SENATOR THE HON KATY GALLAGHER
Minister for Finance
Minister for the Public Service
Minister for Women
Date: Thursday, 2 March 2023
PATRICIA KARVELAS, HOST: The plan to double tax on super contributions in accounts with a balance of more than $3 million will affect some 80,000 people, 60% of those are men. It's a reminder that your gender may impact how much money you earn, and also how much money you'll have when you retire. The Minister for Finance and the Minister for Women, Katy Gallagher is our guest this morning. Welcome back to Breakfast.
SENATOR THE HON KATY GALLAGHER, MINISTER FOR FINANCE: Thanks for having me on, Patricia.
KARVELAS: The average man will retire with 28% more in his super account than the average woman. How do you plan to make super more equitable for women?
GALLAGHER: Yeah, I mean the issue of gender equality isn't just about super in this country, we do have a problem. Women are more educated than men, but we work less, earn less, have less savings, less super and less assets and women over the age of 60 are some of, well, the most vulnerable group in a sense of being the highest group moving into homelessness sector. So there's a whole range of issues around how we deal with women, and women's earnings and women's economic independence. In relation to super, I think there's a couple of things that we're trying to do. One of the big issues around super is the fact that women earn less. And so closing the gender pay gap is a really important part of that, we've got a bill in the parliament right now which looks to accelerate the closing of the gender pay gap, which sits at about 14 or 15%. So that's an important issue. The second one, I would also say is dealing with some of the wages in these feminised industries, like aged care. So you know, lifting the wages where we see large amounts of women in the workforce — in aged care, I think it's in about 95% of the workforce is women. Obviously, they will get a substantial pay increase if you get that pay increase that affects your super over time. So there's those things. And then there's the other issues which we've made no secret we would like to do when we make room in the Budget, which is looking at how we ensure for those gaps in women's earnings in when they're on leave, when they're on, you know, parental leave things like that. Yeah, that we pay super. And we've made no secret of the fact we would like to do that.
KARVELAS: But liking to do it and then doing it is a different thing. Last month, the Treasurer admitted the Budget won't be back in balance for at least the next four years. So when will the right time be, I mean given the trajectory of the Budget and the broader issues there, the Treasurer says we'll do it when we can afford it. When do you think you'll be able to afford it?
GALLAGHER: Well, these are all the matters that are currently before us. I mean, my job as Finance Minister is to look at how we repair the Budget over time with savings. And that's a big part of my job at the moment to make room for these priorities. You know, it is something we want to do, we've made no secret about that, you know, we are the party of superannuation, we recognise that there's a big issue with women's earnings in the super sector. So we're dealing with things outside of that, as I said, gender pay gap, looking at how we get wages moving. And then you know, how we kind of reprioritise inside the Budget to make room for all these priorities, just as we did in October. That's part of the work we're doing in May, for the May Budget, and it remains on the table. I mean, this —
KARVELAS: When would you like to do it?
GALLAGHER: Well, I would like to do it now, right? I think, I would have liked that it was done 10 years ago. But the reality is we've got a $50 billion structural deficit for as far as the eye can see. The pressures on the Budget aren't lessening, they're intensifying. And those are in those areas that I know you and Jim and I talk about all the time, which is, you know, defence, aged care, health, all of those, and the NDIS, all of those areas where we've got intensify pressures, we've got to look at how we manage the Budget sustainably. That's part of the announcement we made on super a couple of days ago is an attempt to start doing that, but also how we reprioritise within the Budget, and that's hard as well.
KARVELAS: Well that's an interesting point you make. Allegra Spender was on 7.30 last night, and she said that the superannuation policy is just one part of looking at the overall scheme and then you've kind of closed the door and boxed yourselves in saying this is it for this term. But if you're actually trying to make the system more equitable, don't you need to have a broader look? The Treasurer talked about a conversation but that conversations already been shut down.
GALLAGHER: Well, I think the conversation about the Budget sustainability is ongoing. I mean, we are making —
KARVELAS: But on superannuation reform, this is just one small policy.
GALLAGHER: It's a small but meaningful difference over time, like it raises $2 billion a year, once it's fully operational. That is not an insignificant amount when you're looking at, you know, I think raising extra revenue to go into Budget repair. So I mean, Finance Minister, part of my job is to look at existing expenditure and how we're deploying that, and whether there's opportunities within that as well. And you'll know that in the last Budget, you know, some of the half of the savings that we found was to actually reprioritise within the Budget. And that's an important thing, too. So it's not a one, I guess how we look at Budget sustainability over time isn't just looking at one part of the Budget, it's looking at the whole part of the Budget and reprioritising within it.
KARVELAS: Okay, so the superannuation policy is one part, what else would you look at then, Minister?
GALLAGHER: Well, what I'm just talking about then is our existing expenditure, it's a huge Budget, there's a lot of money going around, I think we want to focus on evaluating, you know, programs as they exist. I'm not saying it's easy, I'm not saying there's anything jumping out that we can say, 'oh, we could stop doing that.' But it is, you know, we are determined to be responsible Budget managers, and part of that is having a look at what we're currently doing, mindful of the pressures that are coming our way. We have inherited a Budget mess. You know, it's worthy of a whole show on some of the issues in the Budget, including terminating measures, fiscal cliffs, you know, policy areas that just weren't attended to in the last Budget that are now coming home to roost, including, you know, how we resource the public service. I mean, we have inherited all of this. And now we're going through it bit by bit, looking at how we can make some sensible changes to ensure Budget repair so that we can fund the things that people really value like health, like aged care, like dealing with these gender inequality issues in super, they are all, you know, front and centre of every discussion we have at the ERC.
KARVELAS: Now, obviously, there's superannuation change that you've announced over $3 million... for accounts over $3 million that kicks in after the next election, right? And you've obviously done that to craft a way of dealing with any accusations that you have broken an election promise. So why not legislate it after the election too, to be really consistent with that idea of actually honouring your promise?
GALLAGHER: Well, as you say, it will come in after the election, but —
KARVELAS: But it will take a Government if that, sorry, I don't mean to be rude. But if someone else was elected like the Liberal Party, they'd have to repeal it. So it's actually it does take them having to be very active about taking it out of the system, because you're building it in before an election.
GALLAGHER: Yeah and we've made the announcement that that is the Government's policy decision. That's the decision we've taken. And now we would legislate that. What future Governments do on that with the opposition, if they were elected, want to change that yes, they would have to repeal that. If, you know, we'd get it through the Parliament this term. But I think it's only it's normal practice for a Government that's made a decision that requires legislation to then legislate and make sure that make it clear that that is the Government's policy, and we intend on implementing it.
KARVELAS: Minister a couple of other questions. A parliamentary panel has called for the Coalition's controversial Parents Next scheme to be abolished and replaced. Now that scheme helps parents with children under six to plan and prepare for future study or employment, it's been criticised heavily in the past, will you look to abolish it?
GALLAGHER: This is a program that certainly has come to me as Minister for Women from a lot of stakeholders in the women's sector concerned about it, particularly about the punitive side of that program where young parents, single parents lose entitlements for not doing, you know, attending a certain parenting class or whatever the requirements are. So it certainly is on my radar as Minister for Women. It's been raised with me by leading women advocates, this report came down yesterday, I've had a quick look at it. It's got a lot of recommendations there, which we'll work through. So we'll have to take those decisions. But we are aware of the concerns in the program. And I think we want to make sure that we're not penalising women unfairly, but also that we are providing the right support for them when they're parenting young children. So —
KARVELAS: Do you see it as a sense of urgency around this program, given, as you say, all the advocacy, you've heard from women that this is not working and it's punitive?
GALLAGHER: Well, I think, you know, it's certainly on our on the table in front of me. Tony Burke actually referred it to that committee, so I know it's come through his area as well. And we need to have a look at this report and then take some decisions. But I'm not sure it's an either or I think there is also support for making sure we are supporting parents with children to make sure they're getting access to services as well. So we'll just work through that, Patricia. But yes, it's definitely been raised with me as particularly the punitive side of losing money when you're already, you know, living hand to mouth and trying to raise children. I think there is a real question over that.
KARVELAS: Yesterday, we saw the economy grew half a percent in the December quarter, lower than expected and showing the economy starting really to slow down, savings ratio is also down. Is that enough for the RBA to hold off increasing interest rates further given families are suffering immensely it seems?
GALLAGHER: Well, I think the decisions of the Reserve Bank are independent of Government. So I'll leave those to them. But I would say that looking at the national accounts yesterday, difficult set of numbers, and I think the numbers speak to people's experience, you know, real life experience at the moment, which is the cost of living pressures. So you are seeing the economy moderating, as expected. Inflation still remains the key challenge that we are trying to manage as well through our Budget. But you can see through, you know, households are saving less and spending more that you know, that households are doing it tough. And that's, you know, how we manage some of those cost of living relief is a really central part to our Budget considerations now, how do we make a real difference without fuelling inflation is part of our economic plan. So you know, you'll see some of that energy relief come in, the child care savings will come in in first of July, so there is support and assistance on the way which will make a structural difference to how we deliver services, but also make a difference to people's households.
KARVELAS: Minister, you're also the Minister for Finance, Australia Post is also one of the things you overlook, does that mean that you think we have to say goodbye to letters?
GALLAGHER: No, I don't. No, it's not goodbye to letters, but there's certainly some modernisation work that has to happen for Australia Post for it to remain this iconic national institution in our country. The reality is people are sending less letters. And the post has to deal with that and, you know, make sure that it can deal with it in a commercial way. You know, we can't have it fall back onto the Budget to require assistance. So we're pretty keen for this work to continue, Australia Post have been doing this, obviously, and talking with stakeholders but this is the next stage of making sure we consult and people have the opportunity to raise their views about how to make sure Australia Post remains the strong, iconic company that it is.
KARVELAS: Katy Gallagher, thanks for your time.
GALLAGHER: Thanks so much, Patricia.
Lisa Glenday 0403 931 209 | Gallagher.Media@finance.gov.au