Michelle Grattan: It has been widely remarked that you’re changing your image in this new portfolio [Social Services], do you think different jobs require different ministerial personas?
Scott Morrison: I’m the same person I’ve always been. People are seeing different sides of me in this role that people who know me better would have known for a long period of time - back from my days before politics and certainly when I first entered as a backbencher and was involved in various things.
Different portfolios shine a light on different parts of what you’re about and obviously in immigration it required a very strong approach. In this portfolio it requires dealing with a large number of stakeholders in particular and being across a broad range of policy areas.
Immigration, particularly on the border protection side of things, was a very focussed task which required a pretty strong handed approach.
MG: So what are these different sides to Scott Morrison?
SM: I’ll let others work all that out, Michelle. I mean people commentate on that all the time, I’m not one who does.
MG: Your wife was on record years ago saying she hoped you didn’t get immigration – this was in opposition …
SM: I think most political wives hope that for their partners.
MG: Were you glad to get out of it?
SM: I enjoyed my time in the portfolio, from a range of different perspectives. Obviously I was pleased to be able to achieve as much as we did. I lived through the horror of the border protection chaos under the previous government. I was as frustrated as anyone could be in opposition because I believed that we had the answer and we couldn’t convince the government to do it properly, and even when they did they had to be dragged kicking and screaming. And then in fairly short order we were able to demonstrate that we were right.
So I’m pleased that we were able to address just what was a humanitarian tragedy and one that was basically polarising the country, and seriously impacting on the budget as well. I was pleased to be able to achieve what we said we would do.
At the end of the day I did exactly what I said we’d do and we got the results I said we’d get.
MG: Any regrets for anything you did there?
SM: You always have some along the way. It’s a very tough portfolio. There are a lot of very human consequences to the portfolio. Every decision you take has a consequence to someone. I used to say all the time that in that portfolio if you don’t understand that every decision you take has human consequences, then I don’t think you can honestly perform in the role, and that’s not just a border protection issue. I would consider hundreds of intervention cases…
MG: Any specific regrets?
SM: No I don’t run a commentary on the background and the past. There are a few things that you would have approached differently, particularly earlier on, but you learn as you go forward. Being in the immigration portfolio is like walking on the edge of a razor blade the entire time, you make one little slip and there’s a fair bit of damage.
It’s a difficult portfolio, but I think at the end of the day we were able to do exactly what we said we’d do and get the results we said we’d get.
MG: Turning to your new job, you’re talking about new spending on social security computers, you’re talking about a child care overhaul, broad reform of social security - overall are you going to be a spender or a saver in this portfolio?
SM: I think we’re going to be a much more efficient spender of the resources that we have. It’s $150 billion a year and it’s growing, the highest rate of growth of any of the areas of government outlays, and we have to get that increase under control.
I’m also very mindful when you look across the portfolio that there are a lot of ways we can spend money a lot better on the targets that we’ve set.
Those three, I’ve been pretty clear, are: young people, under 25, getting them into work; young families, 25-49, particularly females, particularly those on middle to low incomes, getting them to be able to stay in work or get back to work after they’ve had kids; and older Australians, to encourage them to work longer, not out of any sort of national duty, but just because it’s a really good idea for them and for their families.
Older Australians have, I think, increasing burdens placed on them in a family context. They’re helping their kids out, sometimes when there have been family breakdowns they’re looking after kids as well, sometimes they’re often the primary carers.
Grandparents are often being called on in ways that perhaps they haven’t been before and there’s a big financial burden that often goes with that as well. So there are a lot of good reasons to keep working. I think older Australians are taking even more responsibility in the broader family situation they find themselves in. You never stop being a parent.
MG: Now you are on the expenditure review committee, do you feel rather conflicted by this ‘I want money for this, that and the other’ and ‘we must tighten our belts’, these two approaches?
SM: I feel a responsibility to ensure that I’m spending in the best and most efficient way that I can. I don’t want to ask for a single extra dollar where I don’t feel we’re not spending every dollar we have currently well. I do sign up to the budget rules around offsets and savings, to make room for new initiatives.
I’ve got to make room for a thumping big initiative which was supported from the last government, which is the NDIS. It is only 40% funded out of the levy and we have to swallow this within the social services budget over the next ten years, and that’s going to be a big task.
MG: But can you swallow it at the size that it’s projected to be?
SM: Well if we can be successful in prosecuting the saves through the budget that we have been seeking to - and not getting much support from either the opposition or anyone else on that front. The opposition and the crossbenchers’ view that they can say no and not have an alternative and just do nothing, I don’t think is a viable proposition. I think if there is one thing we’re trying to tease out in the discussion we’re having with the crossbench and the opposition - I don’t rule out the opposition on this, they have to be part of this - is that doing nothing is not an option.
So if you’ve got a better idea about how we make the pension sustainable long term and adequate, fine, let’s hear it. If you’ve got a better idea about how we fund improvements to childcare, happy to hear it. If you’ve got a better idea about how we encourage older Australians to continue to work and to better use the capital that they have available to them, then let’s hear it. But I haven’t heard it.
MG: The present welfare system is quite targeted - what do you see as being wrong with it?
SM: I think Pat McClure really set that out in his [recently released] report. It’s complex, it’s accretive, it in many ways has lost its way over a period of time. I agree that in an international perspective it is one of the better targeted systems around the world. That said, it is still the highest area of growth in public expenditure. So that means we need to get it even more efficient, more targeted.
What Patrick argues, that I agree with, is that if you can do that over time, then you can manage the transition. My biggest fear in the current political climate, as I said at the Press Club, is that if there’s no appetite for any change at all, which seems to be the attitude of the opposition and some of the crossbench, then 10 years from now someone will sit in this chair and have to do something quite drastic. Whether it is on disability support pensions or age pension or carers payments, or any of these sorts of things. Now I would like to avoid that by having a streamlined, efficient and more targeted system, because I think Australians are pretty comfortable with the idea of having a good welfare system.
MG: On McClure, can you start the implementation of McClure for a more simplified system in this budget, or this year, or will it have to wait a while?
SM: You can start with some very small steps and I think that is what Patrick is recommending. Certainly in my discussions with him that was my out-take. You start small and you build it up over time. I think while there isn’t a big appetite for big change in the community or in politics, there is, I hope, an attitude for incremental change, which is what I’m arguing for.
MG: Where would you start?
SM: Well we’ll set that out.
MG: Just turning to pensions, the pension rate for people at the moment is benchmarked at 27.7% of male total average weekly earnings. Under last year’s budget plan to change the indexation arrangement that percentage would fall progressively. What do you believe is the appropriate floor to such a fall?
SM: Well it won’t fall, the pension goes up every March and September.
MG: But the percentage against average weekly earnings would fall.
SM: The proposal before the Senate is that it be indexed to CPI [Consumer Price Index] as opposed to MTAWE [male total average weekly earnings]. That is exactly the same thing that the previous government did with the Family Tax Benefit. They decided to index it to the CPI, so I don’t understand the inconsistency in those two positions between the opposition on that issue and now what they’re taking on the pension.
I think one of the key issues that has come up in my discussion with the crossbench is the issue of adequacy and how you manage the question of adequacy. The pension is a cost of living support payment, it’s an income payment, and it is designed to keep pace with the cost of living and obviously the CPI is the principle measure of cost of living. Equally, we need to be mindful of keeping the pension payment adequate for people’s needs.
At the same time we can’t pretend that it is a lavish payment. It’s not. Or that it’s ever going to be a lavish payment.
I think one of the key issues when we’re talking to Australians about how they’re planning for the next 20-30 years [is] the idea of someone who is currently sitting in their mid-40s or early-50s thinking that they might live till they’re 80 or 90 or even longer being on the aged pension from age 65, or 67, all the way over that period of time. They need to think about that and whether that’s something that they believe is an adequate level of support for them, and what other steps and measures they might want to take to career change, to train, to gear up, to phase into a different work pattern, post what they’re currently doing now.
I think we have to be honest about the pension. It’s not a lavish payment, it’s not ever going to be a lavish payment. Therefore, Australians have got to think widely about what their income support options are.
MG: You mean topping up or alternatives?
SM: The Commission of Audit had a very good chart which talked about this, and there was a crossover between people on full pensions and those on part pensions and I suspect that will be the future. That there will be more people ultimately on part pension than full pensions. I think one of the things that will drive that is people deciding to work longer, not out of some national call to action, but just because it’s a good idea for them and their family.
MG: Now some in the backbench are mounting a campaign to get altered this [2014 budget] decision to change indexation arrangements. I noticed [Liberal backbencher] Andrew Laming was looking to you as one who would be able to negotiate something on this. Is his faith justified?
SM: I’m pragmatic about these things but at the same time I’m not going to concede the debate to doing nothing. Just simply taking something off the table and walking away I don’t think is a responsible thing to do in this debate. There is a measure on the table. Not everyone likes it and I acknowledge that some of our own government members don’t like it.
That said, to simply move away from that position in favour of a do-nothing approach I don’t think is responsible either. What I think we have to focus on is what is the sensible, constructive way forward to have a sustainable pension that addresses adequacy over the next 20 or 30 years. Now in the Intergenerational Report there is modelling there based on a return to indexation to average weekly earnings once the budget gets into a stronger position - now that’s one way of doing it. There are other ways of doing it.
MG: What other ways are there?
SM: Well again, we’ll get to that when we get to that. They’re the sort of things that I’d be discussing with crossbenchers.
MG: And your own backbenchers.
SM: Of course. We meet every Monday when the House is sitting.
MG: So you’re up for some sort of compromise?
SM: Well that is the gig. The same was true when I negotiated the Temporary Protection Visas through the Parliament. There was give and take in all of that. The one thing that was never an option for me was taking something off the table without something else being put on the table.
So it’s not about whether one is advancing or retreating on this - and I think sometimes it is crudely seen in those political terms, is the government going to back down. I don’t think that’s the argument and if it is seen in those terms then I don’t think that is constructive or helpful.
MG: Now where are you up to on the six months wait for the dole [for young people]?
SM: In a very similar space. I’m aware of the concerns that crossbenchers and members have, but equally the idea [is unacceptable] of doing nothing about youth unemployment and allowing people to walk straight out of school and onto the dole – or rather at a later age because they have to be a bit older than that to go on the dole.
The measure doesn’t apply to people who have children and they’re on Family Tax Benefit A - there are a whole host of exemptions to this measure that I don’t think have been well appreciated, but it is designed to try and get people who are able and job ready to actually get into a job.
Now if there are better ways of doing that or if that can be part of a package of other measures, then of course I’m open to that. But again, I’m not just going to take something off the table because I’m being told to do so by those who just have an outright opposition to something but are actually not in favour of anything.
MG: You’ll be soon unveiling a new childcare package, will this be a net cost to the budget and will there be offsetting savings at that time – when you unveil it – or at the budget?
SM: Well my view is there has to be offsetting savings. My preference is that any change that we make that requires additional funding wouldn’t be done by a levy, but we’re in discussions with the opposition.
Now, we have measures on the table in the Senate, particularly in the area of Family Tax Benefit changes, the previous government introduced around $15 billion worth of saves to Family Tax Benefit. We’ve got around less than $5 billion and they’re opposing those. But they were happy to implement $15 billion worth when they were in government, so I find that position difficult to follow, but if we can come to some accommodation on saves in this area, then that obviously gives me more room to move in terms of the improvements I can make on childcare.
MG: So there would be more spent on childcare and savings found in other areas?
SM: We can’t really have saves on the table in the Senate which have been completely rejected. If the opposition is asking for more investment in the area, that’s fine. Anyone can do that, but it can only be done if you can actually fund it.
So with that said, I think Kate [Ellis, opposition spokeswoman] and I have had some constructive meetings. I think they’ve been held in good faith. I think we understand the rules of the discussion and our engagement - whether it will come to something I don’t know. I don’t think the hard part of that discussion is actually working out how you can make the system better. Kate’s been a minister in this area as well, she knows the inadequacies of it hopefully at least as well as I do The problem is how you fund it.
MG: The Productivity Commission said that under its proposals, workforce participation would increase by some 16,400, this seems a fairly modest gain.
SM: It is on the Productivity Commission model a modest gain - remember it is a net gain.
For me, the participation goal is quite acute, it’s quite targeted. Of course I want to see people on family incomes of over $160,000 continue to go into the workforce and make the decision to do all that, but mostly I think the area where the most can be achieved with changes is the middle to lower incomes. Now those families don’t have the choice whether to go back to work or not.
Many families – about 10-15% of families – which is the percentage of families on income of over $160,000 off the top of my head, for them the decision to go back to work is a family decision, there are options they have. If they don’t go back to work it is going to be a bit harder, but equally if you’re just going back to work to pay for childcare, then you make decisions about if it is good to be back in the workforce, career progression, all those sorts of things.
But for those under that, if they’re not on two incomes or if they’re a single parent not on one income, well that’s a very bad situation for that family and for those kids as well. My focus is to try and make the equation better for those families, because it’s not only good for those families but it is actually good for the government in that a/ you’ve got people in the workforce, and b/ you’ve got people with a much lower dependance on welfare.
When you’re in a family stage and I think it’s 14% of kids under the age of 12 are growing up in a jobless family, those kids are more likely to end up in a similar situation. By changing the dynamics of a family not being on welfare in that situation I think you get a much bigger dividend longterm from the members of that family.
So my participation goal for childcare is quite focused. It’s not everybody, as much as I’d like to see secondary benefits of the scheme of keeping those people in work and encouraging them to be in work, I think that would be great, but for those on middle to lower incomes this is about whether they have choices in life.
MG: There’s been a lot of debate in the past few days about the superannuation scheme. Where do you stand on Joe Hockey’s idea of allowing young people to use superannuation for housing?
SM: I’ll leave all that to Joe. He’s prosecuting the case around super and I’ll let him do that. I think it is important though that when you’re looking at retirement incomes you can’t just talk about the pension.
MG: Well you raised the question of adequacy.
SM: You’ve got to be able to look at the mix between the pension and super and how people can use a lot of the capital and assets they have themselves without these massive penalties in doing so. Obviously super is the generational shift from the aged pension to people being self supporting in their retirement. That’s the generational change we’re actually seeing happen right now.
I often use the story when I left school Paul Keating said I had to provide for my own retirement. When my parents left school that’s not the message they got from the government.
As a result, I think there’s a change in the contract between the government and Australians about their retirement incomes and obviously superannuation is plan A and the take up of that being the major sustainer of people in their retirement at the moment is not where you want it to be long term.
You’ve got 80% or thereabouts of people who are over retirement age who are on a part or full pension. Now over time I think you’ll see the number on a part pension increase and a full pension decrease. One of the things that will change that will be people drawing on their own capital.
MG: If you send that message that people need to invest in their future through superannuation it rather contradicts it to say that young people can pull out some of that super early.
SM: One of the big issues, you look at the assets test on the pension. If someone is having to pay rent in their retirement, that’s a big hit out of their pension, so having someone in a position where they’re equipped and able to at least have their own accommodation issues sorted out, that is going to minimise one of the most basic costs of living in your retirement.
Equally the idea of the extent to which people can draw down on their capital to transition their skills. If someone is going to work an extra five years or ten years because of some mid to late career training, to help them transition from being a carpenter to being a manager, to driving or whatever else choice they want to make that enables them to shift from a high physically challenging job to something that enables them to work a lot longer, then that is a big positive for the nations finances as well.
So I think you’ve got to look at it in the big picture. What are people going to have to spend on in their retirement and if you’re equipping them either to make themselves better able to support themselves through working or have lower costs because they’ve been able to look after their shelter costs earlier in life, well that potentially has an upside.
MG: Sounds as though you’re a bit of a supporter of Joe Hockey on this?
SM: You’ve got to look at it pragmatically and I don’t think you can just put it into black and white situations. It’s going to differ for different people.
That’s a measure that Joe has floated for discussion. The government certainly hasn’t made any decisions on it. What we’re attempting to do is to provoke a discussion in the community about how we’re going to live longer, well and not swallow the budget up in the process. It’s difficult. There are a lot of competing and conflicting cross streams in all of this and that’s true. As a result I think the debate’s going to have a bit of that as well. I think there are a lot of things we’re going to have to try and reconcile and they’re not easily reconciled.
MG: Is there anything we haven’t covered that you’d like to mention?
SM: If there’s one theme I’m trying to draw out it’s this binary politics at the moment of “are you for it”/“are you against it”. Even when you questioned me on Joe’s position: are people going to be worse off or better off? This sort of binary assessment of policy at the moment is not conducive to getting a good outcome. The winners and losers argument, I think we’re sort of getting past all that. I’d hope we are.
In the seven years I’ve been in the parliament it has probably been one of the most combative and divisive times – and you’re better placed to judge this than me – that we’ve seen for some time. Having lived through all of that, I think there are a lot of members, I would hope the vast majority, who sort of want to move into a new phase.
MG: So you’re seen as identified with combative politics, but are you saying your preference is for a different style?
SM: It is. My preference was for that in the last portfolio. The only reason it got combative in the last portfolio is that we believed what the previous government did was wrong, that they should change it immediately, the evidence of their folly was being played out on the seas on a daily basis in the chaos that was emerging. They remained in denial about it and the suggestion was that we should compromise what we knew to be the solution somehow to have peace and harmony in the political debate.
You can only have peace and harmony in the political debate if you’re actually getting it right. The idea of people agreeing for agreeing’s sake, I think is nonsense. You’ve got to get it right and I was immensely combative in that space because I knew the government was getting it wrong and I was proved right when I had the opportunity for us to put in place our policies.
I remember going on Q&A once – I don’t go on that, it’s been years since I’ve been on and I’m not in any hurry to rush back – but someone asked why is this debate so divisive? Why does it have to be like this? I took them back to 2004 and said I don’t remember it being terribly divisive back in 2004 because there wasn’t a problem. You fix the problem, you don’t have to have a debate and I think that’s where we are now. There’s some residual issues that Peter [Dutton, Immigration Minister] is now working through, but they will get resolved.
The number of children in detention is probably one of my most pleasing things. We did what they couldn’t do, we got them out. We got them out principally because we stopped the boats. We got the measures in place to deal with people on shore and off, and now we’re working through that. But you can never fix it if you kept piling in on the other side.
So I would say we were practically combative because we thought they had it wrong. Now in this space I would like – at least at first, if I can – to try to get people on the same page. If I am unsuccessful in that well that’s a shame, but I think the options before us in this space are far, far broader than what we had in the border protection debate. There was a genuine difference of view and when that happens, that’s what happens. Hopefully we won’t have as big a difference of view in this area.
MG: Just finally, you’re often talked about as a possible future treasurer, a possible future leader, you haven’t denied your longterm ambitions. No pressure here?
SM: No well it’s all very flattering, but there’s only one thing in politics that I think determines your opportunities and that’s being competent. So that’s what I focus on.