Breaking Politics - Monday 4 August 2014

Today's Breaking Politics segment featured Senator Simon Birmingham and I going head to head over the government's unfair budget, its unecessary Paid Parental Scheme and signs of a welcome back-down on the GP co-payment. Here's the transcript:





SUBJECT/S: Tony Abbott’s unfair Paid Parental Leave scheme; federal budget; government back down on GP co-payment

CALLUM DENNESS: I’m joined by Andrew Leigh, the local member for Fraser in the ACT, and Simon Birmingham, the Liberal Senator for South Australia. Good morning to you both. Simon Birmingham, the government has delayed introducing its legislation for the paid parental leave scheme, this is Tony Abbott’s signature policy. Why?

SIMON BIRMINGHAM, PARLIAMENTARY SECRETARY TO THE MINISTER FOR THE ENVIRONMENT: Well it’s not about whether the legislation is introduced that matters, it’s about when a policy takes effect. We've always said that the paid parental leave scheme – which is of great benefit to working Australian women, particularly to low and middle income women – will take effect from 1 July 2015. That's still our policy intent and we'll legislate in a way to give effect to that. Right now in parliament, our priority is to work on the delivery of our budget measures to bring the budget back under control and particularly to make sure that we reign in the debt and deficit disaster left to us by the previous Labor government.

DENNESS: Why not introduce the legislation so people can see the details, see how the policy works, so that questions are answered. Isn't this a sign that your colleagues may not vote for it?

BIRMINGHAM: Well, the previous government was shambolic in the way it did many things. We want to be orderly in the way we do things and our approach has been, of course, to get on with those initial policy commitment with took effect from 1 July this year like the repeal of the carbon tax.  We managed to get that through in a manner where households will benefit from that repeal backdated to 1 July this year. We also, of course, want to see our budget measures implemented and that's what we are focusing on now, to bring the debt and deficit back under control, and we want to see programs like the Paid Parental Leave Scheme in place from 1 July next year, so we'll legislate that in due course, in a timely way, to have it take effect. But obviously it comes after those budget measures.

DENNESS: But you haven't yet legislated the mining tax, the carbon tax...

BIRMINGHAM: We have brought the mining tax to the parliament 

DENNESS: Yes, sorry, it hasn't passed the parliament yet. The carbon tax took longer than expected. These two policies were there was broad support across the chamber. On something like the Paid Parental Leave, wouldn't it have made sense to introduce it as early as possible?

BIRMINGHAM: It’s important to understand the implementation date difference - the aim for the mining tax and the aim for the carbon tax was to take affect effect from 1 July 2014. The aim for the Paid Parental Leave Scheme is to take effect from 1 July 2015. In between that we have a lot of budget measures we want to see delivered as well. So of course these things have to be taken in an orderly, sequential way. That's all that's happening, no surprises here.

DENNESS: Dean Smith is the latest Liberal to come out and criticise the policy. Are you afraid that your colleagues might not vote for this?

BIRMINGHAM: No, this is a policy we've taken to two elections. All Liberal and National Party MPs have stood on the platform of this policy.

DENNESS: Yet they continue to criticise it...

BIRMINGHAM: A couple do, let's be fair about this. A couple have some criticisms of it. That's fine, we're not a Stalinist state in the Coalition, we accept people are free to criticise. But ultimately, this policy will deliver a workplace entitlement to all Australian women. If they have a child while they're working they will receive, for 6 months, their salary up to a cap of $50,000. That's already the case women for women working in the public service, it's already the case for women working for a lot of large businesses around Australia. The policy will be fully offset and paid for by the 3000 largest businesses in Australia. It will really be of benefit, first and foremost, to small and medium sized businesses who don't necessarily have and can't afford to deliver Paid Parental Leave Schemes as generous as big business. It will be of benefit to low and middle income women who are less likely to get paid parental leave at their real wage at present than higher income women are.

DENNESS: Andrew Leigh?

ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Australia has already got a fair parental leave scheme, what we don't need is an unfair one. This is a scheme which will widen the gap, which will give $50,000 to millionaire households when they have a child and yet those at the bottom will receive far less. We've seen today modelling coming out showing how a range of the Coalition's other policies will act to widen the gap. Inequality is a big issue in Australia. We've just had Joseph Stiglitz visiting, we've had many Australians right across the political spectrum including conservatives like John Hewson speaking out about the challenge of rising inequality in Australia, I wrote a book last year about my concerns about inequality. And yet we have a Coalition which has brought down the most unfair budget in a generation and which is now pushing ahead with an unfair parental leave scheme. I'm glad that there's members of the Coalition who realise the folly in an unfair paid parental leave scheme. Credit to those in the Coalition ranks who are speaking out against this. Tony Abbott should just drop this scheme altogether. It's a scheme which, when we asked the Productivity Commission to look at how best to deliver parental leave, was roundly criticised. There's no evidence it will boost productivity or participation. Australia has fair parental leave, it doesn't need unfair parental leave.

DENNESS: Simon Birmingham, Labor has been calling the budget unfair since day one. New modelling reported this morning was said to confirm that.

BIRMINGHAM: Well no I don't think it does confirm that, quite the opposite. I think it shows that high income households in Australia pay a very significant amount when it comes to taxation. High income households in Australia, in fact, pay more than $47,000 in net terms in tax into the government. Low income households will receive, under out budget, close to $11,000 in net terms from the taxpayer after any tax they've paid. So you actually have a real demonstration here of the type of redistribution that occurs in policy terms under our government - and under all governments we've had in Australia - where higher income Australians pay tax to support lower income Australians, those in need. Ultimately, those higher income families are paying around four times the benefit that is received by lower income families.

DENNESS: This modelling wasn't about the contribution of various sectors. It was about the impact of budget decisions which showed that…

BIRMINGHAM: The modelling, in fairness, demonstrates the contribution of various families and the net benefit that lower income families receive. 

DENNESS: It also shows the impact of budget decisions your government has made which would seem to fall more heavily on low income earners.

BIRMINGHAM: Well, we've made decisions that are about trying to bring the budget into a sustainable position not just for the next couple of years but for the next few decades, for the long term. So that our social welfare system, payments to aged pensioners, payments to single parents, payments to disability pensioners, can be sustained in the long term. The same applies on Medicare, the same applies on education funding - we've had a hard look at what this country can afford. It can't afford a situation where the debt burden on Australians continues to go up. Labor already had a solid trajectory, out of their six years in office, where every single Australian faced a potential debt of $25,000. That's just unacceptable and unsustainable. Especially if you're going to keep seeing the levels of debt rise and rise with an aging population, the increased cost of pensions to come from that, the increased cost to Medicare and healthcare that come with that. All of those things, of course, will put increased pressure on the budget over the next 10 to 20 years. We're taking decisions now to make those things sustainable, so that if you believe in a system where we support the less well off, we have a system where it is sustainable for us to do so.

LEIGH: Simon seems to want to claim credit here for the fact that there is still redistribution going on in Australia despite the Coalition's budget. You might as well claim credit for the fact that his government hasn't brought back leeches and the lash. I mean, let's face it: this is a budget which hurts low income earners the most. The only people that don't seem to realise that are members of the Coalition. Labor commissioned NATSEM to conduct independent modelling on this which was more broad ranging than what’s been released under Freedom of Information today, and that shows exactly the same picture. The poorest single parents are losing one-tenth of their disposable income as a result of this budget by 2017–18. It's an appalling state of affairs. These are some of the most vulnerable people in Australia, losing one dollar in ten as a result of Tony Abbott and Joe Hockey's budget. Joe Hockey is a bit like 'Yertle the Turtle', he's climbing up there up high, he can see beautiful things while he puffs on his cigars. But he has no idea what is going on down on the bottom of the stack for the people whose backs are hurting as a result of the cuts being imposed on them by this government. It's a brutal budget, and it's a budget which, even if the Coalition got through all of its budget measures, would still increase the deficit compared to the Pre-election Economic and Fiscal Outlook.

BIRMINGHAM: First thing, on that last point: it's just completely untrue to suggest that our measures would create a worse situation than under the previous government which constantly promised surpluses, constantly said they would deliver a surplus and of course never achieved it, and never looked like they would and clearly were never going to. But I think it's also important that we recognise that ultimately this budget is, yes, taking difficult decisions. We're not doing that because we enjoy it, but because it is the only way to get the budget back to surplus, back to sustainability - unless you propose increasing taxes. There are only two ways that the budget works, that is revenue in, spending out. Now you can either try to put a cap on some levels of the spending out and make sure they don't grow at the same rate as forecast. Or you can choose to increase taxes. Now if the Labor Party…

LEIGH: Are you saying PEFO is wrong, or are you saying your budget is wrong? Because the deficit recorded in your budget is bigger than the deficit on the Pre-election Economic and Fiscal Outlook. Which one is right?

BIRMINGHAM: Andrew, it clearly shows that in the long term, left unchecked we see debt grow out to some $667 billion as a result of policy measures and disasters that you left. We were on a trajectory that was unsustainable, every time you forecast a surplus when you were in government, you never got there. You never got within 'cooee' of actually meeting any of your projected surpluses.

LEIGH: But the question Australians want answered is your budget compares to the Pre-election Economic and Fiscal Outlook.

BIRMINGHAM I don’t think that is the question people want answered actually, Andrew. I think what Australians probably want to know is: what's your alternative? What is your alternative to bring the budget back to surplus?

LEIGH: It was very clearly laid out in the Pre-election Economic and Fiscal Outlook. You turn away $20 billion of revenue by axing the carbon price and you blow a huge fiscal hole in the budget. Saying nothing of the superannuation changes you've made, money back to multi-nationals. There's a host of changes the government has made since coming into office which have deteriorated the budget outlook.

BIRMINGHAM: So the carbon tax is the Labor alternative.

DENNESS: Coming back to this question of fairness, Dean Smith again today said the Paid Parental Leave scheme was the biggest roadblock in convincing people that the budget was fair, we've seen reports that other Coalition colleagues of yours have called for pensioners to be exempt from the co-payment. Clearly members of the government are worried about this fairness question.

BIRMINGHAM: Members of the government are rightly out there listening and talking to the community. I don't agree, that's not the feedback that I am getting, but, rightly in relation to matters like the co-payment, Peter Dutton, the Health Minister, is going through a proper process of talking to the Australian Medical Association, working through with them the policy that we outlined in the budget. Talking to the Senate cross-benchers and working through with them on how it can best be implemented. Of course we are interested in making sure we take on board all of the different comments and expert advice that comes through. But once again, you've got to come back to the heart of the question here. We're not doing this because we think it will make us instantly popular, we've realised that people don't like the idea of having to pay more for things, of course they don't. We're doing it because it's the right thing. If you believe in Medicare, if you want to make Medicare sustainable for 10, 20, 30 years, then you need to make some reforms like this now. Small reforms now that can provide lasting benefit. Andrew used to believe in a co-payment, he of course has changed his mind to comply and conform with Labor Party policy.

LEIGH: Because it's bad policy, that's why I've changed my mind.

BIRMINGHAM: Well there we go.

LEIGH: If you'd been listening to your constituents you might well come to the same conclusion.

BIRMINGHAM: It is a requirement sometimes for government to lead as well, and to convince the electorate, and explain to the electorate, the importance of policy decisions.

DENNESS: Should pensioners be exempt from the co-payment as your colleagues have suggested?

BIRMINGHAM: Well right now we have a safety net built into the co-payment in terms of the number of times a pensioner would have to pay that $7, a safety net of 10 times. So it's $70 that a pensioner would face over the course of a 12 month period. It's $70 and then of course it's uncapped. There are other safety nets built into the Medicare system as well, established by the Howard government. 

DENNESS: But for pensioners, should there be a blanket exemption from the co-payment?

BIRMINGHAM: Our policy is for a capped number of payments for pensioners and that provides an effective balance in terms of providing some level of incentive or disincentive in relation to any abuse of our health care services, whilst making sure that of course, any pensioner that needs healthcare in Australia should be able access it and will be able to access it.

DENNESS: Andrew Leigh, I won't call you the son of the co-payment as you have been called in Parliament, but you said that you changed your mind on it because it was bad policy?

LEIGH: Yes, when you talk to any major health groups, whether it’s the AMA or the Doctors for Reform Society, they're concerned about the impacts of a GP co-payment on the usage of primary healthcare. And they're concerned that it would end up with more people in hospital, which of course is far more expensive than going to the GP. This is a policy which Labor has been out there fighting, and it is a policy in which the Coalition back bench are in there fighting. Really it's just Tony Abbott and Peter Dutton that are taking a while to work out how they can back down on this policy. That, of course, means that their commitment to increasing funding for medical research isn't going to happen because Tony Abbott's commitment to putting more money into medical research is only contingent on a new tax on the sick. If you can't impose his new tax on the sick he's not going to put more money into medical research. And that suggests to me that his commitment to medical research was always pretty fragile.

BIRMINGHAM: It's amazing how you can go from being an advocate for a co-payment to inflammatory language like 'new tax on the sick'.

LEIGH: It's extraordinary how people can change their mind on issues over the course of eleven years isn't it? As Keynes said: ‘When the facts change, I change my mind. What do you do, sir?’

DENNESS: Ok, Simon Birmingham, Andrew Leigh we'll have to leave it there. Thank you both.

BIRMINGHAM: Thank you.

LEIGH: Thanks very much.



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