Subjects: RBA Governor speech; Omnibus Savings Bill, childcare reforms, NDIS funding; energy policy, One Nation preferences in WA.
TREASURER: On Thursday night in Sydney, the Governor of the Reserve Bank, Dr Lowe gave a very prescient speech to a group of investors who represented some $17 trillion in funds under management. He made a series of points but amongst those points were these. First of all we need to have a competitive tax system in order for our companies who employ millions of Australians to remain competitive. He said this had to be achieved at the same time as the ongoing task of fiscal consolidation and that these were not mutually exclusive tasks and that they could and indeed should be achieved together. The work we are doing to restore the Budget to balance, currently projected to be 20-21, is being done for the reason that we can continue to invest and provide the assurances around critical services that Australian families rely on, that hard-working Australians and their families can rely on what the government is able to support them in doing. in the Bills we have brought to parliament this week, in particular the Social Services Bill, there are two key beneficiaries of the work we are doing. Last week, we announced the first of those, that was the significant child care reforms, which is being introduced by Minister Birmingham, and builds on the work we have been doing over the course of the term of this government since 2013, but today, in addition to ensuring that the child care reforms are affordable and deliverable and paid for, in addition to ensuring that the social services changes are able to fund those initiatives, today we are announcing that the balance of the savings achieved through that Bill will be provided and debited into the NDIS special account.
Now, just to make it clear what that means, and I will invite Minister Porter to take you through it after Minister Birmingham has had something to say on the childcare changes, this means that some $3 billion extra will be put into the special account to fund the NDIS. Now, that is on top of the just over $900 million which has already been dedicated to that special account from the changes of removing the carbon tax compensation for a carbon tax that no longer exists. So, over $900 million already set aside to go into that special account, some $1.6 billion, which is going in to fund child care reforms, and now a further $3 billion that comes from this important series of changes to ensure that we are supporting the delivery of the NDIS.
This Government inherited a black hole when it came to the funding of the NDIS. We inherited an empty promise from the previous government when it came to the NDIS. It wasn't fully funded. We have been working from day one to ensure that we fill that vacuum that was created by the previous government. That has involved the establishment of a special account for the NDIS and today, in putting forward this special purpose arrangement to ensure this money goes into that account, we are delivering greater certainty around the delivery of the NDIS. Now, we are obviously advising the crossbench members and other parties of this arrangement today, and I will invite first Minister Birmingham and then Minister Porter to comment on these matters and then we will take questions.
MINISTER BIRMINGHAM: Thanks very much Treasurer. Through our child care reforms we are prioritising the hardest working Australians and those who are earning the least through their efforts to support them to make the choices that suit their families around workforce participation. All of the research indicates more than 200,000 hard-working Australian families will choose to increase their workforce participation as a result of our proposed child care reforms. Of course, like every reform measure from the Turnbull Government, it must be paid for. We have demonstrated clearly how we will fund it, how we will pay for it and in terms of the reforms how we will better target the support to those who need it most. Take a single mum earning around $50,000 with a child in child care three days a week. As a result of our reforms, net of the family tax benefit changes, she will be around $2,500 per year better off. Or a low income family earning around $80,000 with both parents working and two children in child care, that family, net of family tax benefit changes, will be around $3,000 a year better off. These are real benefits to hard-working lower income Australian families. We want to see them delivered and we are determined to see them implemented to help many of those families once the cap on support that many of them get at present is abolished. It will help many of those families choose to work more hours, to work on the days which suit them and participate fully not just in family life but also in the economy which can only of course underpin and strengthen all aspects of our economic growth agenda and help for Australian families.
MINISTER PORTER: There are about $5.5 billion of savings in the Omnibus Savings Bill, the social services savings, and last week we announced the first part of the strategy for how those savings will be expended and reinvested into the Australian community and that was with respect to covering the full cost of the child care reforms that Simon has announced and described. This week we are announcing the second part of that strategy and that is the remainder of all of the savings from the Omnibus Savings Bill go to fully fund the NDIS in its full operation first year of full operation in 2020. I might just run you through some of the figures with respect to that. The single biggest myth that the Labor Party has sought to perpetuate from its years in office was that it fully funded the NDIS. It is simply untrue. It has left Australians with a disability in a very difficult situation. Whereas the Government has a full commitment, we would much prefer not to find those monies that are required in 2020 from debt or from higher taxes. We are committed to try to find them from savings. The way in which it falls is this - in 2020, the full spending for the NDIS will be about $21.4 billion and the Commonwealth will need to fund about 52 per cent of that, or about $11.1 billion. There were and we concede three identified sources of funding from Labor for that Commonwealth expenditure; they were existing Commonwealth funding in the disability sector – that was about $1.1 billion, there was $4.1b which was the Commonwealth’s share of the increase in the Medicare levy. And there was a return from the states to the Commonwealth of Commonwealth money which had funded state-based programs and that was $1.8 billion worth of returned funds. In effect that means that there was $7 billion for 2020 to cover $11.1 billion worth of expenditure.
The size of the gap that arises in 2020 changes with estimates, but it is a very large starting gap and it grows very, very quickly. So the starting funding gap that Labor left this government in 2020 to fund the NDIS is at this stage estimated to be $4.1 billion and that grows to over $6 billion very rapidly. To ensure that that funding gap was filled from savings, we announced some time ago the creation of an NDIS special savings account. That savings account will quarantine money, both underspends in the NDIS, but also other identified savings from the social services portfolio, but any portfolio.
It is a Department of Social Services administered fund, which means that there is complete line of sight on that money. It can only be spent to fill that funding gap in 2020. The monies will not go into consolidated revenue. What the Labor Party left us with was an incredible growth expenditure unfunded outside the forward estimates required to ensure better lives for Australians with a disability and what we are showing here today is we are absolutely committed to doing the very challenging work of government, and that is find appropriate savings to fill that funding gap in 2020 so that we will not have to resort to further borrowings or higher taxes to ensure that Australians with a disability are looked after in the way that we expect they will be through the NDIS. If I just might add one thing in closing here, anyone who wants to be given the detailed reasons why the mythology about the Labor Party fully funding the NDIS is exactly that myth I’m very happy to get that to you. But it is one of the most scandalous lies that you could possibly see in public finances. If the Labor Party had of been serious about fully funding the NDIS they would have done precisely what this government is doing, and that is create a special account into which nominated savings can flow where they are absolutely quarantined for Australians with a disability.
TREASURER: So the difference now, is by the end of 19-20, instead of a fund of $2 billion, with the successful passage of this legislation, this fund will be over $5 billion.
QUESTION: Mr Morrison, last week when you introduced the Omnibus Bill you spent about an extra $2 billion in increased fortnightly payments and paid parental leave, you’re now putting the remainder of the savings into the NDIS. What’s the effect on your planned return to balance by 20-21? Are you going to find $6 billion in cuts elsewhere?
TREASURER: There is no impact of this on the underlying cash balance.
QUESTION: Why is that? Because you have written these savings into MYEFO. These savings are factored in.
TREASURER: But the expenditures are also there. We are committed to the NDIS and we need to ensure that we get the Budget into a position of balance and strengthen the Budget to ensure that that impact on the Budget which is an expenditure impact in 20-21 and beyond is paid for and these measures in this Bill enable us to do that without going into further deficit. So there is no impact on the underlying cash balances as a result of the announcement we have made today, absolutely none.
QUESTION: The original plan for the special account, wasn’t it meant to be a $5 billion special account? If you’ve got $3 billion that you are putting in, plus you’ve said that there is $900 million there already, that’s $3.9 billion, what happened to $1.1 billion? Have you given that up in terms of this overall package and therefore aren’t you leaving the NDIS short by $1.1 billion?
MINISTER PORTER: Can I answer that? It’s an estimate change. As I said, the starting point of that gap in 2020 changes from Budget to MYEFO, and every time we re-evaluate estimates. The reason why the funding gap has decreased form $5 billion to $4.1 billion is largely because of expected increase in revenues from the Medicare levy, but also because there’s been a slower transition pursuant to a bilateral signed with Queensland and also Western Australia. So the starting point of the gap is slightly lower than we expected. Nevertheless, it grows very quickly. So in summary I’d say you to you the gap changes with every six month estimate change around a variety parameters but it starts at a very, very large amounts, $4.1 billion and it goes very, very rapidly and it is absolutely real to the extent that it’s unfunded.
QUESTION: Are you confident then that this won’t change again, because we know that health costs go up at a faster pace than inflation, in fact even the NDIS itself may change behaviours and change costs. So how can you be certain that you’ve got a handle on it?
TREASURER: Well Chris, what we have to focus on is the things that we have influence over and you’re right to say there are all sorts of changes in costs that can impact on these schemes, that is true. That is why you have estimates variations every six months to reflect those changes. But what we have a responsibility for is ensuring that we achieve the maximum amount that we can to offset the costs that are associated with the NDIS. That is something we do have control over, and we’ve exercised that responsibility by putting these changes in this Bill. We have put it to the Parliament and we’re saying every dollar that is in that Bill that is realised as a result of its passage, will do two things, it will achieve more affordable child care for hard working Australians and their families and it will provide an even greater assurance about the funding of the NDIS and will fill Labor’s big black hole on the NDIS out in the future. Remember the trick that was played by Labor, they put the funding of the NDIS and any number of other measures, whether it was health or education or other things, they put off well beyond the Budget and the forward estimates. The money was just going to somehow fall from the sky to pay for these pledges. Now this Government has the responsibility of implementing the NDIS and paying for it. Not promising it, delivering it. So it is our responsibility to ensure we are doing exactly what is in this Bill to cope with the knowns and the knowns are that we need to get more money into this fund and that is exactly what we are doing.
QUESTION: Do you know if the crossbench will actually pass this package now you have made these changes and you mentioned company tax, I note you wrote letters to the crossbench about the comments from Philip Lowe, have you had any response from crossbenchers?
TREASURER: I welcome the comments, obviously, from Senator Leyonhjelm, who was already keenly supportive of this. But I took a fairly unprecedented step of circulating a copy of that speech, to not just the crossbench, I sent it to the Labor Party as well. Because if it wasn’t for the Labor Party's opposition to something they actually used to promote we wouldn’t have to be talking to the crossbench at all. What we have seen from the Labor Party on this is the most rank of hypocrisy. It suited Bill Shorten to be a fan of having more competitive company taxes when he was the Assistant Treasurer, and he was walking around trying to ingratiate himself in the business community, but now when it doesn’t suit him he changes his position. This is something we see from Bill Shorten on pretty much every issue, he’ll stand for it until he doesn’t and it’s no longer in his self-interest, and that’s why he can’t be trusted. How the crossbench, and others respond to what we have put to them today, we will see how they will vote, ultimately in Parliament. But what we’re making clear is, is the reason we need to get the budget back into balance is so that we can give Australian families, hard-working Australians and their families the guarantee, the confidence, that there is a budget that can support the things that are most important to their cost of living.
QUESTION: Mr Morrison, as a senior participant in the energy debate, what is your reply to the call from that very broad alliance of groups for a more non-partisan attitude in trying to get future energy policy?
TREASURER: Well, Australia doesn’t need lowest common denominator solutions. We need the right solutions to these challenges. I mean if the argument is we’ve got to reduce the policy effectiveness down to a level where it is fairly meaningless, so at least people won’t engage in heated conversation, I don’t think that’s why the Australian people sent us here. What we stand for is more secure, more sustainable, more certain, more affordable energy for Australians, their households and their businesses. That means you need to engage in a pragmatic policy which embraces all of the above, as the Prime Minister says. That includes wind, it includes solar, it includes, wave, it includes hydro, it includes coal. It includes coal. And what we have seen from the Labor Party is an ideological approach which rules that out, and we don’t think that’s in the interest of Australian families. It is certainly not in the interest of the Member's constituents, whose constituents are those who work in these coal mines and these coal-fired power stations and those other places. They should frankly step up and I don’t think they are. They are selling their own constituents out.
QUESTION: Can you explain again simply how the $3 billion that was earmarked last week for budget repair now going to the NDIS, how that doesn’t have an impact on the bottom line?
TREASURER: When it goes to budget repair, it is going to offset the expenditure of the government. Now the expenditure of the government in this area on the NDIS, taking Chris’ point, and the vagaries that can impact on those estimates going forward, is largely known. Those expenses were there. The difference here is rather than having these savings go into a general pool, where they can be hived for other purposes – I mean the Labor Party said before, it was ‘other unspecified saving’s that were paying for the NDIS. Well, specify them. And that’s what we’ve done and that’s why there is no impact on the underlying cash balance. This is saying that there is a locked box over in Social Services for which the Minister has full visibility and accountability to ensure that the money that will come from making these changes will go to ensure that the NDIS continues to be funded and delivered on an ongoing basis. It is a start, but it is not the whole job. As Christian said, the task is even greater than that, and this is one of the many cruel hoaxes that the Labor Party has put on the Australian people, I think this is one of them. We all support the intention of the NDIS, but only this government has a plan to fund it.
MINISTER PORTER: If I can answer just by way of example – when Labor made savings prior to the 12-13 budget, one of the areas that they had savings with respect to, was changes, as you might recall it, private health insurance rebate policy. That was said to generate $1.1 billion in 2020, which was said to go to filling this gap. They first announced that with the following words - the savings taken will help to return the budget to surplus. They then we re-announced it by saying savings in this measure will be redirected to partially offset the cost of the dental health reform package. They then, months afterward, said that it would go towards pay for the NDIS. Now, had that money been placed away in a quarantined special purpose account, such as that that we are proposing here, it could only have been spent when the NDIS came online in 2020, on the NDIS. That’s what we’re doing.
QUESTION: Mr Porter, are you comfortable with the deal done in WA with the Libs and One Nation effectively dudding the Nats?
MINISTER PORTER: That’s a deal done by WA, and that’s a matter for them. But I just might add one thing as a matter of observation, as there’s a lot of commentary going on about this - the relationship between the Nationals and the Liberals in WA is completely different from the way in which it’s structured and exists anywhere else in Australia. I know because I was part of this relationship for many years. You have one party, in effect, in Queensland, you have a true coalition at a federal level. What’s happened over eight years in Western Australia has been described generally has an alliance, but the relationship is completely different. It was indeed Brendon Grylls who put out a press release noting that the WA Nationals act totally independent in a sense of forming government from the West Australian Liberals. So, the context in Western Australia is very, very different to the context in other jurisdiction.
TREASURER: Can I tell you about the deal that I am concerned about? I’m concerned about the deal between Labor and The Greens. This is a political deal that goes on election after election after election. That’s a deal that is forcing the Labor Party further and further and further to the ideological driven energy policies that they are foisting on the Australian people. Not just at a Commonwealth level, but the State level as well. Why is it today they hold onto the 50 per cent RETs at the state level? At the state level in Queensland and South Australia, as Simon might want to comment, we have Liberal Parties who are keen to move to a national system, so we do not have this situation of people who are boiling in the dark or freezing in the dark.
QUESTION: Can we deduce from this Mr Morrison that if you were in a relationship with One Nation that you will move the Liberal Party further and further to the right?
TREASURER: No, we're not in a relationship with the One Nation Party.
QUESTION: Well it started out in Western Australia now, is it going to stop here?
TREASURER: That is a matter for the West Australian division. The next election, federally, isn’t for some years.
QUESTION: Treasurer, just on the two welfare reforms for under-25s, we have got four Senate crossbenchers who have said they aren’t going to support them if they are going to be in the Omnibus Bill. Are you moving towards removing them? Minister Porter you mentioned on [inaudible] last week that’s what you were thinking, is that what the plan is, to take them out?
MINISTER PORTER: That is not what I said…
QUESTION: Reading between the lines.
MINISTER PORTER: I know that you like to do that quite a lot. As the lawyers say, ‘by necessary inference’. We are arguing each and every one of the 16 plus measures in the Omnibus Savings Bill. Those negotiations, with the Treasurer and myself and Simon and the crossbenchers have been going on for many months. It’s fair to say that there are higher levels of enthusiasm for some of the measures and lower for others. It may be the case that not every single measure is successful, but we are going to argue that case right up until when the vote is taken. And I must say the experience with the crossbench has been that, the time that you truly know whether you will get support on each and every measure is when the vote is taken.
MINISTER PORTER: If we make savings in those areas they will go to pay for the NDIS.
TREASURER: Anything not passed through this Bill means that the NDIS special account will be poorer for it, and it will have to be made up from other sources going forward. These are the choices that are before the Parliament. There are no easy decisions here. It is frustrating and Simon might want to comment on this – if it wasn’t for the opposition of the Labor Party to actually agree with funding changes, the child care changes would already be in, pretty much, now.
MINISTER BIRMINGHAM: That is right, Treasurer. We were due to have these child care reforms take effect from 1 July this year. It was only because of the intransigence of the old Senate, and the stubbornness and refusal of the Labor Party and their negativity that in last year's budget we had to make a decision for a 12 month deferral in relation to those changes, because we are determined to make sure that they will be paid for and fully funded. Now it hangs on the head of Bill Shorten and the Labor Party that the benefits to hard working Australian families that should and could have been in place on 1 July this year, won’t be there for a further 12 months. We are confident that we can get a positive outcome by working with this new Senate. We have shown as a Government over the last six months of last year and already this year, we’re able to make good, constructive progress with this Senate, and get outcomes despite the negativity that continues from Bill Shorten. It defies any sense of logic or belief that the modern Labor Party is saying they are going to vote down reforms that will help the lowest earning, hardest working Australian families. That will ensure, in relation to paid parental leave – in Christian’s part of the reforms, families who receive no employer support or little employer support for paid parental leave, will get an extra two weeks of support. A much stronger safety net there for families to be able to stay at home and care for an infant child, a much stronger safety net there for hard working families to be able to step out into the workforce and work as many days a week that they choose to, as many hours as they choose to, and know that their support for meeting those child care costs won’t fall off a cliff.
And while I’ve got the platform, I’ll take the Treasurer’s invitation from before – as a South Australian to say that there’s nothing more urgent, in terms of the economic future of my home state than securing reliability in the energy market in the future. We all wake up and listen to the morning radio here, and just last week I heard Fran Kelly, on Thursday, talking about the weather forecast around the country, and it was: ‘another hot day in South Australia. let's hope the power stays on.’ Well, if that is the message going out to the rest of the country that does nothing to help attract investment in South Australia, to generate jobs in the state that already has the highest level of unemployment in the country. The only businesses doing well in SA out of this crisis at present are those selling generators. That is not something we want to see. We want to see reliability put back into that market and every report has demonstrated so far that in the end the instability that can be caused by having highly variable, high levels of renewable energy that can go from producing 80 per cent one day to just one or two per cent the next day of the state’s energy needs does not help reliability, does not help affordability and of course the comprehensive solutions that we are talking about in terms of getting ARENA and the CEFC to look at storage solutions like pumped hydro in terms of a technology neutral approach and in working with the states and territories to rule out state based renewable energy targets and certainly to rule out Bill Shorten's crazy 50 per cent renewable energy target upon which he has done zero modelling, zero costing, has zero idea of the impact it would have. Our approach is to make sure we have a coherent, consistent national approach that puts on the table solutions for these issues.
TREASURER: Thanks everyone.