Transcript: Sky News interview with Peter Beattie and Peter Reith

26 October 2016

The Hon Alan Tudge MP

Minister for Human Services
Topics: 
Welfare reform: Strengthening mutual obligations
E&OE

PETER BEATTIE:

One of the things we do need to talk about though is to Alan Tudge.

PETER REITH:

We do.

PETER BEATTIE:

Because he's dealing with a really serious issue, and it's one that we want to talk about. So Alan, thank you for joining us.

ALAN TUDGE:

G'day Peter. G'day Peter.

PETER BEATTIE:

Alan can I start by saying this. You're a bit of a fan of the New Zealand model in terms of dealing with unemployment. Can you explain what the New Zealand model is, why you think it's a good idea, and what we can learn from the New Zealanders?

ALAN TUDGE:

Yeah I think there's three things which New Zealand has done, which we're looking at and in part modelling ourselves from them. First of all, they simplified their payment system overall and tried to reduce, if you like, the effective marginal tax rates from going out of the welfare system into work. That was step one. Step two was they introduced what's called the social investment approach, which was heavily data-based analysis, working out which cohorts of people were most likely to be long term welfare-dependent and concentrating more effort on those groups of people earlier on in the cycle. And then the third aspect of what they did was some stronger mutual obligations. Basically setting higher expectations upon people by saying if you've got the capability to work, then we expect you to look for a job, to be attending the interviews, and to be taking the job when it's available. We think those three things are worthy of looking at and learning from.

PETER BEATTIE:

Alan, let me ask you this. One of the challenges, obviously, is to get people into work. Are there enough jobs in Australia for people to actually go to work in? And do they have the required skills to get those jobs? I mean, I've spent a bit of time in this area, and I worry about some of those unemployed that don't have the skills, don't have the education, don't have the training. So do we have enough jobs for those who want to get a job, and do they have the skills for them?

ALAN TUDGE:

Yeah it's a good question Peter. I did a speech on Monday night at the Sydney Institute.

PETER BEATTIE:

Yeah we saw that.

ALAN TUDGE:

And I said that our program must start from the opportunity perspective. That's almost step one if you like. There must be opportunity, and that's why everything about the Turnbull Government is trying to grow the economy to create more jobs. Now, at the same time we also know that there are some regions, and some pockets, of Australia where the businesses can't find workers. Sometimes it's very entry level jobs for those workers that they're seeking, but at the same time you've got quite high youth unemployment, so clearly there's a mismatch going on there. We've talked before about fruit pickers, for example; you know, the orchardists can't get fruit pickers. The abattoirs can't get people. The tourism industries say that they're short by about 38,000 people, most of which are entry level jobs, and yet they're often in areas too where you have high youth unemployment. Peter something's going wrong there in terms of not matching up the available opportunities with the people who are there. And I think part of it is about, actually, our expectations upon those younger people particularly, encouraging them, and believing that they can actually step up and take those opportunities. And that was a big part of what I was saying on Monday night.

PETER REITH:

The problem, well I see it as a bit of a problem, just on the question though of are there jobs? I take the point that you've made, but you've got the Greens saying, and I've got the numbers here. One of the Greens was saying, oh listen, there's 430,000 jobs but, you know in the system I should say, but only 177,300 vacancies. Now what you've said is, well it's a lot more complicated than that. But are there cohorts of people who really can't get jobs because that is their point of attack? We'll get onto the question of opportunity, which I think is the real message, but I think to answer that question I think is an important one.

ALAN TUDGE:

Well it depends on where you are, Peter. I mean, if you go into some of the remote areas for example; I mean there's clearly not enough jobs there for the people who are present. I think part of that solution for those remote areas is that we need to encourage people to be more mobile, and our policy settings have to encourage people to do that. In other areas there are jobs available. We know that, for example, the number of people that are on unemployment benefits might be about 760,000 people at the moment. Yes, there aren't that many job vacancies today, but most of those people go in and out of employment quite quickly. Maybe about three quarters stay on unemployment benefits for less than six months. It's the cohort which are on long term unemployment benefits we get particularly worried about because, as you probably know, the longer you're on welfare the greater the road back to employment is because you often lose your capability, you lose your capacity, your confidence; sometimes your mental health might deteriorate. So we have a great interest in ensuring that people don't become long term welfare-dependent. Yes that starts with opportunity, we've got to continue to grow the economy, but I also think we've got to do some of those other things such as what New Zealand is doing as well.

PETER REITH:

What has actually happened here, because it seems that we've had in a legislative or regulatory manner, a system which says if you're on the dole, you've got to make an effort to get a job, but then we find in the papers today, perhaps I think it might have been in your speech as well, that…

ALAN TUDGE:

Yeah it was.

PETER REITH:

…all these people who basically haven't lifted a finger to get a job, and the sadness of that, really, is that they never get the opportunity to actually understand what it's like to work in a business and to make a dollar and have the pleasure which people can have, the enjoyment people can have, from standing on their own two feet. So, is there any chance that we can…

ALAN TUDGE:

That's exactly right Peter.

PETER REITH:

So are we going to be able to… if we've got a system that says there should be sanctions, have we got any chance of actually making the sanctions work? And will they be stronger sanctions?

ALAN TUDGE:

Well that's what we want to look at and, in essence, that's what I was launching this week was outlining some of the data and some of which you have referred to there. On the surface we appear to have quite a robust system of mutual obligations but, in the practical application of it, our analysis shows that it's not stacking up. And actually what it reveals is that our expectations upon capable people is often miserably low when my view is that we should have high expectations of capable people, and we've got to believe in them. We've got to believe that they can look for work; we've got to believe that they can do that interview and can take that job. And to your point, any job is better than being on welfare, even if it's a pretty ordinary job picking fruit, or cleaning, or whatever. That is better than being on welfare. And if you do that job for six months or for 12 months, you'll be well-positioned to get a more advanced job subsequent to that. And so we are going to look further at these mutual obligations, and to ensure that at every step of the way we're setting high expectations upon capable people. Of course, you've got to have your safety net in there, because life throws up unexpected things for people: you get sick, there's a tragedy in the family. Of course we've got to accommodate that. But if you're capable, and there's no tragedy, there's no sickness, there's no other reasonable excuse, then we expect you to turn up to that interview, and we expect you to take that job, and we have to back that up with policy.

PETER BEATTIE:

Alan let me ask you this. I noticed in your speech you made reference, and we've discussed it a bit about high expectations; I notice one of your ministerial colleagues, Mr Porter, was talking about investment approach. How do they work together? How does that work? How do they both sort of dovetail with one another?

ALAN TUDGE:

There is, in essence, three elements to our welfare reform agenda. The first is we need to simplify and- it's very similar to what New Zealand did. It is to simplify our immensely complicated payment system.

We have 20 payments, believe it or not, and 59 supplements. And all of those interact and in an enormously complex way. We have 10 different income tests in those payments. So, that's the first thing we've also got to do. Second, this social investment approach is really using very detailed analysis to highlight particular cohorts who we know will be long term welfare-dependent based on previous experience and previous data…

PETER BEATTIE:

So you're going to target them.

ALAN TUDGE:

…and targeting those. Now in New Zealand, for example, they targeted two groups initially. They targeted single parents, and they targeted people who went onto welfare when they were under 18. Now with the single parents they did additional support, additional investments. They did put some additional obligations upon those single parents but the Finance Minister told me when I was in New Zealand a couple of weeks ago, that now they've got 40 per cent fewer single parents under the age of 20 on welfare payments than they did five or six years ago. Now that's a huge achievement in my view, if they're onto a better pathway. So that's the social investment approach. And then the overall mutual obligations, the higher expectations, is really to apply to all jobseekers to say that, you know, we believe in you. We believe in your capability and we're going to back that up with policy. We'll provide you with reasonable excuses that after that we expect you to do things and there should be reasonable penalties if you don't.

PETER BEATTIE:

What about the debate about increasing the Newstart allowance? Do you support that? What's your view about that?

ALAN TUDGE:

Yeah this is a debate which has been pushed by ACOSS particularly and by even some of the businesses. Now the premise I guess is that is that Newstart alone is very little to work on and sometimes people will say it's an impediment to actually job searching because it's too little. Now I wouldn't want to live on just Newstart alone, it's not a lot of money. However the facts actually show that very few people do live on just the Newstart payment. Three-quarters of people actually get at least two additional supplements in addition to the Newstart payment. That might be Rent Assistance, it might be some other sort of additional supplement. Of course if you've got children, you end up with Family Tax Benefits and other benefits; you'll get parenting payments and the like. In addition to that, three-quarters of people are on Newstart for less than six months so when you add those two facts together, that most people actually get more than Newstart and most people don't stay on Newstart for very long, then I think you really have to weigh up whether it's worthwhile investing what it's going to be - I think it's about $7 billion to increase Newstart by $50 per week.

PETER REITH:

Can I just ask you on the politics of it, do you have supporters like Noel Pearson, you know, who have got a lot of experience in some of these issues? Do you have an expectation that you'll get a fair hearing at least in the Senate because as I understand it, there's a regulatory hurdle there and the way some of them operate, they might knock it off. But can you tell us what your chances might be on that?

ALAN TUDGE:

It's a good point Peter and listen a lot of my thinking in relation to this space has been informed by Noel Pearson who's been talking about welfare dependency for 15 years now since his landmark speech back in the year 2000 called Our Right to Take Responsibility. And I suppose our starting proposition and this is what we're trying to communicate to the broader community and through the broader community to the crossbenchers as well is that welfare dependency actually is a very serious issue and we now have tens, if not hundreds of thousands, of people who suffer from welfare dependency and, in my view, long term welfare dependency is an absolute poison on the soul because it does become debilitating over time. And this is what Noel Pearson and other senior Indigenous leaders have been saying for an awful long time now, but it's not an Indigenous specific issue; it's an issue about being passively dependent on welfare payments. That's the overarching objective is to reduce the level of dependency and I hope that the crossbench and even the Labor Party will start to appreciate that yes we do have that problem. We've got a problem when one in eight children are growing up in a jobless household and 40 per cent of those children are likely to be welfare dependent by the age of 20 themselves. That is a serious moral challenge for our nation which we do have to address and I think we can address by doing some of the things which I've been referring to.

PETER BEATTIE:

Alan let me raise a very ugly topic as part of this. I had an association with one of the providers in another life and I did visit a number of the offices and saw unemployed and, as you'd appreciate, you know, my side of politics, as yours, we are worried about the unemployed and we want to get them into work. But I've found a lot of people without skills: there was alcohol, there was substance abuse, there was domestic violence in circumstances, there was a social dislocation, and that made it really difficult for them to get the confidence to actually take one of the jobs even if they were offered. I know this is a topic a lot of people don't want to talk about it but it's a blunt reality that if you go to your providers, you will, as you no doubt have done, you will have seen it. So how do we actually deal with that ugly side of humanity where people need that bit of extra help or training or skilling?

ALAN TUDGE:

Yeah that's a good question, Peter, and again I've done a lot of work in the Indigenous space both before becoming a Member of Parliament and indeed while being a Member of Parliament and you see that particular issue acutely in those, particularly the remote or Indigenous communities although again, it's not an Indigenous-specific issue, as you point out. It's in the inner-city as well and you see that, once you start getting alcohol and you start getting drugs and you get family breakdown and domestic violence into the equation, it makes it really, really difficult. Again, I was a bit taken to be honest by my trip to New Zealand just a couple of weeks ago, and I was there for a couple of days. When you go into the Centrelink office in New Zealand, their Centrelink equivalent office over there, instead of what occurs in Australia when you walk into a Centrelink office and effectively they pull out the menu of payments which you can apply for, the first discussion they have with you is actually about how to find a job for you. And if you're a higher risk individual, where you might have some of those issues, you get assigned a case manager straight away who can assist you with helping to get some of those other aspects of your life together, be it a housing issue or a domestic violence issue or an alcohol issue, and that case manager can help you manage that as well as help you look for work and try to take an opportunity when it arises. In Australia we've got a slightly different model where you go to a job service provider. Now, you know, we've got some very good ones out there and we've got some less good ones out there and they ostensibly do a similar thing. They get remunerated for placing people into work, but sometimes I think they struggle with some of those really difficult cases that you're referring to, Peter. Frankly I don't think there's any easy answers for them. I think that New Zealand probably does it better than we do and again we're looking at that model to see if there's any lessons for us here in Australia.

PETER REITH:

Can I just ask, time's getting away from us a bit, but can you give us a bit of a sense of the timing of all this? Are you looking at trial arrangements? How do you go about this, and of course then you're going to face, some time down the track there's going to be an election and the Labor Party will oppose it of course and run all sorts of scare campaigns. How do you manage that, that brute politics we seem to have these days?

ALAN TUDGE:

That’s another good question, Peter. The social investment approach we have launched. We've done the data analysis already, so we know the cohorts which we need to target, and we have a $96 million fund which we want to, if you like, seed dozens if not hundreds of different ideas to trial different methods of trying to tackle those more difficult cohorts. The payment simplification effort, we're being guided by the McClure Review which Scott Morrison actually commissioned when he was Social Services Minister, and Christian Porter and I will have to go through a very consultative process as we go through that. And this process, which I'm talking about in terms of the mutual obligations as well; we're starting that process now, where we want to have a broader conversation with the Australian people and take them with us in terms of unpacking what the problem is and even help getting their advice in terms of what the solutions might be. This will take us into next year in terms of outlining what some of the potential policy answers are, but if we can take the Australian people with us then I think we've got a good chance therefore of getting it into the Parliament and through the Parliament as well, Peter.

PETER BEATTIE:

Alan, look thank you for your time. There's nothing more important than getting young Australians or Australians jobs, so we wish you well and we'll talk again about it as the program rolls out.

PETER REITH:

Thanks very much, Alan. It's great to have you on.

ALAN TUDGE:

Yeah.

PETER BEATTIE:

Alright mate all the very best.

ALAN TUDGE:

Thank you much Peter and Peter.

[ENDS]