SENATOR THE HON KATY GALLAGHER
Minister for Finance
Minister for the Public Service
Minister for Women
Date: Tuesday, 9 May 2023
MATTHEW DORAN, HOST: Senator, welcome to Afternoon Briefing. Is there much celebration in Labor ranks to be seeing the first Budget surplus being predicted in some 15 years?
SENATOR THE HON KATY GALLAGHER, MINISTER FOR FINANCE: Well, it's true, we're forecasting a surplus. I don't think it's a matter about celebrating, obviously, the upward revision to the revenue and the improved bottom line is good, but it's a, it's a good story for the country because the Budget's about investing in the future of our country and supporting people who are doing it tough and I think they expect their government to manage their Budget responsibly, and that's what we've sought at the outset to do with the Budget. Where we can make sensible investments, we do that, but we also have our eye on the long term that it's about getting the Budget on a better footing, so that we can create the opportunities and invest in people for the future.
DORAN: How do you think the public will receive news of a Budget surplus when there is a significant cost of living crunch? Clearly you are going to be delivering some cost of living relief, but it's not going to go all the way to easing household pain is it?
GALLAGHER: Well I think one of the challenges with putting this Budget together is, yeah, we're very mindful of the cost of living pressures. We're also mindful of the inflation challenge in the economy. We're mindful that the kind of, the out years of the Budget, in the medium term, the Budget remains under enormous stress in terms of pressures coming towards it. So I think when people see the Budget, they'll see that it's not one decision in isolation, so it's not about one payment or one program, it's about hundreds, if not thousands of decisions that work together to finalize that Budget, and you know, you have to see it in its entirety. So, I would hope that people will see that the news of you know, the Budget being in better shape is welcome, because I think that is good. We need to make sure we're in a good spot when the next emergency comes, that the Budget's able to respond to it. But I think they also know that their government's got to do a whole range of things, and some of these are really difficult decisions about what's the right amount to invest, where to invest, where to find savings, where to reprioritise back in the Budget, and it's a whole range of those things that we've been, I guess, you know, agonising over at times, in months and months of ERC decisions.
DORAN: Angus Taylor described it this morning by saying that a drover's dog could have delivered a Budget surplus, that Labor has inherited a very favorable set of circumstances with higher commodity prices, the migration coming back after the COVID pandemic. How, he's got a point doesn't he, that there has been some things that have just eventuated that have been outside of the new government's control, that have led to a better set of numbers?
GALLAGHER: Well, I've heard that quip from Angus Taylor. I mean, it's, I think it reflects poorly on him if he thinks that, considering they didn't deliver one out of nine, it was zero out of nine for their record, you know, after promising a surplus in every, in the first year and every year after that. So, you know, I'll leave that to him. I mean, we've been focused on what we can do, what's responsible to do. Yes, some of its around the upward revisions in revenue company tax, that's welcome, but it's also a story about employment and the strength of the employment, you know, the labour force, and also strength of wages growth, which is something that the former government was opposed to, and something that we've invested in and so when you see that flowing through, there has to be some acknowledgement that that's because the government has been proactively pushing for that to happen to, in a sense, deal with some of the cost of living pressures, but also deal with a decade of wage stagnation. So, I mean again, you know, we're not sitting here just sort of, you know, celebrating and walking it up. The Budget is in better shape for a number of reasons and certainly our management of the Budget has been part of that. For example, returning 99% of the upward revisions in October, the revenue to Budget, and in this Budget, you'll see that continue and that's a big part of the story as well.
DORAN: When we're talking about cost of living relief, there's been a lot of speculation over the last couple of weeks about exactly what form that can take, and I doubt that you're gonna give us any hint -
GALLAGHER: Sorry, Matt! [laughs]
DORAN: This afternoon as much as I would love you to -
GALLAGHER: Come into the lockup!
DORAN: You're always welcome to, but there is obviously a balance that you need to achieve there between delivering that cost of living relief and not further fuelling inflation by, in doing so. Chris Richardson, the economist, has gone so far as to say that any cost of living relief is going to be inflationary to some extent. How do you achieve that balance without making the situation even worse, and undoing the hard work?
GALLAGHER: Well, I think it's a range of things, and we have been mindful of that, I think, Jim and I have been saying since we came into government, really that the inflation challenge in the economy was you know, priority in our thinking of how we manage some of these Budget decisions, but people expect governments to do things and we know that because of the inflation challenge that's having a big impact, particularly on people on fixed and lower incomes. So I think it's a question of how much you do, how you target it, when it starts. It shouldn't just be seen in payments, we should look at programs and investments about how we do that over the longer term as the inflation challenge, you know, which has peaked, tapers off. So it's all of those things. But yeah, of course. I mean, people, you know, we are a responsible government, we're not going to sit here and make decisions that make people's lives worse or impact negatively on them or on the economy. So we've been thinking about that, front and centre, really for months, indeed the whole year since we've come into government.
DORAN: A lot of things that the government has announced so far that will be in the Budget are generally, I guess you could call them 'good news items', they are, you know, extra funding for the aged care wage rise that's coming through, you know, energy relief and things like that. What nasties are we going to be seeing in the Budget? What sort of cuts are there going to have to be to offset some of those, those costs that you're now incurring?
GALLAGHER: So well, perhaps I'll leave it to you and your colleagues, Matt, the commentators, to assess what they like and what they don't like in the Budget and you know, people will do that as well. There are savings in the Budget, we've found $22 billion in savings in October, you'll see that built upon in May in the order of about $17.8 billion. So over those two Budgets, $40 billion in savings, it's a huge effort. Ministers have worked really hard on that. In that sense, we've been trying to look at how it doesn't impact people, you know, harshly, that it is about reprioritising, looking at what was being done, are there things that we don't need to do any more that we can invest in other areas? So that in itself is a balancing act, but again, it sends a message of fiscal discipline as well. We're not just adding on to the Budget, we're looking at the money, taxpayers money, we currently have available and how we use that, and that also assists with I think, the inflation story and how we manage that, that it's not adding into all the time, we are looking at how we're reprofiling and using existing expenditure.
DORAN: How do you respond to or pre-empt the criticism that would likely come from, particularly, the Opposition saying that you'd be unwinding things that they put a lot of hard graft into to try and put over, get over the line, that this is a, you know, sort of political payback by axing things that they held dear to fund what you're wanting to put out there?
GALLAGHER: Well, again, I'll leave the Opposition criticism to them, they can make whatever claims they like. I mean, for me as Finance Minister, there is no world where you just say, we continue doing everything, and then we load in new spending on top of that. That is unsustainable. So the work we've been doing since October is building into our processes right from the get go that we have to look at what we're doing currently, whether there's ways of doing things differently, trimming them, returning money to Budget if it's not spent, a whole range of things that make sure that every dollar spent is a dollar spent wisely. And that's the approach we've taken in government, it's, the former government didn't have that approach, we criticised it in opposition, and so we're really cleaning up the mess and putting in place better processes.
DORAN: Just finally, will Australians be more comfortable after tonight's Budget?
GALLAGHER: Well, again, it's hard. It's, I'm so close to it, Matt. I almost wait to, oh well I do wait to hear what, how people receive it. I think, and I hope that people see they've got a government that cares deeply about how we look after people who need an extra hand, how we invest in opportunities of the future, and that we manage their money through the Budget, in the best interests of the country. And, you know, I think, if we're able, if they're able to see that through all of these decisions, even though there'll be bits that people like and don't like and think we should have done more of and think we should have done less of, those three things, for me, are really important and I hope that's reflected in people's views on the Budget after they've had the opportunity to read it.
DORAN: Katy Gallagher. Thank you.
GALLAGHER: Thanks for having me on, Matt.