SENATOR THE HON KATY GALLAGHER
Minister for Finance
Minister for the Public Service
Minister for Women
Date: Tuesday, 25 October 2022
ELYSSE MORGAN, HOST: I spoke to the Finance Minister, Katy Gallagher after the Treasurer's speech. Minister, welcome to The Business.
SENATOR THE HON KATY GALLAGHER, MINISTER FOR FINANCE: Thanks for having me on.
MORGAN: The Budget is facing a structural deficit of 2%. What is the Government's strategy for getting rid of that debt? According to your chart that doesn't budge from 2% of GDP until the end of those charts, which is 203.
GALLAGHER: Yes, so I think what you're seeing today in the Budget is a very honest assessment of where our Budget it is. The fact it is, as you say, in structural deficit. We've inherited a Budget in this position. Part of this Budget is dealing with the first phase of Budget repair and also, I think, being up-front about the state of the Budget and really starting a conversation about how we manage these pressures against, you know, a very challenging set of circumstances, and I think part of that is how do we pay for the things that Australians value the most?
MORGAN: So will that conversation, though, about the debt be about either raising taxes or cutting spending to deal with it?
GALLAGHER: Well, I think it is a broad conversation and in a sense it has to be all of those things. You know, we know that some of the pressures, the structural pressures, are things that Australians value - so health care, aged care, the NDIS, Defence. They are four of the fastest-growing programs. The fastest is servicing the interest on the trillion dollars of debt we've inherited, so you can see against those five programs, one we have to do in terms of managing the debt and four we know Australians value and we've got to work out a way to pay for it.
MORGAN: We've been told to expect a focus on quality spending from the Government - on spending which drives economic efficiencies. The Government has approved a $2.2 billion suburban rail loop, that doesn’t have the approval of Infrastructure Australia, you have said that it has a positive benefit cost ratio. The Victorian PBO says it's negative. How can we be confident that the Government will get it right when it comes to quality spending?
GALLAGHER: Well, we’ve got a huge focus on that. You're seeing the first results of the spending audit that I've led, $22 billion in savings or reprioritisation across Government. Part of the discussion about how we manage the Budget is Budget repair and making sure that every dollar we are spending is actually delivering an economic dividend or working for families across Australia. So, you know, that is absolutely the sharp focus that we take on that. On that project that you raised, we are working with the Victorian Government and they do have a business case that underpins it and they are talking to Infrastructure Australia about it. So infrastructure you'll see, you know, we're definite about business cases having some rigour that underpins these decisions which is why we have made some changes to the infrastructure program where the business cases don't exist.
MORGAN: On to energy now, Minister. $41 million has been allocated to the ACCC for the oversight of gas markets and the implementation of reforms to the ADGSM, as well as energy efficient grants worth up to $62 million. Is the Government taking energy seriously and the concerns of energy from business seriously? Are these measures enough to avoid an energy crisis in the near-term?
GALLAGHER: Again I think we're paying the price for a wasted decade. We've obviously had a war in Ukraine since the election and we've inherited this energy crisis that's sort of from a failed, you know - 22 policies that never landed anywhere. So we're doing the work to clean up these arrangements. There's more to be done. We are acutely aware of the pressure that energy prices is having on households and businesses and there's more work to do. Part of it is getting our Powering Australia Plan up and running and you'll see quite a lot of investment in that in the Budget. But yes, this is, you know, one of the most significant challenges I think we face and the Government is working very hard on it and we'll have more to say about it.
MORGAN: So that work to do - will it involve a windfall profits tax or changes to the PRRT?
GALLAGHER: Well, we haven't considered those. They're not in this Budget. I think the Treasurer has made it clear that we are, you know - and he's leading the work on this across Government, across a group of ministers who are sharply focused on it. He's looking at whether there does need to be some increased regulatory intervention. I mean, that is a live conversation, and I think, you know, Australians expect us to be looking at all options to make sure that we are managing these very, very sharp increases. Part of this is feeding into our inflation problem and making inflation stick around a bit longer before coming back to more normal levels, so we absolutely understand this is a big challenge. It requires the attention of Government and it's going to get it.
MORGAN: Minister Gallagher, thank you.
GALLAGHER: Thanks so much for having me.
Pat Cronan 0432 758 224 | Gallagher.Media@finance.gov.au