SENATOR THE HON KATY GALLAGHER
Minister for Finance
Minister for the Public Service
Minister for Women
Date: Sunday, 23 October 2022
HAMISH MACDONALD, HOST: The Finance Minister Katy Gallagher joins us now. Katy, at this point in the Budget cycle, you must be dreaming numbers.
SENATOR THE HON KATY GALLAGHER, MINISTER FOR FINANCE: Yes, I am going through a lot of numbers, Hamish. Thanks for having me on the show though. It's good to get to this point.
MACDONALD: Your family friendly Budget has got parents pretty keen. But is adjusting leave and care arrangements enough when we're in the middle of a cost of living crisis like this?
GALLAGHER: Yeah, so it's a big part of the Budget is our focus on delivering our election commitments, so our child care policies, dealing with the energy crisis that's underway, investing in skills. So we're definitely going to deliver on all of that. PPL - another important reform. So we're looking to make sensible investments where we don't add to the inflationary pressures that everyone's dealing with in the economy. We don't want to make the bank's job harder. But we do want to make sure we're providing sensible cost of living relief where we can.
VERONICA MILSOM, HOST: So Katy, families on a combined income of $350,000 will now get more generous parental leave arrangements. Is $350,000 a lot to earn and then receive more help, do you reckon?
GALLAGHER: Well, I guess the way we're approaching this and we heard it in the Jobs and Skills Summit is that women's participation in the workforce is an economic priority. So we don't see this necessarily as a welfare or a handout, but it's more about making those investments in childcare, making the investments in PPL so that we can make sure we don't have this sort of talented workforce that isn't able to work because it's not flexible enough for their caring arrangements. So, that's part of our approach in this Budget is to make sure that we are, you know, providing, I guess modern supports for modern families whether they be single parent families or two parent families, trying to make it easier for people to manage those different responsibilities.
MACDONALD: The Budget forecasts show that wages will stay below inflation until 2024. Isn't that contrary to what you guys were saying during the election that actually wages should essentially keep up with inflation?
GALLAGHER: Well, that's what we'd like to see, Hamish. I mean, we want people to get real wage increases. We've had a decade of wage stagnation. We had a former government that had wage stagnation as a deliberate design feature of their economic architecture and we were clear before the election about wanting to get wages moving. And we do. Obviously we've got this, you know, we've inherited this set of circumstances with this high inflation across the economy. And that is meaning that wages aren't keeping up. But we've got to get inflation down. So the work of the Central Bank, us not adding to that problem and over time, we'll see wages increase and real wage increases over time. But I mean —
MACDONALD: With respect, Minister, is that an acknowledgment that when inflation bolts, you actually can't really keep wages up with it?
GALLAGHER: Well, I don't think anyone's you know, just last inflation numbers were over 6%. Treasury is forecasting inflation to peak around 7.75%. I don't think anyone's expecting in this economy that wages can keep up with that. But what we have to do is invest in the productive side of the economy. The bank is dealing with this inflation challenge. We shouldn't be adding to that with this Budget, and we won't, but we need to make sure we're getting wages moving over time, which is why you know, we supported the minimum wage increase, why we're putting some money aside for the aged care and the care economy wage increases we want to see. So we absolutely want to see wages get moving, but we've got to deal with this inflation challenge first up.
LISA WILKINSON, HOST: Won't the stage three tax cuts add to that problem, though?
GALLAGHER: Well, those aren't due to come in for the next, till 2024. So our focus and particularly the focus on this Budget has been over the immediate term, what we have to do now to try and support the work of the Reserve Bank, but to make those sensible investments and deliver on our election commitments. But I think what you'll see in this Budget and then Budgets to come, is that we will tailor a Budget that's in the interest of the Australian economy and supports households. You've got to deal with the economic circumstances of the time. That's what we'll do in this Budget. And that's what we'll do in every Budget that follows.
WILKINSON: Well speaking of economic circumstances, the Budget found an extra $100 billion in revenue over the next four years. Are taxpayers going to see any of that in terms of much needed cost of living relief?
GALLAGHER: Yeah, so this very welcome increase in revenue, which you'll see the majority of that we'll put towards Budget repair. We do have a Budget that's in structural deficit, and we need to deal with that. I mean, these short term increases in revenue don't deal with the longer term challenges we're facing, particularly around the NDIS, around servicing the debt that we've got, about dealing with some of those challenges in defence and hospitals and aged care. So that's the first point. But the second point is, we need to be making decisions that aren't going to be adding to inflation. So we can't, in a sense, just spray money around that isn't going to produce an economic dividend. And that's why delivering on some of those commitments we've made but also PPL, are important investments in the economy, but they aren't going to add to inflation but they will help people with their cost of living.
MACDONALD: Katy, in the UK, they have this term called 'cakeism' — it refers to when Boris Johnson said they could leave Europe but they could have their cake and eat it too. By telling Australians that you can tackle inflation but also give more cost of living measures, put more money out into the economy, that you can do that without adding to inflation, is that a cakeism? Are you telling us what is essentially something that's not possible to achieve?
GALLAGHER: Not at all. I think, certainly if we weren't directing or we were just sort of rushing money out the door in an untargeted an irresponsible way, I think you could accuse us of that. But what you will see is where we are making investments, we're making it into the productive side of the economy. So skills, actually helping with the energy transformation, dealing with women's workforce participation. It isn't a cash handout. These are investments that are going to deliver an economic dividend over the longer term and won't add to inflation in the short term. And I think you'll see that on Tuesday night, you'll see a responsible Budget that's targeted to the current economic circumstances, as challenging as they are that we face.
MICHAEL HING, HOST: Minister, for Budgets, Treasurers are the ones who always get the glory to voters, you know, but as Finance Minister, you're the one who's actually doing all the hard work. Is it time that glory hog Jim Chalmers shares a bit of the limelight?
GALLAGHER: I love working with Jim, he's an excellent colleague to work with. And that's lucky because we spend a lot of time together. But I'm happy being the backroom person just looking over the numbers with my magnifying glass. So I'm very comfortable in that role, and very happy to let others you know, and Jim, he's put in a massive amount of work on this Budget, so he deserves a lot of recognition for that as well.
MACDONALD: I feel like that's politics speak for I'm about to take him out.
HING: He has my full confidence.
MACDONALD: Katy Gallagher, thanks very much.
GALLAGHER: Thanks for having me on.
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