DAVID SPEERS:
Treasurer, thank you very much for joining us. Let me start by asking you, you have been talking about this welfare reform issue for a long time yourself what needs to happen, in your view, to fix the system, particularly this problem identified, highlighted yesterday of people being trapped for even their whole lives on welfare?
TREASURER:
You have got to get the right answers – that is incredibly important. When I came into the portfolio, into Social Services last year, or the year before in fact, we looked across the ditch at New Zealand and they had been undertaking a very successful investment approach. What that is about is having interventions for people who run the great risk of spending large portions of their life on welfare and to actually get the programs right which address them at the point where they are at that tipping point where they could spend the rest of their life, or large parts of their life on welfare. While those groups might actually be small currently in the overall scheme of things of the overall welfare Budget, if you are able to get a change in the direction of their lives and where they go, it actually does get a, a great outcome for them but it also gets a great outcome for the taxpayer because it means decades and decades of someone being on welfare is avoided. So, it is a very proactive approach. It has been very successful in New Zealand. So, we initiated that when I was Social Services Minister and that research that we commissioned and put in the Budget in 15/16 has now come back and in this year’s Budget we did a try, test and learn program which is a $96 million fund which is going to invest in innovation when it comes to helping people get off welfare and go down a different path in life…
SPEERS:
Ultimately the Government, when it gets these ideas from the non-government sector has to choose which it’s going to implement, I suppose. What is your overarching approach here? Is it a financial punishment if behaviour isn’t changed by those welfare recipients or is it more investment directly to help those into a job?
TREASURER:
We are not pre-judging either of those outcomes. What this new data set gives us is the ability to evaluate what the potential changes are over a much longer term of what we are able to do with a person right now. So, working with the not-for-profit sector who in my experience have been very innovative in these areas and I have visited many places particularly in South Australia for example with programs around homelessness and things like that which was connecting that up with education and job opportunities which was totally changing the direction that young people were going to go on. At one point they were homeless, they were without a job, some of them would have even had addiction problems and now after going through particular programs they are in work, they are moving into private rental accommodation and the whole course of their life has changed. So, it really is about investing in those key juncture points. Those opportunity points in people’s lives were you can make a big difference for not a great cost at that point but it does deliver a very big difference going down the track. So, David, it is about focussing on the innovation. Getting the data set right so you can evaluate where the longer term impacts are and where stuff works you keep doing it. Where it doesn’t work you stop doing it.
SPEERS:
A slightly separate issue has been what you do with family payments, whether you extend mutual obligation. We know the ‘no jab, no pay’ has worked really well in getting immunisation rates up. What about no school, no pay? Should families lose their family payments or a part of it if their kid isn’t going to school?
TREASURER:
The ‘no jab, no pay’ was an initiative again that we introduced and that has had some success but what I have learned in social services is that you have got to look at every case and every problem on its merits and deliver solutions in each of those areas. I know people are keen to say, ‘what was this scenario and that scenario’ but the whole point about this approach, David, is just working the problem and coming up with the solution that gets the outcome. Not limiting yourself to things that can constrain you from finding the right answer to these questions. That is how people do it out there in the real world when they are trying to solve problems as case workers dealing with people dealing with some of life’s most difficult situations. This is finding a way to tap into their knowledge, their innovation and to back them in to have a much bigger impact.
SPEERS:
Alright, so that is a ‘you’ll consider it’ in terms of no school, no pay?
TREASURER:
David all I am saying is - you are jumping three of four jumps down the track - we are taking his step by step. First get the data right. Understand where the areas are where we have got to make a big difference and Christian has gone through I think quite well in identifying a number of cohorts and groups of people whether they were younger carers or those moving off student allowances under unemployment benefits or young parents. These were all what you would describe, you can call them at risk groups but you can also determine them as groups where there is a real opportunity to intervene and make a big difference. That is step one. Step two have the Try, Test and Learn fund which will trial, pilot, innovate in areas that can make a difference with those groups. Then you go forward and see how you can take that a bit more mainstream.
SPEERS:
A few other things I want to ask you about Treasurer. A new poll today showing 49 per cent of Australians support a ban on Muslim immigration, it includes 60 per cent of Coalition voters. Are you surprised at that?
TREASURER:
I don’t get distracted by it I suppose is the important thing David. The important thing is that we have always had a non-discriminatory immigration program in this country which has produced the most successful multi-ethnic society in the world and I think that is without question. Sure, we have got issues in our country around some of these matters but frankly everywhere else no one does it as well as we do and the Prime Minister has been making that point overseas. The fact that we have a strong border protection policy and you have a government that is on top of immigration and running a solid program gives Australians confidence about the immigration program more generally. That has been one of the real benefits of the success we have had in our border protection policy. It has led to that greater confidence in how the program is managed. We have a non-discriminatory policy. We actually ask people to come to this country who want to make a contribution not take one; that is how I would describe our policy. It is a skilled-based, merit-based approach for those who want to come who have skills, who can run businesses, grow the economy, create opportunities, that is how our country has become prosperous. Immigration has been one of the real pillars, the way we have run immigration in this country, of our economic success and I will be having a bit more to say about that when I address the Lowy Institute at the end of next week.
SPEERS:
You mentioned the Prime Minister in New York, he has been at this refugee summit. He is committed to lock in that higher refugee intake and also said we are going take some from Costa Rica as well. Was this a Cabinet decision and can you explain why we should be taking them from Costa Rica rather than our own region? Aren’t we meant to be trying to encourage a regional solution?
TREASURER:
Well, there are two issue here. The first one is the 18,750 that came about, as you will recall, when the temporary protection visa legislation went through the last Parliament. We agreed to increase the intake over that period of time and the Prime Minister has confirmed that we are taking it to 18,750 and that will remain then the baseline intake for our refugee and humanitarian program. That doesn’t include the additional amount that we agreed to take in relation to the Syrian crisis which we did around about this time or a bit sooner than this time last year. So, we remain committed to those outcomes and more importantly we have funded being able to move towards those higher levels. I know the Labor Party always talk about how they will take more but they have got a plan for doing that they just don’t have a plan to fund it. We have committed on all of those numbers into the forward estimates and that is included in our calculations. Now, the issue of Costa Rica, the Immigration Minister each year, and I used to do it when I was Immigration Minister, you would set out what your overall intake was for the refugee and humanitarian program and you would provide those guidelines and clarity to the Department to go then and implement the program. So that has always been a Ministerial decision. Obviously there is consultation with the Prime Minister and colleagues but I think Peter is more than on top of that…
SPEERS:
I don’t recall you allocating any places from Costa Rica though? Why are we doing that?
TREASURER:
We have had in the past intakes out of the Americas and that is not unusual and there will be circumstances that will be relevant here and the Prime Minister is there in this important week in New York with Peter Dutton as the Immigration Minister. Yes we have always had a very strong regional focus, when I was Minister we took a lot more out of Malaysia and Thailand of Burmese refugees and we significantly increased the intake there. We also took more of those out of Lebanon and other countries who were affected by the Syrian crisis well before this decision a year ago. So, you do construct this program on an annual basis David and that is entirely appropriate and we are not anticipating, as I understand it, a large intake out of that area and we haven’t before had a large intake out of that area so I think that is consistent with that approach.
SPEERS:
People have speculated it as a people swap where some of those on Nauru and Manus could end up in Central America if we take some from there.
TREASURER:
Well I don’t know why you would be suggesting it.
SPEERS:
I am just saying that some are speculating that that might be something the government might be look at.
TREASURER:
People are always speculating David that doesn’t mean we need to acknowledge it or promote it.
SPEERS:
Alright. But we can pay for the extra refugees that the Prime Minister has announced [inaudible]
TREASURER:
It is within the annual intake which is factored into the forward estimates and the medium term projections. Those commitments today, that and the other funding, was all within existing budget allocations.
SPEERS:
Ok good to know. Bill Shorten has been at Arrium steel today. He and Nick Xenophon say you should be investing $50 million more into the company to help them buy new technology and so on and they say why not spend money there rather than the plebiscite on same-sex marriage. What is your response to that?
TREASURER:
I think it is sadly a bit of cheap politics from Bill, drawing a parallel between these two issues. If Bill wants to assist on the very important issue of Arrium where there are many families and the livelihoods of many Australians under the pump here on this issue then he should I think restrain from injecting that sort of cheap politics into this. The government has been working very closely with the South Australian Government across party lines on this. We are working very clearly with the administrators. Greg Hunt has been down there doing what you would expect him to do as Christopher Pyne has done …
SPEERS:
Are you offering more money?
TREASURER:
Well we have already invested through financing almost $50 million in the new equipment and plant which is upgrading their ability to have higher grade ore. Now that will deliver some $200 million in additional cash flows for the company over the next five years. Don’t forget…
SPEERS:
Is that it, no more money?
TREASURER:
They are in a phase now where they are looking to sell the business and we are obviously working closely with them there surrounding any foreign investment issues that relate to that which is very important. I don’t think it is very helpful for Bill Shorten to be injecting politics at this sensitive time while we are in that process. We work closely with them on issues of cash flow. He is suggesting there are cash flow issues. That is not something that has been raised in those terms with the government and [inaudible].
SPEERS:
I just want to get a sense [inaudible]
TREASURER:
Sorry?
SPEERS:
Are you willing to …
TREASURER:
Well we are continuing to work [inaudible] David. We are taking this one step at a time. What Bill is basically saying is throw some money at it and that money will just end up with the banks. That is what would happen. He rails against the banks every other day but he is actually putting forward a solution that he doesn’t seem to appreciate would just effectively be a cash-through to the banks. They are in the administrator phase. We have made it very clear to the administrator that we want to see this business being successful not just now and work through its current sustainment but well beyond that and for a new owner of this plant and its business to be successful and continue to employ the Australians there now. Now we have obviously been working very closely with Rowan Ramsey on this. He is the local member there. He is all over this and constantly on to me as well as the Prime Minister and Greg Hunt and Rowan is very central to our plans to continue to provide this support we need to there in Whyalla.
SPEERS:
Alright, last one Treasurer. The Victorians aren’t terribly happy with you. Their Port of Melbourne sale they got a great price for it – $9.7 billion. Federal Government has we know has this asset recycling initiative where if states do something like this, put it back into productive infrastructure, they get a helping hand from the Federal Government, a 15 per cent bonus payment if it goes into productive infrastructure. They are saying a couple of things. They want the money to go into level crossings rather than the Melbourne Metro. What is wrong with that?
TREASURER:
Lets’ go back to first principles. The scheme closed on 30 June this year. So they had two years to do this. They didn’t get it done in time. That is point one. The second thing is the 15 per cent is based on the investment they are going to make in agreed infrastructure projects resulting from the proceeds of the asset sales. So it is not just the straight 15 per cent on the asset sale price. That was never the program. It is 15 per cent on the agreed infrastructure project investment that has come to an understanding between the states and the Commonwealth…
SPEERS:
And you won’t agree to what they want to spend it on?
TREASURER:
They put forward some proposals back prior to May - in April. In May I wrote to the Treasurer and said ok we can agree those projects, that is what you are planning to spend on those projects; which was Murray Rail and the Melbourne Metro. So we applied our proportion to that and we committed to five them $877.4 million. Now they hadn’t even sold the asset yet and they knew the program was completing and said we will commit to that $877.4 right now, you sign the agreement and we will provision it and that money will flow when the time comes. Now three other states and territories – NSW, the ACT and NT went through exactly the same process, signed up to the agreement and we get on with the business. Victoria didn’t sign up to the agreement. That means the Commonwealth actually has no obligation to send them a cent. I have said no, Tim we will honour that $877.4 commitment that we offered to you, you actually knocked it back but we will still do that and we will do it on the projects we said we would do it on and we agreed to do it on and if we want to have a further discussion about the composition of that well we can. But we provisioned $877.4 million in the Budget to go towards this infrastructure and it is a bit rich coming from a state that spent more than $1 billion not building the East West Link. So I don’t think their record on infrastructure spending really is something they should be drawing attention to given they spent more money not building a road than money they spent building one. And on the $1.5 billion for the East West link, which I know Michael Sukkar has been a champion of, if they ever want to build that well we will turn up with $1.5 billion for that as well.
SPEERS:
Alright. Treasurer Scott Morrison we have to leave it there. Thanks very much for joining us this afternoon.
TREASURER:
Thanks David. Good to be with you as always.