SENATOR THE HON KATY GALLAGHER
Minister for Finance
Minister for the Public Service
Minister for Women
Date: Wednesday, 26 October 2022
SABRA LANE, HOST: I spoke with the Finance Minister earlier. Katy Gallagher, thanks for joining AM. Does the Government regret making the promise that power prices would be $275 cheaper a year by 2025, that this might come to haunt you like 'no carbon tax under a Government I lead' dogged Julia Gillard?
SENATOR THE HON KATY GALLAGHER, MINISTER FOR FINANCE: Look, Sabra, thanks for having me on. I mean, the simple fact of the matter is we want more renewables into the energy system. Renewables are the cheapest form of energy. Obviously, some things have happened since the election, including a war in Ukraine and an energy system in crisis. So I think the real work ahead of us is: how do we manage this? How do we make sure that we're doing what we can as a Government to take some of the pressure off and rebuild an energy system that was neglected? The reality is, it's been neglected over the last decade and we're dealing with consequences of that. And that's going to be felt by households across the country.
LANE: Sure, but that promise $275 a year was quite attractive to many voters. Do you regret making that promise?
GALLAGHER: No, look, and the modelling that underpin that figure, is right. But the fact is, the situations have changed. You know, I think people in Australia understand that, in a sense, it makes our work and the work that underpin that modelling and the policies that flows from it even more important to get done and get in place – fixing the grid, making sure we're making investments in renewable energy, and dealing with some of these short term pressures where we can and the Government has a huge job ahead of it in doing that. The Treasurer is leading that work, and it'll be ongoing.
LANE: Energy prices are forecast to go up 20% by the end of this year, 30% next year, that will hurt thousands of households. What sort of regulatory interventions was the Treasurer hinting at last night, a price cap?
GALLAGHER: Well, I think the Government's looking at a whole range of options. The reality is this big increase that you're seeing flowing through the Budget, that's come to us relatively late, we need more time and more work needs to be done, which is the work that I said the Treasurer is leading with our colleagues in the cabinet, to see what options are available, because we understand that these sorts of increases both for businesses, and households are really tough. And I think the Australian people would expect their government to look at a whole range of options or steps that could be done to make, you know, to see if there are things we can do to ease up some of these price increases. We've got a role for the ACCC, we've got a role for AEMO and there's certainly a role for the energy regulator to look at and provide advice to Government about what the options are.
LANE: So is everything on the table, including perhaps direct rebates?
GALLAGHER: Well, I think the issue there, and, you know, this Budget has been framed in a high inflation environment. You know, we have to be careful about not making the inflation problem worse in the short term. We've got an inflation problem for the next couple of years. We need to make sure we're not making the Reserve Bank's job harder. But we're aligning our policies. And that is hard. You know, I mean, we've seen a big increase in revenue in this Budget, that, you know, the, I guess the easy thing to do would have been to spend more of that. But we acknowledge that we are in this unique kind of challenging situation, one governments haven't been in for a while, and we need to be responsible.
LANE: The fact that you're even considering some form of intervention, though, that is a tacit admission that your election promise to reduce prices just cannot be met.
GALLAGHER: Well, I don't accept that, Sabra. I do accept that the situation has changed. I think it makes the responsibility of getting our policies — that modelling underpinned — in place as soon as we can even more important, and we are stepping up, taking responsibility, being upfront about what those impacts are on households and saying to people that we want to examine every option available to us to manage this because we recognise it is a big cost on businesses and households and we need to deal with it.
LANE: The cost of the National Disability Insurance Scheme is going to hit $50 billion soon, and $102 billion within a decade. The NDIS is a program with bipartisan support. Where is the Government going to find that money? Is the tax base going to have to change to deal with these costs?
GALLAGHER: Well, the Budget, I think, lays bare some of these spending increases and the challenges going forward, not in just in the forward estimates, but over the medium term. Obviously, one of those areas is the NDIS but it's not on its own. There are hospitals, aged care, defence and, of course, servicing the interest bill on a trillion dollars of debt. These are the big spending challenges going forward. The NDIS, there's a review underway, we need to make sure that that investment is high quality investment going to the people that need it. It's a challenge, you know, the NDIS is growing faster than anyone thought. We need an answer on that. And that work is, you know, underway.
LANE: The Government is making it clear that tough decisions are to come, given the massive pressures on the Budget, some that you've just outlined, do you have to start laying the groundwork now for tax hikes and more spending cuts?
GALLAGHER: Well, I think the Treasurer and I are on the same page on this and we spoke about this yesterday as well, that we want an honest conversation about the state of the Budget. We are, with this release of this Budget, I think, being very clear about what those challenges are, what it looks like in a fiscal sense, what some of the challenges are managing that deficit going forward. And I think, again, the Australian people expect us to be honest about that, and to have that conversation. And yes, I've been clear, we found $22 billion worth of savings and redirected spending in this Budget. But that's just the beginning. We are going to have to do more because we need to repair the Budget. And we need to make room for the services that the Australian people value, many of which are in that five, that list of five programs that I just talked about.
LANE: Finance Minister, thanks for joining AM.
GALLAGHER: Thanks for having me on, Sabra.
Pat Cronan 0432 758 224 | Gallagher.Media@finance.gov.au