SENATOR THE HON KATY GALLAGHER
Minister for Finance
Minister for the Public Service
Minister for Women
Date: Wednesday, 8 March 2023
TOM CONNELL, HOST: Well, I spoke to the Minister for Women and Finance Katy Gallagher about how both issues fit into Budget sustainability.
SENATOR THE HON. KATY GALLAGHER, MINISTER FOR FINANCE: You know, when women start their careers that the gender pay gap is at its smallest, and by the time you finish your career, it's the largest and a big contributor that is the years that women take off in the middle — the motherhood penalty, essentially, that you take off out of the workplace caring for children, and when you re-emerge re-emerging on part time or flexible arrangements and that impacts on your salary, the work you do, and overall, you pay a big price for it.
CONNELL: Whether you get the promotion—
CONNELL: Can that ever be fixed, per se, because there's someone else you know, if an equivalent man at that time is working they’re going to say, I know it might be unfair, but I'm in here that's why I got the promotion. Is that, how do you sort of deal with that? Is there always going to be a gap because of that, what's your view?
GALLAGHER: I think there are some things we can do and we are seeing workplace is changing so flexible work arrangements really are you know, helped along by the pandemic aren't that unusual anymore. So crafting jobs that sort of fit around people's you know, responsibilities is becoming more common. So that's—
CONNELL: So working from home, doing more hours more days, and then you don't fall behind?
GALLAGHER: Well it means that you there's job opportunities, perhaps that weren't available to you in the past. I think other things like having part time people who are in senior positions. Like normally think senior positions, you've got to be there full time. For women, often that doesn't work. So there's changes that can be done there. And you're seeing that in the private sector, I think the public sector is following as well. I think the other thing which would make a difference is trying to find a bit more gender balance in some of those highly feminised industries, like aged care where we have 96% of the workforce are women. That's a big contributor to earnings gaps over time because you're seeing a large group of women in lower paid industries. So if you actually change the sort of gender segregation that will assist the pay gap as well.
CONNELL: We had the government essentially pay for the increase in wages in aged care, but you had a promise and then pulled it away on child care workers or early educators. Would you like to see that back on the table? What's the latest there?
GALLAGHER: Well, we're continuing to talk with representatives in the child care sector. I mean, again, another highly feminised industry, we're working with them, we acknowledge that there's these issues there about retention and attracting people into that workforce. So we've just got to deal with these things over time. The aged care obviously is a big uplift in wages, 15% on the first of July, that will help retain workers in that area. But we understand these pressures in child care.
CONNELL: Rate rise. Number one cost of living issue for many people. The APRA buffer rules, so currently, banks have to assess loans at 3% above the current rates, that's for refinancing as well. It does stop a lot of people from switching. So is that something that could be looked at changing the buffer rule just for people who are refinancing, they don't want more money, they just want to switch banks and they're copping that buffer rule. Is that something that could be looked at?
GALLAGHER: Look, we are talking with the banks and obviously with APRA about what we're seeing in terms of people struggling to pay their mortgages or looking to refinance. I haven't had that come to me as a big issue, but it may have come to the Assistant Treasurer or the Treasurer. And we are always engaged with the regulators and the banks on what's happening, what they're seeing and open to sensible suggestions where they might be made. I think the buffer rule is important to and you know, in a tightening environment, it sort of proved why we do need those responsible lending arrangements.
CONNELL: And that makes sense because people said 'well how will rates go up' and they did. But that makes sense for new loans, for these people the loan is already in the economy, you know, you're not creating more risk. Would that make sense to look at that because someone has a mortgage, they might have never missed a payment, they've paid it off for five years, but they get assessed and only got 1% buffer and they cannot switch banks, I mean that'd be a pretty powerful tool to hand them and at least let banks take that on if they'd like to. Does that sound, does that make sense to look at that?
GALLAGHER: Look, again, it's not something that's been raised in me but it's certainly something I can talk to the Assistant Treasurer about and see what the response is. We get that people are doing it really tough. And, you know, we are as a government our focus is on how can we make a meaningful difference to that so happy to look at it, Tom, don't have an answer for you on the show today.
CONNELL: Okay, fair enough. But what I'm saying makes sense. I mean, because we hear Labor ministers say look around, shop around, change banks. Some people go hey I'd love to, I can't do it because this APRA rule.
GALLAGHER: Yeah, I mean, again, the buffer is there, those rules are there for a reason. So you would have to look at it, what are the risks or consequences of loosening that in an environment where people are under pressure, but again, you know, I'll talk to the Assistant Treasurer, it falls right within his portfolio responsibilities.
CONNELL: We look forward to an update. Superannuation tax changes, you revealed 10% of people will be affected in 30 years’ time. That's because it's not indexed - it's 0.5% to start with. That's a tiny cohort initially and essentially, the government said look they can afford to pay a bit more. Does that same apply for the 10%? Do you still consider that a relatively small cohort and one that can handle a bit more tax?
GALLAGHER: Well it still means 90% — in 30 years’ time, I mean, goodness knows what's going on in 30 years, but in 30 years’ time, 90% of people would not be affected. So I think that tells you that it is a very small proportion of account holders who are in a fortunate position. I mean, my job really, Tom, is to try and look at how we make room in the Budget for a whole range of competing priorities. We've got obviously defence, national security, we've got aged care, we've got things people value, hospitals, Medicare, these are all increasing, they're not decreasing pressures. So, when you've got a $50 billion structural deficit, which we do every year, annually, this raises I think, about $2 billion once it's fully operational, that just shows how modest this change is and how significant the job of Budget repair remains.
CONNELL: No one is doubting that, I guess the interesting thing is, you mentioned 30 years, income tax is not indexed, but we assume there'll be changes, right, no one is saying income tax won't change in 30 years. Do you think super might stay untouched? I mean, is that, you mentioned it's still 90%, could that be the sort of thing that might just stay 3 million in 30 years could still be reasonable?
GALLAGHER: Well, I mean, it's hard to forecast you know what in 10 elections' time decisions might have been made.
CONNELL: But I guess in the income tax, it's inevitable it will be changed. Do you see it as inevitable from a Labor point of view on the on the super or not necessarily?
GALLAGHER: Well, I mean, again, it's almost impossible to sort of predict what future governments would do. I would say on some of the changes like the division 293, which is a change that's not indexed. And in 30 years, 30% of people will be captured in that change that came in in 2016. Notwithstanding any future decisions governments might make, I mean, it's kind of it's a very, it's an almost impossible position being we've not indexed it.
CONNELL: But it sounds like you're saying the division 293, look at 30% you'd have to. Maybe not at the 3 million for...
GALLAGHER: Well, not, I think my point is 90% of people in 30 years’ time will not be affected. That is how small this change is.
CONNELL: You're saying it's still relatively low, even if it's untouched.
CONNELL: This all came about because of a sustainability of Budget conversation? Are we're gonna have more of them over the next couple of years?
GALLAGHER: Yeah, we are. I mean —
CONNELL: And on tax concessions?
GALLAGHER: Well, on how, on things we value in the Budget, on how the Budget meets those challenges. I mean, we've, you know, again, I went through the list, the pressures on the Budget are increasing, not decreasing. People value those services in national security. We have to keep Australians safe in you know, a changing global environment and we want to be responsible economic managers. So, you know, as people know when they're putting their budgets together at home, they're making these decisions around the kitchen table. We're making them around the Cabinet table. So we definitely, look, we look at all sides of the Budget, you know, and I think to some degree, people in former governments have had a sort of a dishonest conversation about the state of the Budget or they haven't been upfront about the state of the Budget. We're trying to say, look this is the situation.
CONNELL: My interview with the Finance Minister a short time ago.
Lisa Glenday 0403 931 209 | Gallagher.Media@finance.gov.au