ADDRESS TO THE NATIONAL PRESS CLUB, CANBERRA

SUBJECTS: Service delivery reform, fraud, data sharing, superannuation, Cooper Review, Henry Review, Basel Committee, information technology, Liberal Party.

JOURNALIST: You’re at pains to point out that these reforms aren’t about sharing information per se, but will these reforms and changes allow you, give you any extra ability to detect and investigate fraud across the agencies?

BOWEN: No, that’s not what these reforms are about. These reforms are about better service delivery. The Government has a range of mechanisms in place to deal with fraud and non-compliance, some of which we announced in the Mid-Year Economic Statement. But they are very separate. These reforms are all about service delivery and that’s why I stress that information won’t be shared. If it was about fraud and non-compliance, there would be a different answer to that. This is about better services for Australians.

JOURNALIST: Can I just test your assertion that it is all about service delivery. Going back to the Access Card, the original recommendation of the Smart Taskforce was to make it a voluntary rollout and the theory was that over five years, 99 per cent of the population would agree to have an Access Card. Now, you talk about there being a need for a one stop shop. A one stop shop needs this data to be controlled. What studies are you aware of or what is the expectation as to how many people will agree to have their information shared so that while there might not be one central database, there might be five.

BOWEN: Well, it’s hard to have five central databases, Andrew.

JOURNALIST: Well, five DHS agencies, all the same information.

BOWEN: Well, presumably when people tell different Human Services agencies their information of their own volition, you would hope that their information is the same. But I stress that we are providing people with the ability to make their own decisions. So if you change address or if you’ve lost a loved one, we will ask you if you want us to let other Human Services agencies know. If their answer is, ‘no, I’d like to do that myself’, that’ll be fine. So I stress there will be absolutely no compulsion. It will be completely voluntary and at the discretion of the individual. I don’t know what proportion of people will take this up and in effect, it’s completely up to them. If it’s a high proportion, that will show the convenience of doing such a thing. If it’s a low proportion, it shows that people would prefer to make those decisions themselves, so it would be completely up to them.

JOURNALIST: Minister, I thought I might try changing the subject to superannuation.

BOWEN: I thought you might.

JOURNALIST: First opportunity to get your views on the Cooper Report from earlier this week. So my first question is, do you see some merit in that idea of the different types of funds, including the concept of the universal fund? But my second question is about the overall adequacy of the super system now. You’ve said before, I think you’ve said that you thought it wasn’t adequate at the moment, the nine per cent contribution. Now, the Henry Review has indicated that it thinks nine per cent is okay. When the final Henry Report comes out, do you accept that or do you move onto some other process to sort of resolve this debate about the overall level? Do you think that there’s any merit in a 12 per cent contribution for instance?

BOWEN: Well, there’s a fair bit in that question but I’ll do my best to tick them off as I go.

On Cooper, one thing I won’t be doing is providing a running commentary on the Cooper recommendations. Now, the Cooper committee, at my request, is making three iterations of its report. So it’s a modular report in three tranches. And what I won’t be doing is commenting as we go. I’ll be putting together a response and taking that through Government. The response will be based on the principles of simplicity, efficiency, equity and adequacy, although Cooper is not looking at adequacy. I welcomed the report of Jeremy Cooper, the Cooper inquiry, during the week. It does make a valuable contribution, particularly to the debate about efficiency and downward pressure on fees. And I’m on the record as saying I’d like to see fees lower in Australia, that the growth in the economy of scales in the superannuation industry hasn’t been reflected in a reduction of fees in my view, and anything which reduces fees is something that I’m very interested in pursuing. But I won’t be commenting on details. It’s out, I’ll be getting feedback from the superannuation industry over the coming weeks and months, and I’ll be putting together a response.

In relation to adequacy, my view expressed previously and it remains my view, is that the Henry committee has said that nine per cent is adequate. I think we need to have a national discussion, not so much about adequacy – let’s put the debate about adequacy aside – but is adequate enough or should we be aiming for something better than adequacy? Because there is a cost to be paid. If you move to higher retirement incomes, there’s a cost to be paid and we need to have a national discussion about that cost. I think it’s a discussion well worth having, given that superannuation is now 20 years old, many people are moving to retirement and increasing retirement incomes are something which should be very much on the national agenda.

JOURNALIST: On superannuation again, you said we need a national discussion. Will it include the difference between people getting nine per cent in the private sector and the 14 per cent the public servants get or more? And can I ask you personally whether you think that’s fair?

BOWEN: Well, I think it does underline the point that those of us who work for the Government are on higher than nine and therefore we have better retirement incomes. And that underlines the point that I agree with you, that we need to have a national discussion about it. I agree with that point and I think that point would be part of any national discussion, almost inevitably.

JOURNALIST: Just following up on reports today that the Basel Committee on Capital Adequacy, it’s now looking like being a much more drawn out process. I’m just wondering from Australia’s angle, where do you see that process being at? You know, could it be something that takes up to ten years to institute?

BOWEN: Well Rachel, I haven’t seen that report. I’ve been focused on today’s announcements and other news that’s been out this morning. All I’d say generally is that we are very much engaged in the Basel process. John Laker, the Chair of APRA, is very much engaged in it. Obviously, the quicker it can be resolved, the better I think for the purpose and certainty of financial markets, not just here but around the world and we’d certainly be pushing for that to happen. But by the same token, you need to be sure that you’ll get the right result, not a rushed result, and there’s a balance to be struck there.

JOURNALIST: Minister, let me ask you a question about information technology involved in various things you’ve announced today. The various elements of your Department are already huge users of IT. This will make them much, much bigger. When Peter Gershon reviewed the Government’s use of information technology, he wasn’t entirely complimentary about the way it was used or bought. Have you had any detailed studies into that aspect of the changes so far?

BOWEN: Well, what I’ve announced today is entirely consistent with Sir Peter Gershon’s recommendations. He’s recommended much more of a centralised focus in terms of procurement and much more of a coordinated process in terms of driving efficiencies. I can think of few better ways of doing that than bringing together the information technology platforms across my Department as a very important contribution to that process. So I think the Gershon Report was a very valuable contributor and we’re implementing it in spirit and letter.

JOURNALIST: Minister, if I can just ask you a question about another speech that was delivered today by Tony Abbott, the Leader of the Opposition., who in Sydney this morning delivered a pretty feisty speech with a key message to Kevin Rudd: ‘bring it on, we are not frightened of taking the Government on in an early election, perhaps, on climate change. Can I ask you as a Minister who does have the ear of the Prime Minister, would you welcome the chance to fight an election, perhaps early next year, on the core issue of climate change, CPRS, or do you think the Government would be vulnerable to what would be a pretty feisty scare campaign on a new tax?

BOWEN: Well, in answer to your question Steve, I’ll say a few things. Firstly, matters of election timing are entirely a matter for the Prime Minister and while he does, from time to time, seek the counsel of his Ministers, I’m sure that’s a decision that he will be making himself.

On the general matter of Mr Abbott. I’d say this: we never should and never will take any Leader of the Opposition lightly. Every Leader of the Opposition needs to be treated with respect. They haven’t become Leader of the Opposition without showing considerable political skills to get to that position.

So no Government worth its salt can get arrogant or complacent and should dismiss a Leader of the Opposition out of hand.

I think what the current Leader of the Opposition is doing is having a conversation with his base. They are having a conversation with core Liberal Party constituents. And what we are doing is governing and talking to all Australians, our base, swinging voters, and even others.

And I’d say this: last year I made a speech where I pointed out that there’s been a 60-year battle between conservatives and liberals in the Liberal Party.

And 12 months ago I said, ‘the battle is over, conservatives have won’ and that thinking, small ‘l’ liberals should consider joining and participating in the Labor Party. Twelve months later, the conservatives have not only won, they’ve scattered salt on the wounds of the liberals and there is now very little room for small ‘l’ social liberals in the Liberal Party. The Labor Party is now their natural home, and we’ll be pointing that out as well.

JOURNALIST: Looking around the room here, I see a lot of faces from the IT sector and I’d like to ask you to perhaps expand a little on precisely how you see this integration process occurring. What’s involved in it? I’m assuming with the various agencies you’ve got, it’s obvious you’ve got a range of contracts to be rationalised somehow and crunched together, but also can you tell us a bit more about the savings? I mean, the reality is that the history of these things are they always get projected savings but they tend to be elusive. An image springs to mind, I remember a predecessor of yours from the former Government said they’ll never be another Edge Project. And for our viewers I’d say that was a Centrelink project which I think cost $65 million before it was scrapped. Are you confident we’re not going to face a problem like that?

BOWEN: Yes. You’re right to identify that it is a very big task bringing all back office together, particularly IT, and you’re right to identify that it will take some time, that there are contracts in place which need to be reworked and recalibrated, etcetera. It’ll be a task we do in collaboration with the private sector.

A couple of months ago I released a paper on service delivery interaction with the private sector and there’s been in the order of 50 submissions from the private sector about how we can work better together to deliver services for Australians, and I see those two processes coming together in terms of the joining up of our IT and delivering a better IT collaboration with the private sector. And Finn Pratt, the Secretary of my Department, has this very high on his agenda in terms of implementing the reforms we’ve announced today and working with the various private sector providers to ensure we do it as seamlessly as possible.

In terms of savings, as I said in my remarks, there are savings for Government in this. The savings will be substantial. To give you some flavour, in the Mid-Year Economic Statement we announced some reforms in relation to digitisation which have savings of $150 million over three years. These will be of a greater order. We’re talking several hundred million dollars a year, in my view, in the out years, not the forward estimates, because there will be upfront investment to get to those savings. But that’s something that we’ll work through in terms of the Budget process and those will all be reflected in future Budget papers. But I’m confident that they will be delivered. They come not only from IT, but from increased efficiencies in the whole back office operation.

JOURNALIST: I was just wondering – in the past 12 months, obviously a lot of people’s circumstances have changed with the global financial crisis and your businesses have been required to be quite nimble. I know, for example, there is more Centrelink staff sent into North Queensland with the unemployment rate one of the highest in the nation. Is that part of why you introduced reforms like this, because people’s circumstances have rapidly changed? And are you confident that this will make the businesses that you have a little bit more nimble to adjust to these sorts of things?

BOWEN: As you correctly identify, I think our agencies already do a pretty good job at that, not only in terms of hot spots of unemployment. And I was in Townsville with the Cabinet last week, where we held a Jobs Forum, where we had thousands of people through, and Cairns as well where there’s high unemployment, so we are nimble in responding to that. Obviously I’d always like it to be more so, and the Mobile Service Offices will play a role in that, so it will be part of it but I have to say it’s not the driving force. I think it’s something we already do reasonably well, but of course improved collaboration across the agencies can only improve that degree of flexibility.

JOURNALIST: Super this time. Look, do you agree with the contention that’s expressed by people like Warwick McKibbin and Bernie Fraser that increasing the super guarantee helps shift some of the pressures off inflation, especially in states where wages are exploding, like WA?

BOWEN: Well, there’s no question that if you institute pay rises through payments into superannuation, that’s less inflationary than other mechanisms of doing so. There’s no question about that, I think. Whether that is the right thing to do is a completely different matter and something that should be involved in that national discussion I referred to.

JOURNALIST: Alright, well on that note, one thing I’m not clear about is how the national discussion will go, because you’ve got the Cooper Review, which is not about adequacy and won’t be about the guarantee, then you’ve got the Henry Review, where you’ve pretty much got the final report about to drop. I don’t see where the process is for a national debate, other than lots of people lobbying you personally. But shouldn’t there be a structure about that? Shouldn’t there be a process to get some formal submissions and actually scope it out?

BOWEN: Well, you’re right in identifying the Henry Review as being imminent and having a discussion about, obviously, tax across the board but also tax in superannuation. The Treasurer and I have both had quite a bit to say about equity in tax on superannuation, and both the Treasurer and I have pointed out that equity in the taxation treatment of superannuation is frankly non-existent. Low income earners get no tax concession; high income earners get a very considerable tax concession for superannuation. Both the Treasurer and I have outlined that as an area we’re interested in looking at very closely.

And in terms of the Henry Review, I think the Treasurer has indicated that it will be received later this year and then made public in the first part of next year. And there’ll be a process around that, that we would be outlining our broad response, but there’d be a process of discussion and consultation around the Henry Review and I have no doubt, knowing now the superannuation industry very well, that the superannuation and others interested will not need my invitation to give me their views.

JOURNALIST: Look, just quickly then on another issue around super at the moment. That is whether there should be a move by the superannuation industry to invest more in infrastructure in Australia to help address the sort of investment gap in local infrastructure. Do you reckon there’s any reason to tell super funds where they should invest?

BOWEN: The short answer to that question is no. The superannuation system is designed to maximise the retirement incomes of Australians. That is its sole purpose and it should remain its sole purpose. It also has the by product of promoting Australia as a global financial centre, which is something that I could talk about for hours as well, but I won’t.

Superannuation funds already invest heavily in infrastructure, about 10 per cent of their investments are in infrastructure. Is it appropriate for Government to look at whether there are any obstacles to superannuation funds investing in infrastructure? Yes, I think it is, and we’ll be looking at that again, in conjunction with both the Henry and Cooper Reviews. If the superannuation funds point out to us the reason why they don’t invest more heavily in infrastructure, then that’s something we’d be very happy to look at. Mandating trustees to invest in any particular type of investment, whether it be infrastructure or any particular asset class or geographical spread, is not something that I would support. Trustees are entrusted with maximising the retirement incomes of their members. I’m not; they are. They are the ones who should make those decisions.

JOURNALIST: Do you think the last two years might have made them think about the weight of their investment in equities?

BOWEN: Well, one of the interesting questions around infrastructure is the proportion of investment in infrastructure has increased through no decision of superannuation funds, as the proportion of investments in equities has fallen through the reduction in the value of those equities. Superannuation funds in Australia have taken a battering in terms of return but they are not unusual in that scenario. Around the world, pension funds, regardless of their asset spreads, have been battered and I’m glad to see superannuation funds in Australia returning to positive returns, which they are now doing.

JOURNALIST: Minister, you said that you’d like to have 20 co-located offices around the country by 2010 and 40 by 2012. Given the problems the Government’s had rolling out the GP Superclinics, 35 of those, are you confident that you’ll be able to meet those timelines? And I assume some of those will be in new buildings?

BOWEN: Well I wouldn’t have announced it unless I was confident. So I am confident. It won’t be easy, but I am confident we can do it. We’re going through a process now of identifying where they should be. Criteria would include where there are existing services or where services are lacking in a community. For example, if we have a Centrelink office in a particular town but no Medicare service that would be a good opportunity to expand services. Where leases are up, where one or another lease is up, and it’s a good opportunity to locate. The amount, the demand for services of each agency in that particular location.

It’s not an easy process. Narooma took both my predecessor Joe Ludwig and myself and various senior levels of the agencies a lot of effort to get one office up. I don’t underestimate the importance or the difficulty of doing this on a much bigger scale, but as I say, I’ve tested this very closely and I would not have made the announcement unless I’m confident that we can achieve it.

ENDS

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