SENATOR THE HON KATY GALLAGHER
Minister for Finance
Minister for the Public Service
Minister for Women
Date: Monday, 24 October 2022
MICHAEL ROWLAND, HOST: We're joined now by the Finance Minister Katy Gallagher from Parliament House. Minister, good morning to you.
SENATOR THE HON KATY GALLAGHER, MINISTER FOR FINANCE: Good morning, Michael. Thanks for having me on.
ROWLAND: It's great to have you on. I want to start with the floods, as you would well know, so many people around the country mainly on the East Coast suffering from floods. I've just spent a week on the ground in Echuca. I know how bad the situation is there. Any relief tomorrow night from the Budget for those flood affected communities?
GALLAGHER: There'll be significant investment, Michael, in the Budget to deal with some of the flood emergencies that we've been seeing over the last few weeks. And of course, you know, the Government stands with every flood affected community, which we've been seeing even overnight your reports from Lismore. You know, the stress and the uncertainty that is occurring in those communities is heartbreaking. And the Government will do everything that we can do to take some of that pressure off and support those communities.
ROWLAND: Your colleague, the Emergency Management Minister Murray Watt was flagging over the weekend, setting up possibly a semi-permanent disaster relief workforce. Sadly, these floods, these bushfires are becoming more frequent as a result of climate change. Is that something on the Government's books?
GALLAGHER: Yeah, so Murray is doing an excellent job. We've seen him you know, really from the minute the Government was elected, we were started dealing with some of these emergencies. And I think, yeah, the reality is we're seeing more and more of them, more is being asked of volunteers in responding to these emergencies and we have to be looking forward and looking at how we can deal with this in the best way that gives those volunteers and other, you know, even our defence force that have been called in continuously, that we are building that workforce essentially that's going to be needing to deal with these emergencies into the future. We know that the likelihood while we address some of the impacts of climate change is we're going to see more of them and we need to make sure that we're resourcing those emergencies properly. But Murray's doing a heap of work on this and he'll continue to do so and provide advice to the cabinet.
ROWLAND: Okay, let's go to the broader economic outlook. We learn now that the growth is looking pretty dismal, down to 3.25% this year, the Budget will announce that it'll fall to 1.5% in 23/24. That's a pretty dire outlook.
GALLAGHER: Well, yeah, I don't think your viewers will be surprised, Michael, that against the backdrop of this, some of this global uncertainty, high, you know, rising inflation, rising interest rates, the uncertainty that exists across the global economies, that we would see some impact of that here in Australia. And so those forecasts largely reflect that. We've got obviously a lot of things going for us here in Australia, but we're not immune from some of these challenges that we're seeing internationally or indeed, domestically, you know, even the floods, certainly our inflation problem that we need to get back down to normal ranges. All of that is in the mix. And we've been putting the Budget together against that backdrop.
ROWLAND: Now, what impact will a 1.5% growth rate have on Australia's economy in terms of jobs and other key parameters?
GALLAGHER: So, well you'll see the forecasts updated in the Budget, Michael, but obviously it reflects you know, the results of rising interest rates and the inflationary environment we're in. So that will have some impact. You know, we will see the unemployment numbers lift. Those forecasts will be released in the Budget, but it goes to kind of some of the decisions we've been taking and putting this Budget together about what are the areas that the Government can invest in and, you know, ensure that we are doing what we can to keep the economy strong but not add to the inflation problem and deal with some of the long term challenges that have been neglected over the past decade.
ROWLAND: Speaking of inflation, the Treasurer Jim Chalmers, has confirmed inflation will stay higher for longer and a lot of Australians therefore won't expect a real wage increase for a couple of years possibly pushing towards 2024, if not beyond. Now, the Government campaigned very heavily on this, a very strong pitch vote for us, your real wages will go up. Given all of that we've seen since the election, was the Labor Party being a bit too unrealistic in making that pitch to voters?
GALLAGHER: Well, we don't resolve in the fact that we want real wages to grow, that wages getting moving is a key part of our economic policy and you know, you'll see that in some of the work we've done since the election in supporting the minimum wage increase, in talking about wage increases in the care economy, in some of the industrial relation changes that Tony Burke's been leading, but we are dealing with a high inflationary environment that has changed quite significantly, even since the pre-election outlook that was released by Treasury and Finance. And I don't think anyone's expecting that when you've got inflation running, you know, between 6 and 7% that you're going to see wages outcomes keeping in line with that. So absolutely, we need to get wages growing, but we also need to get inflation down. And that's, you know, the challenge that the Reserve Bank has been working on and certainly the context with which we have been putting this Budget together.
ROWLAND: The Government has identified $10 billion worth of savings, a further $11 billion will be reprioritised tomorrow night, care of the Treasurer. Going to that $10 billion, it focuses mainly on infrastructure projects announced by the former Government including a level crossing removal in the seat of Kooyong in Melbourne. What was wrong with that?
GALLAGHER: Well, Michael, we've found savings in the order of about $22 billion and that is a mix, as you say, of savings and reprioritising existing funding to go and fund government policies. It's been a huge piece of work that we've been undertaking. It's the first stage, we've got more work to do there. But again, against the backdrop that we've been looking at, we don't want to add to inflation. So we're looking at where we can find sensible saves and reprioritise existing funding. We have gone and I'll let the Infrastructure Minister talk directly to some of the programs and projects that she's been looking at, but we have looked very closely and Catherine King's done a huge amount of work in this area, to look at where infrastructure projects stack up and where they don't or where there are some questions about how they'd be delivered or whether more work needs to be done, we've taken some of those hard decisions. They're not easy, but we have to bring responsible budgeting back to the table. We intend to do that. And this is part of that work.
ROWLAND: Katy Gallagher, Finance Minister, thanks for joining us from Canberra this morning.
Thanks so much Michael.
Pat Cronan 0432 758 224 | Gallagher.Media@finance.gov.au