Transcript: PVO Newsday, Sky

18 February 2016

The Hon Alan Tudge MP

Minister for Human Services
Topics: 
Human Services portfolio, Negative gearing, New ministry
E&OE

PETER VAN ONSELEN:

Thanks very much for your company.

ALAN TUDGE:

G'day Peter.

PETER VAN ONSELEN:

I hear that your wife and family didn't do you the honour of joining you in Canberra for this important part of your life. I hope she has a good excuse.

ALAN TUDGE:

No, they didn't come up today. My mother did, but my wife is going to be delivering a baby boy tomorrow morning. So after we finish this interview, I will be packing up my bags, going to the airport and making sure that I am there to assist her tomorrow.

PETER VAN ONSELEN:

Don't miss your flight. If there is one thing you will never recover from it is not getting back in time.

ALAN TUDGE:

I am not going to miss my flight. I would never recover from that. My marriage would be over, so I have no intention of doing so. But obviously very excited about that as well as excited and honoured about being sworn in this morning and realising the responsibilities that that brings.

PETER VAN ONSELEN:

If you had to rank them, which is more important? No, no, I am not being serious. Alright, let’s move on.

ALAN TUDGE:

Don't give me that question! Of course family always comes first Peter. My wife could be listening.

PETER VAN ONSELEN:

I would hope it comes first even if she is not listening. But let's move on. I want to ask you about, well in a sense congratulate you on running the gauntlet as one of the people that voted for Tony Abbott and still getting promoted nonetheless.

Because every single person who turned up at that coup meeting at Peter Hendy's house got promoted and a lesser number of Abbott supporters have also been promoted. So, congratulations.

ALAN TUDGE:

Thank you Peter.

PETER VAN ONSELEN:

I gave you too much of an opportunity to give a short answer.

ALAN TUDGE:

I'll just take that as a comment. All I would say in terms of who got promoted this time, is that obviously a broad group of people have been promoted this time.

We have had to replace some very senior members of the cabinet who decided to retire; in terms of Warren Truss and Andrew Robb, and obviously a couple of other unexpected resignations.

In some respects, in any organisation, and the Government is similar, you constantly want to be renewing your team and ensuring you have got some experienced hands as well as new talent coming through.

I think that is what the Prime Minister's intent was to orchestrate in terms of this reshuffle.

PETER VAN ONSELEN:

Can I ask you about Victoria in terms of its new found dominance in the overall frontbench line up? There are a lot of Victorians that have come into the team, and more importantly even than the simple number is probably the age factor. Very much generation next in Victoria is doing well; yourself, Dan Tehan, Kelly O’Dwyer, Josh Frydenberg and there is many more than that as well, so it really is a line up there amongst that group. Greg Hunt, he has been around a long time, but he is not that much older than the rest of you.

Is this a sense that Victoria is almost returning, do you think as the crown in the jewel for the Liberal Party that it once was?

ALAN TUDGE:

I would like to think that is the case and certainly I think we have a very strong team from Victoria and even when you look at the calibre of some of the people who are on the back bench but could well be on the front bench in the years ahead — Sarah Henderson, Michael Sukkar — people like that.

You look at some of the people who will be contesting the seats like Goldstein and you have just got stellar candidates contesting the seats. So I think it does bode well for the Liberal Party — well it is not just the Liberal Party it bodes well for — when you have got strong candidates contesting seats, then it obviously bodes well for the overall political system as well.

I am really happy where Victoria is at and the calibre of people we are attracting to the Federal Parliament.

PETER VAN ONSELEN:

Alright, let's move into some policy discussions. Your new portfolio, Human Services, that is really one of the ones that is going to have to see some sizable cuts isn't it, going forward? And if we are not going to see major reform, and I don't see that as a put down, but if we are not going to see major reform that incorporates an ability to have higher taxes or a restructuring of the tax system that grows the pie, so to speak, lower spending is going to be vital and the Human Services portfolio is a high spending portfolio isn't it?

ALAN TUDGE:

All the welfare payments combined constitute about a third of the overall budget and they have been growing at an unsustainable rate. Clearly if you continue to grow the welfare spend at say, 5 or 5.5 per cent per annum, it is just not sustainable longer term.

We are constantly looking at the welfare system to make it financially sustainable. That means a few things. It means looking at the parameters of the welfare payments and ensuring that they are targeted properly. It means looking at the assessment process and making sure that people are properly assessed against what the criteria is. And further ensuring that people are doing their mutual obligations and that there is proper compliance and rigour in that process as well.

We will be looking across all three of those. We have already done a lot of work in that space, but obviously there is some more work to do as well.

PETER VAN ONSELEN:

I want to ask you about Labor's negative gearing policy. The government has come out against it, essentially, the policy as it is constructed. What are all these lefties like Jeff Kennett and Saul Westlake and Professor Richard Holden and Warwick McKibbin; what are they all missing when they think it is not a bad scheme?

ALAN TUDGE:

In terms of the Labor scheme? We're prepared to look at the excesses of the negative gearing scheme but what we are not going to do, which Labor has done continuously is just announce new tax on top of new tax on top of new tax.

Our ambition in our tax reform process is yes to look at the tax mix, but with the overall objective of keeping the net tax take as a percentage of GDP the same, if not lower. We are the party that wants to lower taxes, whereas the Labor Party are out their announcing more and more taxes.

PETER VAN ONSELEN:

But Mr Tudge, your side has a problem with the design of Labor's negative gearing scheme, at least according to what I have seen and heard, what is wrong with that?

ALAN TUDGE:

We have got two problems, one is it is just another tax without any offset. The second is the design of it which we think could have some unintended consequences and penalise all those middle income families, basically, who tend to use negative gearing.

Most people that use negative gearing are in the under $80,000 range.

PETER VAN ONSELEN:

Now I have got to pull you up on that figure. I know that figure is in the Liberal lines, and I don’t mean that disparagingly, I know it is. Scott Morrison has been spruiking it as well. So has the Property Council, I am going to talk to their CEO a little later in the afternoon, Ken Morrison.

But that line, that $80,000, that is actually an after tax and after negative gearing figure. It is not actually the figure that people actually earn, it’s their take home amount. They could literally be earning hundreds of thousands of dollars.

ALAN TUDGE:

You can also look at the demographics and the occupations of the people who are negatively gearing and it often is the teachers, the nurses, the policemen, the middle managers etc. They use it as a good vehicle to prepare for their own retirement down the track.

We think it has been a good vehicle for that purpose. Now the problem that we have got with the Labor Party's proposal is that they are saying there will only be negative gearing on new houses.

Our concern with that is that all the money will rush towards the new houses and in essence crowd out a lot of people from being able to make that investment choice of their own. We think that it could have the side effect of just benefiting the higher income earners rather than it being a vehicle in which middle income earners can use as well.

PETER VAN ONSELEN:

How long do you think we are going to have to wait before we see some policy alternatives to these Labor policies in that sort of area — super, tax and so forth — being rolled out by the government now that Malcolm Turnbull has been PM for nearly six months?

ALAN TUDGE:

We have been going through a pretty rigorous process, Peter, and as you know we have had a pretty frank debate with the Australian community.

In some respects we have done things differently in terms of raising ideas and discussing them with the Australian community. In relation to the GST, coming to the conclusion that the economic gains simply aren't down that path.

Scott Morrison gave some pretty strong signals yesterday, that yes, we are looking at some of these other areas in order to change the tax mix with the objective to support jobs growth and economic growth.

It will likely come out in the next few months, possibly in the budget, but certainly before the election.

PETER VAN ONSELEN:

It is getting tight isn't it? You can understand that some conservative commentators; not people on the left, are starting to come out and say well hang on a second, he has been there for nearly half a year. He has said that it was Tony Abbott’s lack of economic leadership that was the problem; half a year in you would like to think that there was a bit more of, I guess, a signposted journey on what this re-found economic leadership was.

Because the (inaudible) in the changeover was that there wasn't very much. That there was a lack of economic leadership, you'd think, he’d want to quickly correct that rather than the May budget in an election year.

ALAN TUDGE:

Listen, he’s already done a great deal Peter. The economic agenda is not just tax. Tax is a component of it, and we are looking at the tax system with the objective of growing the economy and creating more jobs, but there are other elements as well of the overall agenda. Of course the innovation agenda which the Prime Minister announced and is very much a signature policy in the economic space to date has had a huge impact I believe. It's an extra billion dollars in the innovation space, it creates tax incentives for businesses to start up and grow and there has been a cultural shift as well I think in terms of that area. Of course we’ve still got the big infrastructure agenda going on, about 50 billion dollars' worth of infrastructure spend. We've got free trade agreements which are being signed, being ratified, and that's a key part of our economic agenda.

So you've got key components of the overall agenda here, all to support growth, all to support the transition of our economy away from the resources boom and to diversify. I think we're actually well on track on that front.

PETER VAN ONSELEN:

Just very quickly, yesterday Scott Morrison said that it’s a test match, not a T20 when it comes to dealing with debt and all the other challenges. Does that mean it's no longer a budget of emergency?

ALAN TUDGE:

Oh, you know Peter that we have to get further control of the budget. We've put out forecasts which show that our expenditure as a percentage of GDP is coming down over the years and if our expenditure continues to come down as a percentage of GDP, and we continue to grow the economy, then we do get to surplus and we start to pay back the debt. That is in essence the nature of our budget strategy: Expenditure restraint and growing the economy. You do those two things, you get the budget back under control, and it’s a very different proposition than what Labor is proposing by the way.

Labor is proposing to continue massive expenditure, and continue to have massive new taxes to match that expenditure. So we have two very different approaches here. They've got a tax and spend approach, we've got a expenditure restraint approach with income taxes hopefully coming down in the near future rather than continuing to go up.

PETER VAN ONSELEN:

Alan Tudge we appreciate your time. You better get back to Victoria. Thanks for joining us.

ALAN TUDGE:

Ha, thanks so much Peter.

PETER VAN ONSELEN:

Good luck.