the Bill is now part of the legislative process and we’ll be negotiating with the cross benchers around that.

PATRICIA KARVELAS:

Have you sweet talked them yet because they didn’t want to support the changes. Have you convinced them?

MINISTER PORTER:

Look I wouldn’t say there is a huge level of enthusiasm, but there is also a degree of realism amongst the crossbenchers that I’ve spoken to and the greater part of the savings that we’re trying to make here revolve around ending what is known as the end of year supplements in family tax benefit. And these came on line at about 2004 when Costello was Treasurer.

PATRICIA KARVELAS:

John Howard - big fan of them I recall.

MINISTER PORTER:

Indeed. But the times were very different back then in two respects. One is we had a massive budget surplus, so there was money that could be expended on these things without having to borrow the money to pay the end of year supplements. But also the end of year supplements were meant to be able to allocated to families who in those days were often accumulating debts because they had either incorrectly underestimated their income or something had gone wrong in their estimate of income so had been paid too much welfare and had been allocated a debt. Now in the not too distant future in 2018, we’re very confident that problem can be very substantially alleviated by single touch payroll technology. So we’re asking ourselves I guess the question. Is it a good idea to borrow four billion dollars to pay ourselves end of year family tax benefits supplements which are meant to be able to be applied to debts which we no longer are accumulating?

PATRICIA KARVELAS:

You are right but your political problem is that families have now become very reliant on them – particularly families struggling financially. To give them that extra money to buy even essentials for their children for school supplies, that is your political issue isn’t it?

MINISTER PORTER:

Well the family tax benefit system applies roughly to families under $100,000. So, yes inside the family tax benefit system there are families above median income and below median income. And yes people find it much easier to accept more money than they do find to have a supplement like this ended. But all of these things have to be considered in context, not just for the government but for each of the individual families. And the terrible irony here is that you end up getting an end of year supplement which is effectively being paid for by borrowings which your children will have to repay when they hit the tax system. So we are requiring a future generation of Australians to pay for an end of year supplement that a family is enjoying today. And I think that when you look at it in that context, even though it is difficult to have any supplement wound back, it is not a terribly fair thing at the moment to be lumping the next generation, not merely with the burden of paying for their own welfare system, but for paying for today’s welfare system.

PATRICIA KARVELAS:

On RN Drive my guest is Christian Porter. He is the Minister for Social Services joining us here at the Perth international arts festival at the University of Western Australia. We thought we’d get him in to his old university.  Minister, separate to your tightening of welfare payments is the proposed streamlining of those payments, which was kind of the headline recommendation of last year’s McClure review. I reported extensively on this review, I know it off by heart and yet I think the government is sitting on it. Are you planning to implement any of its reforms in this budget?

MINISTER PORTER:

So what Patrick McClure said basically was this. We have an excruciatingly complicated welfare system which is basically the result of government after government putting new payments supplements, add-ons, end of year bonuses just like the one we have discussed, onto the system without ever rationalising the system and limiting and consolidating the number of payments. Our welfare system Patricia as you know from reading that very useful report, has about 20 major categories of welfare and then inside that we inherited 55 different subcategories of supplements, add-ons, bonuses. Inside those are different rates of indexation, different income test, different assets test, things are indexed sometimes once a year, sometimes twice a year, sometimes according to one measure.

PATRICIA KARVELAS:

So much so that McClure says it is a broken system. Are you going to fix it?

MINISTER PORTER:

Well I would agree with Patrick McClure that is a highly complicated system which does no good for Australian families who are in it and no good for the Australian economy. Already we have reduced those 55 supplements down and we’re trying very hard to end a couple supplements that we’ve discussed today. So the only way that you can consolidate the system is by passing legislation through the senate.

PATRICIA KARVELAS:

So are you going to do it like that thought because that is a different approach. You’re incrementally taking bits, picking pieces of that report, but actually Patrick McClure said he wanted a holistic rollout of that report and its strategy because some of it would involve spending money as well of course, especially the direct investment money where you put money up front to help people before they became very disadvantaged. Would you do that? Would you follow through with that proposal?

MINISTER PORTER:

Yes and so what McClure suggested was instead of having 20 major categories with 55 different subcategories that you have five or so major categories of welfare with uplifts, so levels inside each. Now that is a very elegant design. We live in the world of achieving the art of the possible. So we have to have a mind as to how you would do that. You can do that two ways you can start working at those 55 different supplements and add-ons and that is part of our childcare reforms to turn three different subsidies into one. It’s part of trying to get rid of these end of year supplements which we think are no longer fit for purpose.

PATRICIA KARVELAS:

But really if I can take you to the question. Will you be doing more in the budget responding to it?

MINISTER PORTER:

Every government from this government on has a responsibility to try and consolidate. Now it might not be exactly the way in which Patrick McClure envisaged it, but the system has to be simplified. And something that I was discussing last week was the fact that we have got people inside the family tax benefit system who pay almost exactly the amount of tax that they receive back in family tax benefits.

PATRICIA KARVELAS:

Yeah the welfare churn as it is known.

MINISTER PORTER:

Yeah so we’ve got families - a primary income earner on $50,000, with a secondary income earner on $15,000, collectively pay $12,000 of tax and get back almost exactly the same amount in the family benefit system. It is inefficient; it’s complicated; its wasteful.

PATRICIA KARVELAS:

Can I get a confirmation from you that you are working on more reforms based on that McClure report for this budget in May.

MINISTER PORTER:

Ah yep that’s part of the things that we are looking at absolutely. But we are also looking at churn and we’re looking at welfare to work traps and I think that any government has to sensibly look at the way they can achievably make the system simpler, and fairer.

PATRICIA KARVELAS:

So we will see that in the budget. There will be welfare to work strategy in this budget that we are looking at. Because the Treasurer raised yesterday this middle class welfare issue that he is worried about it still. Are you both working together to deal with it?

MINISTER PORTER:

Yes, look you’ll obviously have to wait for the budget to see what is in the budget. But core to the portfolio responsibilities that I’ve got is finding ways to simplify the system. But to reward people for working more and trying to end welfare to work traps where if you move up a tax bracket and then not long after that find that your income means that you lose a payment, that you are actually finding that you are presented with incredibly high effective marginal tax rates, and low incentive to earn more money. Now that’s a terrible situation for families to be in, but that is the result of years and years and years of welfare payments simply being added to the pot.

PATRICIA KARVELAS:

Before I let you go if I can just turn to politics here in Western Australia. Federal Labor is losing its only three MPs and one of them Gary Gray says Bill Shorten will lose the election. He told RN Breakfast that very thing. Is it time to dance on some political graves here?

MINISTER PORTER:

Whose?

PATRICIA KARVELAS:

Labor’s. Are you going to try and get those seats, do you think you can?

MINISTER PORTER:

Politics is competitive. I mean I think you’ve never got a better chance to win seats than when long-standing members retire. And Gary Gray’s been a good member for his seat, but he has indicated that he is retiring. So of course we’ll be working very hard to win those, but this is all about the fact that elections are very competitive. Gary Gray’s got a view about what might happen. I’m not a fortune teller, but this is an incredibly competitive environment.

PATRICIA KARVELAS:

Do you agree with his assessment?

MINISTER PORTER:

Look, I don’t know. That’s his assessment and you’ll have to ask him questions about that assessment. But every election is hard fought and nothing can be taken for granted. And we’ve had great success in Western Australia as a Liberal party. But that is about hard work, it is about devising policies that are right for the state and I think it’s about having realistic conversations and honest conversations with people like we are trying to have in the welfare space.

PATRICIA KARVELAS:

Thank you so much for joining us here.

MINISTER PORTER:

Pleasure.

(ENDS)