SENATOR THE HON KATY GALLAGHER
Minister for Finance
Minister for the Public Service
Minister for Women
Date: Wednesday, 7 September 2022
MICHAEL ROWLAND, HOST: The RBA's Governor, Philip Lowe, is warning rates will continue to rise in coming months. We're joined now by the Finance Minister Katy Gallagher at Parliament House. Minister, good morning to you.
SENATOR THE HON KATY GALLAGHER, MINISTER FOR FINANCE: Good morning, Michael.
ROWLAND: Lots of Australians have been taken aback by the speed and, I guess, aggressiveness of the RBA's interest rate hikes. Do they have a cause here to be concerned?
GALLAGHER: Michael, could I just before I answer your question, just extend my condolences and, you know, in the devastating, heartbreaking news that you went to over that car crash in Picton and extend my condolences to the families, friends and, of course, all the first responders. It's a very distressing story overnight.
Look, on the interest rate increase, I mean, we inherited this economy with rising inflation and rising interest rates and I think the RBA and their decision yesterday to increase interest rates, you know, will impact millions of households who are already struggling to make ends meet with increasing cost of living and now the mortgage rate increase on top of that. So we are very sympathetic to those costs and looking through the October Budget, you know, what we can do to make sure we are focusing on reducing the cost of living and those impacts that the households are feeling right now.
ROWLAND: I want to get to that in just a moment. Greens Senator Nick McKim has gone as far to call on the RBA boss Philip Lowe to resign, what do you say to that?
GALLAGHER: I’ll leave the Greens to defend their own comments. I think the RBA Governor has a very, very difficult role. We have got this increasing inflation. They're trying to manage that. And I think it's a real balance that they have to play between, you know, the decisions they take each month. I don't think it's easy. I think we have been well served by them and we trust the independence of the Reserve Bank. There is a review going underway that we announced as part of our election commitments. I think that will report early next year and that's making sure that the RBA is fit for purpose. You know, I think it's a sensible and useful thing to do and that's underway but I'll leave the Greens to defend their comments. We have trust and faith in the Reserve Bank.
ROWLAND: Let's talk about cost of living relief. We do know the Government is bringing in legislation that will bring down the cost of pharmaceuticals. We know the expanded child care subsidies take effect from the middle of next year although at the same time, of course, petrol prices are about to spike at the end of this month with the ending of that excise discount. What more cost of living relief is the Government considering for Australians, hard-pressed Australians, Katy Gallagher, in next month's budget?
GALLAGHER: Yes, thanks, Michael. This is the challenge, it was the challenge in the election campaign. It remains the challenge. As you said, we have got the legislation going in to reduce medicines, we'll introduce our cheaper child care reforms shortly as well. The Jobs and Skills Summit, the focus there was a lot of these issues, so we have got to make some longer-term investments to put downward pressure on the cost of living as well and that goes to cheaper and cleaner energy and the opportunity that comes with that and making investments in skills as well - skills and training. I mean, we're not going to sit here and pretend there is a magic wand that we can wave and these pressures will be relieved overnight. You know, nine years of some of the policy failures of the previous Government can't be fixed in the first three months of this Government, but I can assure you and your viewers, Michael, the Government is 100% focused on doing everything we can responsibly do within the confines of a very, very difficult budget situation to ease the cost-of-living pressures on families, on households, on individuals. I mean, that is 100% of our focus, with every ERC meeting that we're currently going through for the October budget.
ROWLAND: The Prime Minister says, though, there'll be difficult decisions that have to be made in the budget. You're the Finance Minister keenly involved in those expenditure review committee meetings, can you expand how difficult things could get for Australians?
GALLAGHER: Well, the budget we inherited, Michael, was heaving with a trillion dollars of Liberal Party debt. We’ve got deficits as far as the eye can see. We’ve got some programs that weren't funded in an ongoing sense that clearly are programs that need ongoing funding. We have got a whole range of waste and rorts – it’s kind of the focus I'm trying to look at, going through line by line. So some of those difficult decisions are how we reprioritise, how we make savings and how we make room for all of the other good ideas that people are coming forward with, including many of the good ideas that were discussed at the Jobs and Skills Summit. So these are some of the difficult decisions that we are balancing up in the lead-up to October. But it won't end there. I mean, this - again, this budget situation is not going to be fixed in the short-term. These are going to be decisions that we have to make in an ongoing sense across the forward estimates because the budget is in such a difficult position and all of the kind of challenges, aged care, increased defence spending, the NDIS, servicing the debt that we have inherited, these are all programs that are growing very fast and we have to make room to manage them.
ROWLAND: The Prime Minister has also told caucus yesterday Labor MPs including yourself need to be straight with Australians, right? So in that vein, can you be straight with the voters watching now and tell them if you keep or ditch the stage three tax cuts?
GALLAGHER: Well, we are being straight and I have been asked this a number of times. We haven't changed our view on stage three. They don't come in until 2024. My sole focus at the moment is putting a budget together for October and what we can do in the short-term to relieve pressure on families. That is what I'm focused on every day. We haven't changed our view on stage three, but we are looking at what we can do in the short-term to ease some of those pressures on families in this really challenging environment where we have got rising interest rates and we're trying to deal with a high inflation environment.
ROWLAND: Okay. So they're staying?
GALLAGHER: We haven't changed our view on stage 3, Michael.
ROWLAND: Which means they're staying? Australians who have been promised the stage 3 tax cuts, yes mainly affecting higher income earners, can expect them from July 2024?
GALLAGHER: Well, that is what is currently scheduled and we haven't changed our view.
ROWLAND: Before you go, child care workers out on strike around the country today affecting lots of parents with young kids, of course. They are making what many Australians would agree are understandable calls for better pay, when can they expect that?
GALLAGHER: This is an issue I'm looking at pretty closely with my Minister for Women's hat on because, predominantly overrepresented women in the workforce and also it acts as a handbrake on women working more hours. I think the issue in the care economy is really substantial and, again, I don't have the single answer for how to fix it all, but we have got the issues with aged care workers, disability care workers, and early education and care workers, and how we manage that. This is part of why we've been talking about multi-employer bargaining because in the feminised sector, bargaining is broken, it doesn't work, and they haven't been getting the pay rises that they should be getting and so we have to look at how that system is working for female-dominated industries and the early education and care sector is a critical part of that. It's a growing part of that, as is the care economy more broadly and we have got to work out a way through it. So we acknowledge - we want early child care educators to be well-paid and we think the answer to some degree lies with making sure the bargaining system works for women.
ROWLAND: Katy Gallagher, really appreciate your time this morning. Thank you.
GALLAGHER: Thanks for having me on, Michael.
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