SENATOR THE HON KATY GALLAGHER
Minister for Finance
Minister for the Public Service
Minister for Women
Date: Tuesday, 9 May 2023
DAVID LIPSON, HOST: Katy Gallagher, thanks for your time. Economist Chris Richardson reckons this Budget is inflationary. And he says it makes it more likely the Reserve Bank will lift interest rates, is he right?
SENATOR THE HON KATY GALLAGHER, MINISTER FOR FINANCE: Well, I understand that economists will have various opinions about this. That's not the advice that the Treasury has provided the Government. You can see the forecasts for inflation are in the Budget. Over time, we're seeing that the high level of inflation tapered off and that factors into account all of our spending decisions and other decisions in this Budget. So it's certainly been front and centre as we've been making decisions about being very mindful of the inflation challenge. But we've had to meet some pressures in the economy as well. And you see that in the Budget, but certainly the advice to us is that actually, couple of our cost of living pressures put downward pressure on inflation and overall, the package as a whole does not impact on inflation in a negative way.
LIPSON: Over four years, the impact of all your decisions will push the Budget $21 billion or so further in to the red - the direction of the red - but external factors like commodity prices, stronger employment and the like, add $146 billion to the Budget bottom line. So how much of this surprise surplus is down to blind luck?
GALLAGHER: Well, certainly the revenue upgrades are welcome. I'm not going to pretend they aren't. A part of that, obviously, is the fact that we've been getting higher prices for some of the things we sell. No one's arguing with that. But a large part of it, is the fact that we've got low unemployment, high levels of employment, more people in jobs, and we've got wage increases happening for the first time in a long time, and that that's impacting on revenue to government as well. So I think the other thing to factor into this is the fact that we wouldn't be talking about some of these issues like surplus and much smaller deficits if we hadn't banked a lot of that revenue back into Budget repair. You know, over this four years, 82% of the revenue upgrades are going back to the Budget. So we've got less debt, less interest on that debt over time, which also assists with Budget repair in the medium term. So we've been really responsible, we've been very fiscally disciplined in this Budget. But it can't be all put down to just one thing.
LIPSON: Let's look at a couple of the initiatives. Tripling the bulk billing incentive for doctors - how many more doctors will fully bulk bill as a result of this?
GALLAGHER: This is a really significant investment. It's essentially a bit of a game changer for Medicare because it's under so much pressure at the moment. We know people are finding it hard to find bulk billing doctors and we also know doctors are finding it hard to bulk bill because of the the costs on their practice. So this is a huge investment into primary care. We know it'll reach about 11.6 million Australians. So that's people with kids under 16, pensioners, concession cardholders. By tripling the incentive, we really think we'll shift the dial for doctors to bulk bill. It'll be worth their while to bulk bill -
LIPSON: Have you modelled the number of doctors that will be?
GALLAGHER: Well ultimately that's a decision for individual doctors. No one can force them to bulk bill. They have to make that decision. But tripling the incentive, which is something that I think they've been seeking - certainly extra investment in the incentive, I don't think anyone thought we would triple it. But we're deadly serious about making sure that bulk billing is available, particularly for those that need it most. And more importantly, in the overall package in health, that Medicare is fundamental to the success of our health system and we have to invest in it.
LIPSON: Looking at welfare payments JobSeeker, Austudy, Youth Allowance: they'll all rise by $40 a fortnight and for over 55s it'll rise even more. But for that $40 a fortnight, it's about $2.85 a day. Now that's, you could say, half a milkshake and no sandwich. Is that enough?
GALLAGHER: Well, I think, going back to your first question about people's views on the inflation challenge in the economy and some of the decisions we've taken, we've had to be mindful of our spending decisions. We think it's a meaningful increase to JobSeeker. We also see it in combination with some of those other measures - the investments in Medicare, for example, but also like the rent assistance. That's part of it. The cheaper medicines. These are all working together to try and ease cost of living pressures on most vulnerable Australians. Some people will say it's too much. Some people will say it's not enough. We think that we've got the balance right for this budget about what's affordable, that doesn't break the Budget in the future, and gives people a bit of an extra helping hand.
LIPSON: There's $2 billion to support the production of hydrogen. It's called the hydrogen headstart, but I can't really find much detail about what you're expecting to get from that $2 billion. Is there any obligation on delivery of this hydrogen industry?
GALLAGHER: Well, I think what we're trying to do here and again, we need to see it in the bigger context of what we're doing around the energy transition that's underway. We want to make sure that we've got some incentives and to basically encourage the development of the industry, the renewable hydrogen industry.
LIPSON: It's a lot of money.
GALLAGHER: It is a lot of money. The details of that program need to be developed. Chris Bowen will be leading that work, but it works across a number of portfolios. But we know that there's a lot of energy going from other countries into incentivising and trying to grab the opportunities that come with the energy transition. We've got to be part of that. I mean, a big part of this Budget is how do we seize the opportunities going forward? How do we create the opportunities? Making sure that we are developing up a renewable hydrogen industry in this country is part of those opportunities, and this program will do just that. Chris will work over the next few months with stakeholders about getting the balance of that program right.
LIPSON: Katy Gallagher we'll have to leave it there. Thanks so much for joining us.
GALLAGHER: Thanks very much David.