SENATOR THE HON KATY GALLAGHER
Minister for Finance
Minister for the Public Service
Minister for Women
Date: Wednesday, 8 June 2022
MICHAEL ROWLAND, HOST: Finance Minister Katy Gallagher joins us now from Canberra. Minister, good morning. Did the size of the rate hike take you by surprise?
SENATOR THE HON KATY GALLAGHER: Good morning, Michael, and thanks for having me on. Well, the Reserve Bank is an independent board as you know and they make the decisions around monetary policy in the best interests of the economy. I think we all expected – I think every economist and commentator predicted there would be an increase around that size. I think there were some that predicted 50 basis points, but it's clear that, you know, tackling rising inflation is a key challenge in the economy and I know it's going to be a really tough day yesterday for millions of mortgage-holders and households already under enormous pressure from rising cost of living, now rising interest rates and falling real wages. It's a challenging set of circumstances facing the economy.
ROWLAND: The morning after is even tougher as we heard from those Australians there and already we have groups like ACOSS calling on the government, essentially pleading with the Government to offer immediate relief, ACOSS for instance is calling for $1,000 energy relief payments. Is that something the Government will consider straightaway?
GALLAGHER: We've got short-term relief already in the Budget over the next year that was announced in the previous Government's final Budget and that will carry us through to the end of September, towards the end of September. There were immediate payments in there. We're putting together a Budget for October and of course, as the Treasurer has already foreshadowed, a cost-of-living lens will be placed over that Budget. We have to deal with the economic circumstances we face at the time. We make decisions based on that. We understand that households are under enormous pressure, so there's short-term support and then there's the longer-term challenge of how do we make sensible investments in a Budget that's already in pretty challenging circumstances with a trillion of debt and lots of deficits. How do we make those sensible investments that are going to provide long-term cost-of-living relief that I think many households are after and what we've been missing for a decade. So those are sensible investments in childcare, our Powering Australia Plan, and skills and investing in jobs of the future. So we've got to balance up a range of those challenges, Michael. Jim and I aren't pretending that anything is easy or there's a silver bullet for many of these issues that are facing the economy and facing households right now, but we're working hard and the October Budget will be, you know, our first step in dealing with some of these challenges.
ROWLAND: October's a long way away, though. You heard there again from Australians doing it tough. It's going to be a tough few months, as you and the Treasurer both say. There is no way the Government will consider fast-tracking some cost-of-living help?
GALLAGHER: Well, the Budget in October really is the first opportunity that we can make and bring to the Parliament some of those decisions, so I think Jim and I are really trying to be honest with people and up-front. We're not pretending that there are things, you know, that will solve these long-term challenges. If we look at energy, this has been building up for many years. If we look at wages, it's a deliberate design feature of the previous government's economic architecture to keep wages low. In two weeks or in a month, these aren't going to be things that we can turn around but we are working hard and we will make sure that where we can make sensible or provide sensible solutions or make those sensible and responsible investments, we do so. And the Budget is really the first opportunity we'll have to do that.
ROWLAND: Okay, now, there'll be cost-of-living help, as you say, in the Budget, but what we saw from the Reserve Bank Board yesterday – and you as Finance Minister would know this – it's a significant contractionary move aimed at contracting the size of the economy. Will the Government, as part of the Budget, separate to cost-of-living measures, look at reining in spending to play its part in ensuring the economy doesn't overheat?
GALLAGHER: Well, the Government – you're right, the Government has to do our bit in terms of working alongside monetary policy and making sure that we are making the right decisions in the long-term interests of the economy because that impacts on households, absolutely. So we've already under way. I'm working pretty hard every day on looking at spending, looking at spending that's built into the Budget, looking at wasteful spending, getting rid of some of the rorts that we've seen over the past decade that have really been embedded and ingrained into the Budget and we are looking right through it, line by line, where we can reallocate, where there's spending that's not delivering the right outcome, where we can reprioritise, where we ask agencies to have a look at programs they don't think are working and where that spending can be reallocated. We will be looking absolutely right through that. You'll see the first stage of that in October but I think there's a longer-term piece of work about how we manage spending but also Budget repair going into the future and that work is under way, Michael.
ROWLAND: Does that review include the $18 billion in spending the Labor Party promised during the election campaign? Or is that somehow sacrosanct?
GALLAGHER: Well, we will deliver on our commitments to the Australian people.
ROWLAND: All of the commitments?
GALLAGHER: Well, yes. They're our election commitments we made to the Australian people. We were very, very measured. When you look at the Budget of the previous government, they announced over $39 billion in the previous Budget, you know, before they lost government. We announced, well, very measured in the order of there are $18 billion over the forward estimates, but we also announced about $11.5 billion in savings which was about dealing with issues of Budget repair. So we are determined to deliver on our election commitments. The other thing I would say about that was those election commitments were crafted about dealing with these long-term challenges that are plaguing the economy. So it’s about investing and making sure we're getting a more productive economy but dealing with substantial cost-of-living pressures and the opportunities that come with dealing with the energy crisis that we're all paying the price for, for a Morrison Government that did nothing for 10 years. So, these are sensible investments, they're affordable but yes, we have to manage that with savings and looking at making sure all spending is quality spending and delivering the right outcomes for Australian people.
ROWLAND: The Government could save a mozza by looking again at the very expensive stage three tax cuts. Is the Government committed to bringing those in?
GALLAGHER: Well, that was the commitment we made. Those tax cuts are legislated. They've passed the Parliament and we believe that it was right to give certainty to people in the lead-up to the election…
ROWLAND: So they're L-A-W law? They won’t be repealed?
GALLAGHER: Well, they are the law and we haven't changed our view on that.
ROWLAND: Okay, Katy Gallagher, appreciate your time this morning. Thank you.
GALLAGHER: Thank you very much, Michael.
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