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

27 September 2017

The Hon Alan Tudge MP

Minister for Human Services
Topics: 
Budget, Cashless Welfare Card
E&OE

KRISTINA KENEALLY: 
The Human Services Minister Alan Tudge joins us in the studio. Thank you so much.

ALAN TUDGE:
G'day Kristina.

PETER VAN ONSELEN:           
A rare privilege to have you up here in the studio.

ALAN TUDGE:
I am pleased to be here live in your Sydney studio.

PETER VAN ONSELEN:           
It is a new one.

ALAN TUDGE:
It is. It is fantastic isn't it?

PETER VAN ONSELEN:           
You been in here before?

ALAN TUDGE:
You are obviously raking in the money here at Foxtel.

KRISTINA KENEALLY: 
No, no. Okay, moving on before we become part of the solution to the Government's budget woes. Let me ask about the Budget.

Yesterday we found out it is $4.4 billion better off than it was forecast five months ago. Now, the Treasurer said that the biggest contribution to that final budget outcome was a reduction in spending on social services.

Can you unpack that for us? Who is missing out, who is getting their services cut, how are you achieving that save?

ALAN TUDGE:
There was and no one is getting their services cut, as such, Kristina. It is about a $5 billion savings compared to our estimate from social services.

How does that maths work? We have actually had a reduction as well in terms of the outlays plus we have had a reduction in terms of expenditure of about $4.4 billion.

Where has that come from? The biggest bucket where that comes from is fewer than expected number of people who are on unemployment benefits, which is a great thing because we have had almost double the expected employment growth.

In the last 12 months, we had 250,000 people who were leaving unemployment benefits going into work when we expected that figure to almost be about half.

PETER VAN ONSELEN:           
Can I just jump in to ask you, do you think that it was a conservative estimate or do you think that it has been good times that have led to the difference?

ALAN TUDGE:
The estimate was about a 1% growth in job figures and it has ended up being about a 1.9% growth in job numbers. Those estimates are done by Treasury.

They do their best analysis to determine what the most likely outcome would be and that is what they forecast but it has come in much better at 1.9%.

And that is a great thing. It is a great thing for the budget, it is a great thing for those people getting off welfare and into work and of course it is a great thing for the country generally to have more people into work.

KRISTINA KENEALLY: 
You often say the best form of welfare is a job.

ALAN TUDGE:
Absolutely. And it is absolutely true.

KRISTINA KENEALLY: 
Of that $5 billion that has been a cutback on social services, how much can you attribute to jobs?

ALAN TUDGE:
It is not a cutback because in those that are actually demand-driven, if you have more people on unemployment benefits, the figures go up.

The cutback implies that we have made a decision to reduce an individual's payment. Very important, Kristina.

KRISTINA KENEALLY: 
Okay, fair point, fair point. I was going off media reports of Mr Morrison's comments. He may not have used that word.

ALAN TUDGE:
He did not use those words.

KRISTINA KENEALLY: 
Let me phrase it differently. Of the $5 billion you have not had to spend on social services, how much of it is related to jobs growth? Can you quantify that?

ALAN TUDGE:
I have not got that exact figure. There are also a bunch of other things going on as well. You have fewer unemployment benefits, but you also have less expenditure on the job service providers, as well, which came about.

You had a little bit less money, about $800 million, which was less spent on the NDIS scheme, compared with what was forecast, in part because the ramp up was slightly slower than what was forecast as well.

KRISTINA KENEALLY: 
Can I follow up on that? Because is that a drag or, that seems to me like that was more a drag in expenditure than an actual drop. It is not going to continue on as a drop is it?

ALAN TUDGE:
That is right, so there was forecast in terms of what the ramp up rate would look like and that ramp up rate has been slightly lower than what was forecast and hence we have a savings for last financial year compared with expectations of about $800 million.

This is a big complex reform, where we are trying to, over the medium term, shift about 400,000 people on to the NDIS system that will be of great benefit to them.

We have got about 100,000 people on already and we steadily and progressively are putting more people on.

PETER VAN ONSELEN:           
Can I ask a broader question around the nature of trying to get the Budget back into surplus and then something that no one these days seems to really be talking about, but then actually start paying off the hundreds of billions of dollars-worth of debt that has accumulated.

Half of it on Labor's watch, half of it on this Government's watch. I understand that the political argument is that that was a hangover from their decisions. I am not looking to re-litigate that.

KRISTINA KENEALLY: 
But we are at $500 billion.

PETER VAN ONSELEN:           
We are at $500 billion, and this is the question essentially. Even if we get back to surplus at some point in the years ahead, the forecasts are for that surplus to pretty much forever and a day then just be wafer-thin.

How do you pay back $500 billion, unless you start running $50 billion surpluses? I cannot see politically that ever happening.

ALAN TUDGE:
It is a good question Peter.

PETER VAN ONSELEN:           
The debt is built in now, I guess is the point.

ALAN TUDGE:
Step one though, because - let me step back. The debt levels will continue to increase, by definition, if you run budget deficits year on year.

PETER VAN ONSELEN:           
Sure.

KRISTINA KENEALLY: 
Sure.

ALAN TUDGE:
Step one is actually getting the Budget back into surplus and we have worked very, very hard in terms of doing that and we have put up billions of dollars of savings measures, many of which have got through the Parliament but others which have been blocked by the Labor Party and the Greens.

But we are on track to get back to surplus in a couple of years’ time and these figures that we are talking about today show that we remain on that trajectory.

PETER VAN ONSELEN:           
But do we then…

ALAN TUDGE:
Then after that we start paying back the debt.

PETER VAN ONSELEN:           
But realistically though, you say then after that we start paying back the debt, but more likely, given the nature of politics, the minute that you get to a surplus, you know, it is going to be pretty small and, I mean, I am not going to see this.

I am going to be long gone by the time there is any chance of us paying down the $500 billion, which will be a lot more than that by the way, by the time we even get to the first of the surpluses.

ALAN TUDGE:
I can tell you what, we have got a track record of paying back debt in the past. In the past under…

PETER VAN ONSELEN:           
Peanuts compared this.

ALAN TUDGE:
…under Howard and Costello we paid back $90 billion worth of debt.

PETER VAN ONSELEN:           
But you cannot resell Telstra.

ALAN TUDGE:
You cannot resell Telstra, but it also involved a lot of expenditure restraint in order to get there. That was paying back Labor's debt.

We have again got a bunch of Labor's debt which we have to get back into surplus and then we will have to start paying off.

What I can guarantee, what I can guarantee by the way, if the Labor Party gets in, then we will never, ever see that debt paid off. We are going to have higher taxes and we will have higher deficit and we will have bigger debt.

KRISTINA KENEALLY: 
I am always intrigued by this argument because right now the two highest taxing governments in Australian history are yours and Howard's. That is just a fact, that is just the reality of the situation.

And I hear government ministers make this claim, yesterday we heard the Treasurer say that it would have been a much bigger blowout if Labor had been in government, in deficit, in debt.

But the Abbott/Hockey government said that in 2013-14 MYEFO that in 16-17 we were going to have a $17 billion deficit.

We found out yesterday it is $33 billion. I mean the reality is both sides, and what I am asking is do you accept that the Coalition has not solved the debt and deficit emergency?

ALAN TUDGE:
What I am saying is that we have a plan to get us back into surplus and we are sticking to that plan and we are on track to deliver upon that plan…

KRISTINA KENEALLY: 
You have got a deficit that is double than what you have projected. You have debt that is much higher than what was projected.

ALAN TUDGE:
But we are now absolutely on track to get back to surplus, I think from memory, in 19-20.

KRISTINA KENEALLY: 
Twenty-21, I think.

ALAN TUDGE:
Nineteen-20, 20-21 and that is when we start paying back the debt. Going back to your point about sort of saying we are the equivalent of the Labor Party, we are putting up taxes, you know…

KRISTINA KENEALLY: 
No, I am just citing data.

ALAN TUDGE:
Kristina, have a look, have a look though at Bill Shorten's policies today in terms of where he is proposing more taxes.

He is proposing more income taxes, more capital gains taxes, more taxes on your housing and the list goes on. Basically if it moves, the Labor Party wants to tax it and that's what we will see if the Labor Party does get back in.

We are going to have a raft of new taxes and all that will do is slow the economic growth which we now have.

We started this conversation talking about jobs growth, which is tremendous. We want to continue with that jobs growth but you start whacking taxes on everything and you will grind it to a halt.

KRISTINA KENEALLY: 
What about bracket creep? Doesn't bracket creep fit into that same argument? I mean your budget projections to get back into surplus are built off the idea that workers will be paying more through bracket creep.

ALAN TUDGE:
We have made some action towards that, as you know. In fact, in the most recent budgets we cut the income taxes for that middle-income bracket who were about to go into that higher income-taxing threshold so that they won't be doing that.

As Liberals, we want to bring taxes down. That is in our DNA, Kristina.

PETER VAN ONSELEN:           
But in the data, it shows that that is not happening.

ALAN TUDGE:
But we have to get expenditure down…

KRISTINA KENEALLY: 
That is a good point.

ALAN TUDGE:
…but we have to get expenditure down so that we can both bring taxes down as well as get the budget back under control.

PETER VAN ONSELEN:           
But Minister, do you accept, and I think this is a bipartisan problem, and I understand your argument is that it' is a bigger problem for Labor, but I am interested in it just being a problem per se.

Government is too big. Government tries to do too much. Government tries to spend too much. The size of government, the level of red tape, the butting in to every bloody element of a person's life…

KRISTINA KENEALLY: 
Banks and what have you. Industries.

PETER VAN ONSELEN:           
Government just should rack off and then let people just get on with their lives. You are the Liberal, Minister. I am the commentator. Government should bugger off. Just go away. Do less. And family tax handouts, you know, solving every crisis. Just get lost…

KRISTINA KENEALLY: 
Regulating bank executives' pay.

PETER VAN ONSELEN:           
…go away, do less, tax less, happy days.

ALAN TUDGE:
In principle, I agree with you, Peter.

KRISTINA KENEALLY: 
In practice.

ALAN TUDGE:
As Liberals, we want to have smaller government, lower taxes, more freedom for individuals.

I have responsibility for the welfare system, along with Christian Porter, the Social Services Minister, and certainly in our space, we have done some very heavy lifting in terms of reducing the growth rate of welfare in the system.

PETER VAN ONSELEN:           
And I know your philosophical view. I know Christian Porter's as well. You guys, if you were not blocked by either, if you like, tax and spend conservatives inside your own ranks…

ALAN TUDGE:
That has not happened.

PETER VAN ONSELEN:           
…agrarian socialists within the ranks of the Nationals, or a Senate that you cannot bloody well do anything with. You bring all of that together…

ALAN TUDGE:
In terms of the measures that we are putting forward in terms of getting the welfare expenditure under control, we are not getting blocked internally.

Where we constantly get blocked, is by the Labor Party and the Greens, but nevertheless we have had dramatic changes in terms of the future outlays for these expenditures.

Let me give you some examples. On unemployment benefits, we inherited a growth rate on that which was 13.5% growth.

Thirteen-point-five per cent growth on unemployment benefits which we inherited. Now the forecast is 3.2% nominal growth. That is a dramatic change. The Disability Support Pension…

KRISTINA KENEALLY: 
And how does that contribute? How is that contributing…

ALAN TUDGE:
The Disability Support Pension. This is important as well, right?

KRISTINA KENEALLY: 
I wanted to ask about that figure, but…

ALAN TUDGE:
There was 830,000 on the Disability Support Pension when we came into government, growing by 50,000 people per annum.

PETER VAN ONSELEN:           
It is just extraordinary.

ALAN TUDGE:
An extraordinary figure. Now that figure is down to 760,000 people per annum.

One of the big changes which we did, by the way, to affect this change was to insist that a person goes to a government-appointed doctor to get their diagnosis, rather than necessarily going to one of their own doctors.

Some very practical changes which we have instituted, which is having an impact on the overall finances in the welfare sector.

KRISTINA KENEALLY: 
Can I ask about one of them? Your trial of the cashless welfare card. We have talked about this before.

Earlier, I think it was this month, you released an interim report on the evaluation of those two trials.

You said that the card has led to stark improvements in those communities, that there are very few other initiatives that have had such an impact, but not everyone agrees with that.

Janet Hunt, the deputy director of the Centre for Aboriginal Economic Policy at ANU has said the Government has ignored serious flaws in the report, and she says that the trials show that the card has not actually improved safety and violence figures in Ceduna and East Kimberley.

Do you have any response to her criticism? I am sure you are aware of them.

ALAN TUDGE:
I am aware of her criticism. We undertook, because we knew that there would be so many people out there who have ideological objections to what we are doing, we undertook to have an independent evaluation conducted.

And they did two things; (a) they looked at all of the data which was available, and (b) they surveyed hundreds of people on the ground to get their views.

What that independent evaluation showed was that well over 40% of people who were drinkers were drinking less. About half of the drug takers were taking fewer drugs…

KRISTINA KENEALLY: 
That was self-reported, wasn't it? It was self-reported.

ALAN TUDGE:
It was self-reported. There was other important numbers, though, about the hospital admission rates. The hospital presentations, for example, in one quarter in Ceduna, a drop by 37%, hospital presentations from alcohol.

The views of the police and the community leaders is, of course, important. The police report that in some of the public parks now, that they now see families which are using them, rather than previously it used to be full of drunkards, basically.

It is the independent evaluation, it is the views of the community leaders, and it is these raw results which we are seeing which makes me conclude that this, fundamentally, is having an impact on the ground.

Not a panacea, Kristina. We never pretended it would be, but it is one of the few interventions which we have done, with the support of the local community leaders, that is having that turnaround in those difficult communities.

PETER VAN ONSELEN:           
Alan Tudge, we appreciate you joining us on To the Point. Thanks so much for your company.

KRISTINA KENEALLY: 
Thank you.

ALAN TUDGE:
Thanks so much Peter, Kristina.