Radio National Breakfast with Fran Kelly

Program:

Radio

Interviewer:

Fran Kelly

E&OE

FRAN KELLY:

As we heard earlier on the program, the Federal Government’s massive Omnibus Savings Bill has been delivered a fatal blow with the Nick Xenophon Team announcing it will vote against the package in the Senate.

With the Government needing nine of the ten crossbenchers to pass legislation, this decision means that billions of dollars in welfare cuts to help pay for child care and the NDIS will not make it through the Senate.

In justifying his blocking move Senator Xenophon says the Government’s approach of, quote, “robbing Peter to pay Paul”, will impose too high a cost on families.

NICK XENOPHON:

Well, I can’t support the Omnibus Bill for a number of reasons. Firstly the trade-off is simply too harsh for families on Family Tax Benefit. That still would leave a lot of families out of pocket to the tune of hundreds of dollars and we think that is not the best way to fund the child care package. Senator Nick Xenophon speaking to us earlier.So it’s back to the drawing board for the Social Services Minister Christian Porter, who joins us in our Parliament House studios. Minister, welcome to breakfast

MINISTER PORTER:

Morning Fran.

FRAN KELLY:

You’ve lost the three Nick Xenophon Team votes – do you concede the Omnibus Savings Bill is now lost? It won’t pass the Senate?

MINISTER PORTER:

Well I’ll have another talk with Nick today – certainly there are some difficulties that we’re presented with. I think the fundamental difficulty is the one that Nick has raised which is that he does not consider it’s a mechanism he can support – to find savings within the Family Tax Benefit system – to pay for child care.

Now, we’ve been very clear on that from the very beginning, we want to keep working to make sure that people benefit from the child care reforms which again, as Nick noted, seem to be widely lauded. There are one million Australian families who’d benefit from those child care reforms, and they are particularly focussed on ensuring that families and mums who are less well off, but who are working and who want to work more or who want to work and engage in the workforce for the first time are disproportionately benefitted. So we want to find a way to benefit those families and those mums, but Nick’s position appears to be now that that shouldn’t be through savings in the Family Tax Benefit system.

FRAN KELLY:

He says the trade-off is too harsh. He says these reforms come at too high a cost and it quotes, your model I think, which is a family with a shared income of $75, 000 could be about $1000 a year worse off. He says that’s fundamentally flawed and unfair.

MINISTER PORTER:

Well, again, I think that’s a way of looking at it which does not take into account the very heavy benefits that exist inside the reforms we’re proposing to child care. So, there can be a benefit to a family, just like that, to the tune of, literally, thousands of dollars, if they are a family who is accessing child care or after school care, or who wants to, or wants to access those things more.

I did note…

FRAN KELLY:

Which is not all.

MINISTER PORTER:

Well, not all of them, but the overwhelming majority. So you’ve got 1.2 million families inside the Family Tax Benefit system who have children of child care age, zero to five; or after school care age, six to twelve.

So we think that the benefits are disproportionately in favour of families, and focussed very much on families that we think need the most help – and they’re families of lower incomes who are engaging, or want to engage more, in the workforce.

But one curious thing – and I have spoken to Nick, and I’m going to speak with him again today – but one of the curious things that Nick did, sort of say, is that he wants the child care, doesn’t like the swap between Family Tax Benefit and the child care expenditure – it’s $1.6 billion worth of expenditure, and wants to think about other savings that can be produced to allow the child care reforms to go ahead. Now being in a portfolio where we have had to find some savings, the list of savings just isn’t endless. But I will talk with Nick today about what he means by other savings…

FRAN KELLY:

He gave us a hint – he said some of them could come from defence spending. So perhaps he’s going to look outside your portfolio. But can I come to something that you announced yesterday when you directly linked the passage of the Omnibus Savings Bill to proper, ongoing funding of the NDIS – the National Disability Insurance Scheme. Some in the Senate saw that as blackmail - Nick Xenophon amongst them it would seem. Here’s what he told us this morning

NICK XENOPHON:

…if I can be diplomatic and say – it was not helpful, in terms of trying to pit one group of disadvantaged Australians with another group of Australians in – desperately needing help with disability support services.  I would rather see, my personal view is, I would rather see a small increase in the Medicare levy, Medicare surcharge in the sense that I think that would be more equitable to fund the NDIS, rather than measures that would be seen to be directly taking it off low income families who are on Family Tax Benefits.

That was Nick Xenophon speaking to us earlier. And in his statement this morning he said linking those two things – this package and the NDIS funding – is dumb policy and even dumber politics.

Did you make a strategic mistake?

MINISTER PORTER:

I think Nick’s problem with the Bill is fundamental, and that’s about the Family Tax Benefits and not wanting to make any savings there to pay for child care. I think that’s the fundamental issue that Nick has with the Bill.

I’m interested to hear…

FRAN KELLY:

But $3 billion of this savings package was for the NDIS.

MINISTER PORTER:

Yeah, sure. The savings would have gone into the NDIS Special Savings Account, and they would have contributed to the ongoing sustainability of the NDIS. But our commitment to the NDIS is immutable. It is absolute. That means, as Nick noted, if we can’t find savings to fill that funding gap that Labor left in the year 2020, than you have to look at other mechanisms to fill that funding gap. Now Nick suggested one.  There are other savings, obviously, that we will have to look at. But I don’t think that it is in any sense wrong, or a bad idea to, when you do identify savings, place them into an account and absolutely quarantine them for the use of the NDIS. That provides surety and certainty to the application of those funds to the NDIS.

FRAN KELLY:

Was it the fact that we heard about this link just in the, sort of, dying days of this negotiation? I noticed that Paralympian champion, form Paralympian Kurt Fearnley tweeted yesterday – the NDIS is a life and economic enabler and mustn’t be threatened as a by-line when you run out of ideas to force cuts elsewhere.

MINISTER PORTER:

No-one’s threatening the NDIS. What we have identified, and what Nick Xenophon appears to agree with, is that there’s a funding gap. And that’s because Labor did not make all of the savings that it needed to, to fully fund the NDIS when it becomes fully operational in 2020. That funding gap starts at around $4 billion, and it grows very rapidly after that…

FRAN KELLY:

I think the point of Kurt Fearnley and others is that that gap doesn’t necessarily have to come from welfare savings. Couldn’t you cut back a bit on your company tax plan for instance?

MINISTER PORTER:

Well unfortunately those things don’t happen in the same time period.  Of course the company tax plan, the enterprise tax plan is designed to grow business investment in businesses and employment in Australia so that we don’t end up in a situation where we have flight of business investment and inability to have companies and businesses employing people in Australia. So the two of those things are both equally important, but ultimately we were left with a funding gap and we’re doing our best to find savings for it.

Look, we have found savings already, and things that will pass the Senate and money that does go into that account and starts to decrease the need at some future point to look at other options. Nick’s mentioned one of those, but our very strong preference is to ensure that we find savings across government, not just in my portfolio of Social Services, but other savings to ensure that we’re funding the NDIS. This is what Labor should have done when they put the NDIS together.

FRAN KELLY:

So where to now for these reforms you want to get through? Senator Xenophon indicated there are some measures within the Omnibus Bill he could support, will you now split the Bill and introduce the various measures individually, the cuts to Family Tax Benefits, the changes to Newstart for young employed – take them one by one?

MINISTER PORTER:

Sure. Well I need to, obviously, speak, as does the Treasurer, with Nick to work out precisely what he is – the measures, because there are multiple measures, 16-odd measures, totalling savings of $5.5 billion – which are the measures that Nick does feel he can support, and have a look at those. Of course the main issue here is finding a way to fund a very serious, $1.6 billion investment, in child care which parents and families and mums are screaming out for. We can’t do that through borrowing more money, we have to find savings to fund that expenditure. I think the first project here is to look at those savings that Nick thinks that he can agree with and see how close we get to that figure of $1.6 billion, because if Nick does have a view that there are other savings out there that could fill whatever gap we’re left after we look at the savings he can agree to, then obviously we’ll have a look at that.

FRAN KELLY:

Minister, on another issue – the Liberal Party in your home state of WA says it will preference One Nation at the March state election, and in some seats it will preference One Nation against the Nationals. Are you happy with that decision?

MINISTER PORTER:

Well if I can just make one observation and that is they have said that in the Upper House in some districts they might do that – which is actually something that the Nationals, themselves in WA, did exactly the same thing several elections ago…

FRAN KELLY:

So are you happy with this decision?

MINISTER PORTER:

Well look, it’s not a question of being happy or unhappy with it. That’s a decision made by the West Australia State Division of the Liberal Party…

FRAN KELLY:

Well do you have a personal view? You’re a senior West Australian politician.

MINISTER PORTER:

I’d offer the same observation that I offered yesterday having been in and about Western Australian politics and been in the Parliament.

The relationship between the Nationals and the Liberals in WA is very, very different from the one that exists in every other jurisdiction in Australia. It’s not a single party, it’s not even a coalition. The Nationals, as has been noted many times by Brendon Grylls, acts completely independently of the two major parties in the way in which is negotiates for Government and they do what they do independently in the best interests, as they see it, of their constituents. Now, it’s a very, very unusual and unique relationship between the Nationals and Liberals in WA.

FRAN KELLY:

So you’re not concerned about a rift within the Coalition more broadly? Because Barnaby Joyce clearly isn’t happy about it.

MINISTER PORTER:

No, again I think that it is a very idiosyncratic and different and unusual set of circumstances in WA.

FRAN KELLY:

Christian Porter, thank you very much for joining us.

MINISTER PORTER:

Thank you.