Transcript: Sky News PVO News Day, Interview with Peter Van Onselen and Kristina Keneally

2 May 2017

The Hon Alan Tudge MP

Minister for Human Services
Cashless Debit Card, Good Debt/Bad Debt, Jobseeker compliance, Online Compliance System


Let's get to Alan Tudge for his portfolio area. We won't talk about One Nation Mr Tudge, but I do want to talk to you about some of these issues in your space when it comes to welfare cheats and the welfare card trial.

Where is it at? What will we see in the Budget?


Peter I am not going to speculate about what might be in the Budget, but we have been discussing the rules in relation to welfare obligations.

We have been analysing this for a few months and what we have discovered is that while overall the system has the rules in place, many people are getting around it because of the introduction of the waiver system, which the Labor Party introduced.

And that means people who are doing the wrong thing are not suffering a financial penalty and therefore are not being encouraged to actually look for work and take jobs when they are available.

So we would like to address those and like to just toughen up the system, as well as identify those people who need additional support and provide additional support for them.


I understand you don’t want to tell us what is in the Budget, but there are reports out today that this Cashless Welfare Card trial is costing some $10,000 per participant.

To put that in context for our viewers, Newstart Allowance for a single person is less than - just under $14,000 per year.

Are you happy with the trial to date?


Just to address that point to start with, it is completely misleading, that figure.

This has been a world first trial where inevitably there has been a lot of upfront design and development costs which have been associated with it.

Of course the running costs are considerably lower and they get lower over time and particularly as you get economies of scale.

I have been very satisfied with the trials to date.

When you look at some of the results which have come out of the 2 trial sites in Ceduna and the East Kimberly, you see that a quarter of people are drinking less, a third of people are gambling less and a quarter of people are taking fewer drugs. They are all terrific indicators at this stage.

We are collecting more evidence as we go along. All the anecdotal feedback is very strong and we still maintain good community support on the ground.

It is not the panacea for all the problems in these communities, but it is certainly showing that it is a very effective tool in dealing with some of those very significant welfare fuelled, alcohol, gambling and drug abuse problems.


Minister, we know the Government is considering expanding the trial in the Budget, I am not asking you to speculate on that, but in terms of the cost that have been attached to the trial so far, have you learnt enough through the process to be able to bring them down if there is an expansion?


Inevitably the cost will come down. There is significant upfront costs when you are designing a new technology and of course that is the case.

It is the design, it is the development, and also we had a year-long consultation process on the ground – that costs money.

As you roll this out more broadly, of course there are huge economies of scale in this, as well as we learn the lessons along the way.

The operating costs are significantly lower than what you are talking about.

I don’t want to speculate in terms of what we might do in the Budget, but clearly we have got other regions that are putting up their hands saying listen, we would like to at least explore the introduction of the card in our area because we have similar types of problems where, particularly alcohol, is just the poison that runs through them and causes so much catastrophic harm to the broader community.


Minister, you did point out some of the figures about lowering drug, alcohol and gambling problems in the communities where the card is being trialled. But a report also showed that 1 in 2 participants in the trial said that their life is worse off because of the card.

Do you have any understanding why people might report that type of outcome?


Inevitably if people have any restrictions on their welfare expenditure, then they may say they would prefer to have complete cash rather than a card which restricts them from purchasing alcohol, or taking cash out or purchasing gambling products with it. But when you look holistically at the broader community, the broader community at large is satisfied with the results of this.

Of course we are balancing out the interests of the welfare recipients, but we are balancing out the interests of the entire community, particularly the children as well who often bear the brunt of the very significant harm caused when people drink at excessive levels.


What does it say about the participants if 1 in 2 are dissatisfied or says their life is worse off?

Is that a reflection on those participants? Is that the point?


I am not saying that, and everyone will have their own reasons for why they say it is helping or not helping them individually.

We were very careful in terms of the design of this trial and the design of the particular card and its features. We co-designed this with the community leaders on the ground.

It was made so that it would be as low-touch as possible on individuals who were doing the right thing. Because you could use this card anywhere to purchase anything, but you simply cannot use the card at the bottle shop, you cannot use it at the gambling houses, and you cannot take cash out from it and consequently can’t purchase illicit substances.

Inevitably, some people would prefer to get cash and continue to do things the way they have been doing it. But the overall interests of the community are at heart here, particularly women and children who suffer greatly when people drink at very excessive levels and cause violence.

When you have got domestic violence rates off the charts, you have got child neglect rates off the charts, kids not going to school and alcohol is frequently very rife at the centre of those problems.


Minister, we are standing by for the Prime Minister, we understand he is about to speak in relation to schools funding.


Apologies in advance if we do have to cut you off mid-sentence.


Let me ask you this, with the trial, are you aware of any black market use of the card?

That is, people using the card to purchase legal or appropriate products and then turning around and selling them for cash?

Has a black market economy attached itself or developed around this card?


Inevitably, some people will try to get around the system. We have heard anecdotal evidence of some of that occurring.

The design of the trial was that all working age welfare recipients were on the card, which means we have taken a lot of the cash out of the economy, which means that ability to trade is diminished.

I would further say, if somebody does that, they do purchase a good and on sell it, inevitably they are going to sell it for less than they purchased it for.

So they are paying an immediate penalty in doing so.

I suppose the third point is we do have compliance mechanisms in place where we find out about it, we go and speak to individuals or speak to particular businesses to try and stamp it down.


Let me ask you, before we run out of time, about this good versus bad debt phenomena.

We see that there seems to be some context around that now that the Government is going it alone on the second Sydney Airport.

You are from Melbourne, so at one level you probably couldn't care less about the second Sydney Airport.


Of course I care about it, Peter.


But to the extent that you do, how is it good debt to invest in an airport that Sydney Airport group thought would represent a bad investment.


I am not going to comment in terms of where the debt fits, but presumably if it is at all debt funded, then presumably it will be considered to be an economic asset. Because you have a second airport and that is going to help drive the overall economy and that is very different to investing in an economic asset, versus say generating more debt to pay for welfare payments which is a recurrent everyday expenditure.

So that is, I think, the distinction which the Treasurer…


But what about this, though, Minister?


…was trying to make a couple of days ago in his speech.


But what about – it is not as - some of the lines are a bit more blurred than that.

Because, for example, spending on health and education, done the right way, it is a recurrent expenditure but it can lift productivity based on the kind of educational opportunity or the way that the health services are provided.

So, there is a lot of grey in a pretty binary way of describing debt as good or bad.


I think everybody understands, though, those investments where you are building assets which have an overall economic impact on the economy - the big roads, it might be an airport, I don't know if it is considered like that, and other economic infrastructure - and I think people understand that versus some other types of expenditure - grant programs, welfare expenditure.

The everyday health expenditure I would not include in that category, Peter, either.

It is a proper expense, we need to fund it properly, but it is not in the same category as economic infrastructure which will drive the economy and make it stronger.


Minister, with the Budget coming up, can we talk briefly about the robo-debt, the so-called robo-debt recovery scheme for Centrelink?


I would not be calling it that, though, Kristina. But anyway.


I am sure Minister, and I understand your frustration when a project gets a tagline you don't like…


Welcome to my life every day for 1 hour between 1 and 2, Alan Tudge.


How did this turn into a gratuitous attack on me? Excuse me.


Being verballed and boxed into a corner. Sorry.


Yeah, I can imagine, it must be tough for you Peter.


You 2 just go right ahead, enjoy this interview. [Laughter] I’ll get my box of popcorn out and…


Alright, come on, here we go. This is what happens next.


Here we go, yeah. You are the one that sulked yesterday.

So, we will go to the video. Alan Tudge, will the Budget tell us how much this robo-debt system has saved to date?

Or will we have to wait to some point in the future to find that out?


We are providing updates as we go along in terms of how much debt is being identified and recovered.

At the moment from this new compliance system, which began on 1 July last year, it has recovered a little bit over $300 million.

I haven't got the exact figure on me today.


What was it projected to recover by that time?


I do not have that exact figure.

I do not know either of those, but it is in the vicinity of $300-and-something million of debt which is identified.

Of course, then the cash comes through the door at a slower pace because we put people onto repayment plans if they do have debt owing and sometimes those repayment plans, if you are of lower means, can be as little as $5 per week. But this is the important thing about what we are trying to do, we are trying to recover money when people have been overpaid, either because they have been deliberate in underreporting their income for that particular year or they have been inadvertently underreporting that income.

If we discover it, we ask people to repay that debt but we are sensitive in relation to how much money people have and put them on sensible repayment plans.

I should say, one example we discovered, was a person who had only declared $5,000 of income in one particular year and therefore was eligible for Centrelink benefits. And yet the Australian Taxation Office said that they had earned $100,000 or over $100,000 in that particular year.

Now, that is what this system is uncovering and I think the taxpayer expects us to properly ask questions of people who have such discrepancies and to recoup debt where it is owing.


Understand that Minister, but the Ombudsman last month also made clear there were a lot of deficiencies in this system, that the letters were unclear, they did not include help lines, and they did not explain people's debt to them.

You have accepted all of those recommendations from the Ombudsman.

How did we get to a system that was so badly designed?


The Ombudsman's report was an important one and we have accepted all of the recommendations. But the Ombudsman also did very clearly state that it was quite reasonable for us to be asking the questions of welfare recipients when there is a discrepancy in the data.

He said that the system is accurate in calculating the debt. He pointed out that the 20% so-called error rate is false. His main criticisms were not of the things which the Labor Party's been attacking us on.

To the contrary, he is saying that those things are okay.

His main criticisms were with the clunkiness of the interface, if you like, where it was difficult for some people to understand what they were required to do and difficult for them to be able to get online and update their details.

Now, we have fixed those things, we had done those things before the Ombudsman had reported to us.

He has provided some other practical things that we should do and we are getting on with those and frequently going further. At the end of the day, we want this system to be fair and reasonable to the welfare …


We are going to have to jump in there, Minister Tudge. Very sorry to do it to you. The Prime Minister has just taken to the podium.