Australia's Welfare State

Posted on: Monday, 22 February 2016 at 7:22:58 PM

Managing Australia’s Welfare State

In the highly-esteemed annual AICC(WA) annual Harold Clough Executive Lunch, tribute is paid to leadership and generosity of a senior Statesman, corporate visionary and friend.  It was fitting that the 2016 event was addressed by one of Australia’s brightest and emerging leaders, and political visionary, the Hon Christian Porter MP, Minister for Social Services.

From L to R - Mr Gary Smith, Chairman of Partners, WA, KPMG, Dr Harold Clough AO OBE, Chairman Emeritus, McRae Investments Pty Ltd, The Honourable Christian Porter MP, Minister for Social Services and Federal Member for Pearce, Parliament of Australia, Ms Cheryl Robertson, State Director, Microsoft Australia and Mr Graham Laitt, President, Australia-Israel Chamber of Commerce (WA) and, Managing Director, Milne AgriGroup Pty Ltd

 

Hosted by KPMG, the business and philanthropic contributions of Mr Clough were also extolled by Mr Gary Smith, Chairman of Partners.  He noted that Mr Clough’s contribution and support of WA business through investment, development and diversification had been at the forefront of the State’s economic prosperity.

Mr Gary Smith, Chairman of Partners, WA, KPMG

Mr Porter’s keynote address was introduced by Mr Stephen Quantrill, Executive Chairman of McRae Investments.  Referring to the strong bond and commonality between the AICC(WA) and McRae Investments, the ability to develop and foster business, and further extend Western Australian commercial capabilities into the Asian region were of mutual benefit to both organisations. 

Mr Porter’s contribution as an educator, legal practitioner, and politician at State level also exemplified outstanding business leadership.  Following his role as a Parliamentary Secretary to the Prime Minister, Mr Porter was appointed Social Services Minister in September 2015.  Mr Quantrill introduced his keynote speech by calling him “one of Western Australia’s favourite and most respected sons.”

Mr Stephen Quantrill, Executive Chairman, McRae Investments Pty Ltd

With a commanding knowledge of his portfolio, Mr Porter outlined the current state of Australia’s welfare system and its evolution through an era of prosperity and austerity.  Delivering context in relation to the growth and complexity of Australian social services, the budgetary constraints that drive necessary changes also deliver emerging opportunities for policy change to impact the structure and effectiveness future service delivery.  Mr Porter eruditely spoke of an economic reality and a social necessity, proposing that there is an achievable path back to surplus for the Australian Government through evidenced based reform.

The Honourable Christian Porter MP, Minister for Social Services and Federal Member for Pearce, Parliament of Australia

The figures themselves provide insight into the management of one of the Governments most challenging Ministries.  The current commitment to servicing sovereign debt accumulated since the economic stimulus that followed the GFC is a cost of $1 billion a month, a payment burden that cannot otherwise be redirected to economic growth and infrastructure.  However it is the size and composition of Australian’s welfare expenditure, some $154 billion per annum that Mr Porter is attempting to arrest and optimise.  This expenditure represents 35% of the Federal Government’s costs.  In context, the Australian Government collects $194 billion in personal income tax, such that 80% of this value is directed to welfare costs.

Mr Porter alluded to his challenge by sharing the different perspective he applied from holding Ministerial responsibility to the academic, ideological and philosophical viewpoints relating to the welfare state that he developed prior to his tenure.  In the early stage of his Ministerial career he is seeking to look beyond the simple equation of how much is spent, to focus on the outcomes associated with the expenditure. 

From L to R - Mr Stephen Quantrill, Executive Chairman, McRae Investments Pty Ltd,  Mr Gary Smith, Chairman of Partners, WA, KPMG, Dr Harold Clough AO OBE, Chairman Emeritus, McRae Investments Pty Ltd, The Honourable Christian Porter MP, Minister for Social Services and Federal Member for Pearce, Parliament of Australia, Ms Cheryl Robertson, State Director, Microsoft Australia, Mr Graham Laitt, President, Australia-Israel Chamber of Commerce (WA) and, Managing Director, Milne AgriGroup Pty Ltd and Mr John Cluer, Chief Executive, Australia-Israel Chamber of Commerce (WA)

 

With 20 categories of welfare payments and 55 further payment types, the structure and focus of each will come under scrutiny.  Some are no longer fit for purpose, for example the structuring of “top up payments” were designed to support beneficiaries with year end tax liabilities.  Evolving real time systems will be deployed that avoid the occurrence of a year end reconciliation and therefore negate the need for payments.

Acknowledging the political challenges of legislative change, and the policy imperatives of shifting work-able beneficiaries into paid employment, Mr Porter brought forward strong evidenced based positions to advocate for a repositioning of Australia’s envious progressive tax system.  One statistic to support his case was shown by the distribution of income tax receipts by marginal tax band.  Some 45% of Australia’s income tax is collected from the top 10% of income earners, demonstrating that there is little room for redistribution. 

Further to this, the middle class welfare system is delivering neutrality to a surprisingly high portion of taxpayers, being families who receive back through welfare as much as they pay in tax.  The administrative cost of collecting and returning money for some 600,000 families with a net position of receiving as much or more than they pay in tax through a Family Tax Benefit was described by Mr Porter as “not the best design for a tax and transfer system”.  Much of the burden of the welfare state borne by taxpayers who are both contributors and beneficiaries created offset complexities.  A change of structure would also alleviate bracket creep for income tax payers.

Mr Porter also noted that the fiscal position and way forward for the Government was not as pessimistic as the budgetary position suggests.  The analytics and big data associated with systems development would greatly enhance both administrative efficiency and policy development, supporting proactive measures to maintain genuine welfare support, whilst reducing welfare dependency.

Dr Patricia V Kailis AM OBE, Governing Director, MG Kailis Group and Dr Harold Clough AO OBE, Chairman Emeritus, McRae Investments Pty Ltd

 

The Honourable Christian Porter MP, Minister for Social Services and Federal Member for Pearce, Parliament of Australia

Through question time engagement Mr Porter shared his views on the role of Corporate Social Responsibility to support the national agenda of reducing the welfare burden, in particular the growing Disability Enterprise sector.  He also referred to potential new legal structures and social impact bonds that could deliver a greater connection between private enterprise and Government.  Mr Porter favours policy with KPI’s that measure the effectiveness of public expenditure, through a system that avoids early cost but rewards the delivery of results. 

When asked about international comparisons, Mr Porter noted that Australia’s position was relatively favourable compared to the welfare costs borne by many Governments, particularly within European countries.  He has not been able to assess Australia’s position in comparison to Israel, but did note the progressive nature of Israel’s deregulated economy and economic development in the context of high levels of skilled employment.

Mr Porter concluded his presentation by emphasising that the NISA innovation agenda and knowledge economy development would bring transformative economic growth.  In proposing a vote of thanks, Ms Cheryl Robertson, WA State Director, Microsoft extended further appreciation to the involvement of Harold Clough in the business community.  She also noted that Mr Porter’s address was an example of the use of complex and large data to support business decision making and policy development, with outcomes that greatly enhance economic prosperity.

The Honourable Christian Porter MP, Minister for Social Services and Federal Member for Pearce, Parliament of Australia and Ms Cheryl Robertson, State Director, Microsoft Australia

 

To wide acclaim, the contribution of Mr Porter at both a State and Federal level was greatly acknowledged through the AICC(WA) Harold Clough Executive Lunch, with attendees expressing high regard and optimism for Mr Porter’s future political career at the highest level of office.

 

 

Photos:  Matt Jelonek

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