Thank you Cassandra for inviting me to address this conference of the Australian Council of Social Services and for your warm welcome.
Since becoming the Minister for Social Services my regular contact with Cassandra and other members of her executive has been constructive, robust and valued. We might not always agree, but the relationship between ACOSS and the government is one that fosters mutual respect, that promotes debate and that encourages contribution about these important issues facing this country.
Indeed for 58 years, ACOSS has been offering leadership on a wide range of policies and programs that serve Australia’s vulnerable and low income families in particular.
And indeed more recently, ACOSS has developed an outreach program to the business community and I believe this is a very encouraging development under Cassandra’s stewardship.
Collaboration between the business sector and civil society is crucial to the wellbeing of Australian civil society.
As Cassandra said just a few weeks ago the first budget of the new Abbott Government was delivered by the Treasurer, and indeed there has been much comment about what’s in that Budget in terms of the details, the proposals, the programs and the changes which have been put forward.
I don’t want so much this morning to discuss the what but to go back to the why.
What are the challenges we’re facing in this nation which affect all of us, whether we’re working in your sector of the community or whether in other parts of the community, and indeed there are three interrelating challenges that we face in this country.
The first may seem unrelated to this gathering this morning but it has an impact on all of us and that is that the national economy is undergoing a major transition.
For the best part of the last two decades the economy has largely been driven by the construction in the resources and mining sector, in states like Queensland and Western Australia in particular. But that great investment in construction is coming to an end and indeed the mining and resources sector in particular is moving from a construction phase to a production phase.
What that means is that the huge input of capital and the corresponding huge workforce that has been required for the construction section is no longer required to the same extent, and yes production will continue but that production will be largely level , it will largely be influenced by world prices of commodities.
But it’s not the same as the huge investment that we’ve seen in the corresponding jobs and economic growth that has gone on over the last two decades and we in Australia need to adjust to that changing economic circumstance, the changing transition that we are going through.
Secondly as a country, and particularly as a Government, we face economic challenges.
We inherited deficits; we’re on a trajectory to $667 billion worth of Commonwealth debt if we do nothing about it.
The IMF in a report just last month said that the debt burden in Australia had tripled since the Global Financial Crisis and is now growing as fast as commensurate nations around the world, and so this is something which whoever is in Government will have to deal with in the current circumstances.
The third challenge we face is more significant than both of those and will have a lasting impact on this nation and that is the ageing of the population.
The last great demographic shift that occurred in Australia was the baby boom generation in the decade or so after the Second World War, and if you think about it for a moment the baby boomers are now entering into retirement and will do so in increasingly large numbers over the next 10-15 years.
And indeed in about 15 years’ time that great baby boom generation will become the old age generation in Australia as they reach roughly the age of 80 and onwards and this is going to have a marked impact on everything that occurs in Australia.
We know, for example, that the number of people aged 80 and over, the cohort of people in their eighties is the fastest growing cohort of the Australian population at present.
You may be interested to know that there’s roughly about 4000 people aged 100 and over alive in Australia today. It is estimated that by 2040 there will be 40,000 people aged 100 and over alive in Australia at that time.
One of the great achievements of the last century has been the increase in life expectancy.
In the early part of the last century because of improvements to maternal and child health and in the latter part of the last century through the great developments in medicine and technology and the like, the result of which means that people are living commonly into their eighties and longer.
Indeed had we been gathered here in Brisbane, when the then colony of Queensland joined with the other colonies to form the Commonwealth of Australia in 1901, average life expectancy was about 55 for men and 59 for women.
So that increased life expectancy is a great achievement of the last century. It’s great in terms of individual lives and what people can do during their lives, but it carries challenges for all of us in this nation, two challenges in particular.
The first is we face a larger, older cohort of Australians than we have in the past, and that has challenges for health care and aged care in particular.
We know, for example, that a large proportion of expenditure on a person’s life in terms of their health care comes in the latter years of their life, and so with a large number of people in that situation then obviously there are challenges in terms of providing that health care into the future.
We also know that one of the consequences is a contraction in the growth of the workforce in Australia and an increase in the ratio of dependants, particularly older dependants to workers in the community. Indeed it’s about five to one and is going to fall to less than three to one.
In 2004 when I was the Employment Minister we had a report undertaken by some academics at Monash University about the growth in the Australian workforce and that report revealed that in 2004 the net growth in the Australian workforce, when the people who’d retired and left the workforce were subtracted and those entering the workforce were added in, the net growth in the Australian workforce in 2004 was about 175,000 people.
The report and the scholars then projected ahead to the decade of the 2020s and what they found was that for the entire decade, for the entire ten year period of 2020 to 2030, the net growth in the Australian workforce would be just 125,000 people.
In other words, falling from 175,000 in 2004 to an average of about 12,500 each year of 2020 to 2030.
When you think about that in terms of the impact that would have on the community, on the society, on the economy, on businesses, on the whole nation, then you can see that this is a major challenge that we face in this country.
These challenges cost money.
The Age Pension for example, which currently costs about $40 billion a year, in a decade, on current projections will cost about $68 billion, and every other area of expenditure that the Commonwealth is responsible for, and indeed the states are responsible for, you can see growth generally in those areas of expenditure into the future.
So I say these things to point out the whys of what we’re trying to do. We can argue obviously about the whats and the programs and that, but as a nation we are facing these challenges which we must address into the future if we want to sustain our economy and ensure that we address the issues that will determine the future prosperity.
Not only of people today, but generations to come and indeed our ability to provide the programs of support that we want to provide into the future.
One of those which has widespread support throughout Australia is the new National Disability Insurance Scheme.
That’s going to cost us additional billions of dollars, that have not yet been budgeted, but we are committed to finding those additional billions of dollars, in conjunction with the states so that we can roll out a scheme whose time has come.
This is an example of something we want to do, which we are committed to doing in the future but the funds are not yet there at the present time and that therefore adds to the challenge that we have as a Government in the future.
So that background, the why, if I can call it that, is the background to some of the things that we’ve done in this Budget.
It’s why over the period from 2023 to 2035, we propose increasing the Pension Age to 70. As you know it’s going up to 67 by 2023, we’re proposing to continue that trajectory of increasing it six months every two years until it reaches the age of 70 in 2035.
That would affect people born after about 1965. Those born before that time of course are on the current trajectory and the current situation.
It’s also why we’ve looked at young people and said in terms of under thirties, that we have an expectation that if you’re not in a job that you should be training to get a job.
There are lots of reasons for that.
We all know that the best form of welfare is work.
We all know that from the perspective of individuals and families and communities, work brings real meaning to people’s lives over and above the economic contribution that they might make.
But in the context of a changing demographic, where there’s a shrinkage in the growth of the workforce, where demand will continue into the future, just take a couple of areas, aged care and disability services, which will require tens of thousands of workers in a decade’s time beyond what we have at the present time, in those challenges.
It makes sense also from an economic point of view to be saying to young people our expectation is that if you’re not in a job then you should be in training and that’s the why, if you like, the motivation behind that particular proposal.
So ladies and gentleman, we can deny the challenges if we like or we can face up to them but the demographic shift will continue.
Demography is destiny and it’s like an aircraft carrier, it doesn’t turn around very quickly. Indeed it takes a couple of generations to make any change in the demographic patterns of a nation like Australia and we’re not alone in this because almost every country in the world, particularly all those in the western world, in commensurate situations to Australia are facing the same challenges that we face in this country.
That’s why we’re also examining the welfare system more generally, and it’s great that Patrick McClure is involved in that welfare review. He’s here this morning and will speak after me. I just want to say a couple of things about that and Patrick’s going to say a little more.
The reality of our welfare system in Australia is that we’ve got dozens of payments, supplements and allowances.
If you draw a diagram of the welfare system it looks like a bird’s nest and it’s difficult to understand from that and it must be difficult for lots of people who are participants in the welfare system, who use aspects of the welfare system to actually understand their way through it. And it’s been added to by decision upon decision, often made in an ad hoc manner over years and indeed decades.
So two things come from that.
The first is, can we simplify the system, can we redesign it so it’s established on some understood, reasonable principles but constructed in a simple way? Could we have four, five, six payments rather than the dozens we’ve got at the present time, and that’s part of the exercise which Patrick and others are undertaking currently.
And secondly, can we look at what we’re actually doing in terms of welfare? Let me just take Newstart for example.
We know that about half the people who go onto Newstart leave Newstart within six months or so, but if two people walk through the door of a Centrelink office here in Brisbane we don’t know for sure whether one of those is a person who will use Newstart for a short period of time or one is a person who is going to use Newstart for 12, 18 months, two years or what.
Surely there can be some better way of actually trying to assess people who are using these services in Australia, and that’s why I’ve been attracted to the model which has been developed in New Zealand.
The New Zealand model arises from their experience with their accident compensation scheme which has been around for many years in that country, and it’s essentially a social investment model which they’ve now modified and adapted to their welfare system.
What they’re able to do in New Zealand is actually divide the population of people who come for their services into many cohorts and getting closer to, therefore, the individual circumstances of any particular person, and by that look at which are the groups of people that actually need more investment up front.
They can tell, for example, from doing their empirical work and from looking at the data over a period of time that if someone’s on welfare at the age of 35, there’s a very good chance that that person was on welfare at the age of 18 or 19.
So if you can get to that data and divide your population into various cohorts, there is a possibility then to make investments in each of those cohorts which are appropriate to the circumstances of the people in those cohorts.
So to take the clichéd example, the young person of 18, who didn’t finish school, who left school in Year 10 or whatever, has got no completed secondary education, has got no skills and is therefore finding it difficult to get a job.
If we can invest in that person and we can look at what we can do for that person to get them the skills then that’s more likely to leave that person on a trajectory that leads towards employment, rather than on a trajectory that leads towards welfare.
And we know that if a person is on welfare for a lengthy period of time they’re more likely to stay on welfare or return to welfare throughout different stages of their life.
So that’s a simple explanation, if you like, of the New Zealand investment model, and that’s why I’m attracted to it because I think it would give us better information and enable us to do a better job in terms of helping people, particularly young people, in terms of the welfare system in Australia and this is one of the things which Patrick and others will be looking at in terms of his review.
That review, the discussion paper, will be released soon. One of the things I’ve found in Government is that inertia is the greatest force, so we hope we’ll get it out soon, when the Prime Minister gets back from overseas.
After that there will be a period of consultation. I know there’s been some consultation in the early stages of it, it’s essentially a discussion or issues paper and there will be an appropriate time for consultation with people throughout Australia and after that, Patrick, Wesley and Sally will prepare a report with recommendations, there’s no recommendations in the current issues paper.
Then they will be presenting that to me and to the Government in about September or October of this year, and Patrick will say more about the report and more about the underlying aspects of it when he makes his presentation next.
Ladies and gentlemen, I know that you in this room are not just advocates for the poor, vulnerable, the young, the old and the marginalised in our society.
Most of you also work in agencies and organisations that are funded in part by the Government, both State and Commonwealth Governments. This relationship is significant, because it’s in the institutions of civil society that you were discussing yesterday, that individuals combine to address the challenges of local communities and the relationship therefore with Government should be clear.
As I said previously to the ACOSS conference; when the state directs the activity of civil society, it enfeebles the ability of citizens to take responsibility for their own community and society.
As the Prime Minister has said, the risk when Government tackles problems that are best addressed in the community is that people are denied the chance to achieve something for themselves, and the practical outcomes of this are all too familiar, a one size fits all approach to social problems, ensnared by contractual obligations designed to fit Governmental silos which rob much of individual initiative and personal initiative that should motivate charitable activity.
Worse, it endangers the vibrancy of the institutions that help to form us as citizens in the virtues.
The act of giving, whether it be finances or services or counsel, becomes a professional activity and indeed a function of the state, rather than an act of charity and love directed towards our fellow human beings.
Now this is not to say that the state has no role in other spheres of society, rather it’s to argue that free citizens should ensure that the state is the enabler of other spheres of human activity, not the master of them.
The political community, I believe, should be at service to civil society, which is that collection of relationships and resources, culturally and associative, that are relatively independent of the political and economic spheres of activity, government should act therefore for the people’s benefit.
There’s a danger that I’ve observed over the years in government, that government itself can seduce community groups into becoming its mouthpiece, a danger that the government will see the voluntary sector, civil society, not-for-profits and the like, simply as an extension of itself rather than as something which should be separate from government.
That’s why I promised, prior to the election, a new approach, which we are in the process of delivering.
This will involve less program areas rather than the huge number of programs that we funded in the past, and through that hopefully more flexibility for agencies in the way in which they deliver services.
We’ll have single contracts with the Department of Social Services, wherever possible five year agreements, rather than single or three year agreements to give you greater certainty in terms of funding and the decisions you make and much simpler reporting arrangements than exist at the present time.
We’re also looking to measure outcomes, rather than inputs which we measure at the current time and to place a new emphasis on prevention and early intervention, rather than simply doing what we have to do, and that is to address the problems that arise, address the dysfunction which occurs in individuals and communities, can we take a step back from that and put more emphasis on prevention and early intervention and I’ll be setting up an expert panel to advise me.
That will be established sometime in the next month or so, drawn from not only scholars in this area but from practitioners that can advise us on how we can place much greater emphasis on prevention and early intervention. Whether that’s with children or young people, or at whatever stage of their lives, to put the new emphasis in relation to that.
The reality is that most programs of amelioration come too late. In his report on early intervention in the UK, Graham Allen concluded:
“The bleak truth is that decades of expensive late intervention have failed. Major social problems have got worse not better: despite heroic frontline efforts tackling the symptoms, their causes remain unaddressed.”
The consequence of this is reduced likelihood of achieving a remedy and expensive palliative measures that often fail to serve the problems that have arisen in the first place.
So I look forward to working with you, with ACOSS, with Cassandra and the Executive over the coming years.
There are major challenges, as I’ve tried to outline, which we need to address in this country.
Whether or not we do things, those challenges will remain and our responsibility we believe in Government is to participate in a conversation with the Australian people.
To engage in a discussion with everybody in Australia and the society and organisations such as ACOSS, and all the various agencies and organisations represented in this room today, so that ultimately through that process we can build a better Australia for the future.