SENATOR THE HON KATY GALLAGHER
Minister for Finance
Minister for the Public Service
Minister for Women
Date: Monday, 17 July 2023
PATRICIA KARVELAS, HOST: Over the last 12 months the RBA Governor, Philip Lowe has become a household name. But in just two months, the new governor will decide the fate of mortgages for households across the country. Current Deputy Governor Michele Bullock will step into the role as the RBA undergoes a modern transition, with her position likely to be even more public and arguably more scrutinised. Katy Gallagher is the Finance Minister and the Minister for Women and she joins us this morning. Minister, welcome back to the program.
SENATOR KATY GALLAGHER, MINISTER FOR FINANCE: Thanks for having me on PK.
KARVELAS: Why is Michele Bullock the right person to take the RBA into the future given she's spent 40 years building a culture at the bank that you say you want to change?
GALLAGHER: Well, Michele Bullock is… it's a historic appointment. Highly qualified economist, very experienced leader and incredibly qualified to serve as the governor. She does have a reform agenda, obviously, that's been provided through the RBA Review, but I think the qualities she brings to the job give the government great confidence that those recommendations will be implemented and that she's got the leadership skills necessary to guide that path over the next few years. So, it's an incredibly important appointment, and a historic appointment and I have great confidence in Michele being able to provide that leadership through the bank and through the following years.
KARVELAS: Good leadership is rather intangible in terms of how you can describe it. You'd know her pretty well by now as you've been deliberating with the Treasurer about this appointment. How different will her leadership style be?
GALLAGHER: Well, I think that's up for Ms Bullock to define herself. I mean, obviously when new people come into jobs, people are interested in the style of leadership and how they will manage in that job. But I've found in the jobs that I've taken on and I'm sure many of your listeners will understand that the experience and the skills and the qualities that you bring to the job to help shape that leadership direction. I think we'll see from the response to the appointment how it's been welcomed across the board, you know, economists, other commentators, and even the opposition have supported this appointment. So I have no doubt that she will provide, you know, bring all of her immense experience and qualities to that job and be a tremendous governor of the Reserve Bank.
KARVELAS: One of the biggest challenges will be longer meetings and immediate press conferences by the governor after making a decision on the cash rate. How challenging will that level of scrutiny be? Do you accept that the scrutiny actually on the governor will be higher under this new regime?
GALLAGHER: Well, those recommendations which I think Governor Lowe has outlined last week that will – the change that will come from the way they, how often they hold board meetings and the process afterwards obviously came out of the Reserve Bank Review, but I think any job at this level, at the level of Governor of the Reserve Bank, is going to bring incredible scrutiny, as it should. These are important jobs making important decisions that have effect on Australians lives and so I think part of the strength of those recommendations is an acknowledgment that communication and transparency and explaining those decisions is an important part of the role. Not just the governor but of the board as well, and the Review saw an opportunity to improve that, I think, and that process has been put in place. But yes, I have no doubt that incoming Governor Bullock understands that there will be incredible scrutiny on the job that she does, and that the bank does as a whole.
KARVELAS: I just want to talk about unemployment. Michele Bullock says unemployment needs to rise to 4.5% for inflation to stabilise. Today the ACTU Secretary Sally McManus says the RBA has tolerated an unemployment rate that's too high, and that the drivers of inflation need to be properly identified. Do you agree?
GALLAGHER: Well, I think in terms of our forecasts that were published in the Budget, we do believe that there'll be an uptick in unemployment as inflation comes down, and moderates. So that is something that we have forecast but I also accept that there are a range of views around particularly around where full employment sits and what is the appropriate level for that, and there are mixed views on that.
KARVELAS: What’s your view on that because the ACTU is essentially saying unemployment is not the answer to inflation. Do you have sympathy with that view?
GALLAGHER: Well, I think from the government's point of view, we want as many people in jobs as possible. And I mean, one of the strengths as we've seen over the last 12 months is the incredibly strong jobs growth that we've seen across the Australian economy. So we've seen almost 500,000 jobs created in the first year. We've got stronger employment growth in any of the major advanced economies. The Treasurer is leading a hugely important piece of work with the Employment White Paper that will be finalised later this year to really understand some of the drivers of, you know, particularly, well, I think an important focus will be on, you know, people struggling to get into the employment market and what we can do about that. So the government's job is we want as many people in work as possible and tailor our economic policies around that.
KARVELAS: So Minister full employment is one of the objectives of the Reserve Bank, what do you see as full employment, what percentage figure do you think should be considered to be full employment?
GALLAGHER: Well, you know, I will I prefer to leave some of these things to the experts and there is a range of views around it. I think my job as a member of the economic team is to make sure that we can get as many people in work as possible and that our policies support that approach. It's an approach I bring not just as a member of the economic team, but particularly as Minister for Women as well, considering some of the disadvantage and barriers that women face in the labour market. So in a sense, I leave others to commentate on what they think is its full employment, and focus on my job, which is how do we make sure that everyone gets a fair crack at opportunity?
KARVELAS: That's an interesting point you make on women. When we talk about unemployment rising, do you fear that it will be women who make up those numbers?
GALLAGHER: Well, we've seen some very good results for women over the last 12 months and I think we need to stay focused on how we protect that. We did see in the pandemic when the unemployment rate went up, that women were disproportionately affected. And that's not unusual because it was people in casualised and part time work that took a lot of the brunt of that. So we've seen gains, we’ve got the highest female participation rate that we've seen on record now. And looking at how we can protect that and how we can align our policies. So things like cheaper childcare was part of our thinking there…
KARVELAS: So if you don't mind me interrupting you say during the pandemic, you probably do mind but I've done it anyway, During the pandemic, women bore the brunt in terms of the unemployment figure is that something that you anticipate will happen again, as unemployment is predicted to rise?
GALLAGHER: Well, it's certainly something that we're thinking through with the Employment White Paper. Impact on women, women in the labour market, other issues relating to gender and how it applies to employment opportunities are front and centre of our thinking and Employment White Paper, so you know, it's something that we are looking at very closely.
KARVELAS: Last week Deloitte admitted it had misused government information. They were also dumped by the Home Affairs Department for failing to disclose a conflict of interest. How much worse can these issues around the big four get in relation to these consultants?
GALLAGHER: Well, I think we're learning a lot in the last few months off the back of the Tax Practitioners Board revelations and now obviously the Senate is doing the work that it should do with the powers it has to inquire further into these matters. But this is something the government has acknowledged, has been a problem. We acknowledged it from opposition. I've been talking about these issues for years. This over reliance on consultants and contractors, and the role they play in the public service, which is why we took to the election, significant savings in this area of removing money that is being spent on these consultancies to start rebalancing the public service. It is a problem it is worse than I thought. From opposition, I knew and I was concerned about it, but having come into government and looking at the way it operates, it is worse than I thought from opposition and we're taking steps to rectify that. But it's going to take a bit of time because of the way the imbalance that has been you know, that has occurred over particularly over the last five to seven years, I reckon.
KARVELAS: We spoke to our business reporter Adele Ferguson, whose exposé on the big four airs tonight on 7:30. Is she right when she says that the government and the public service is too dependent on these firms.
GALLAGHER: Well, I would certainly like to see a reduction in dependence.
KARVELAS: Right now they are just not up to doing the work because they've been so dependent.
GALLAGHER: Well, I think there is a very… well it's complicated in the sense that the public service had a thing called a staffing cap placed on it. So departments were not allowed to employ public servants without getting the approval of the minister. So one of the behavioural responses to that was, okay, we can't employ people to do the work we've been asked to do, we will buy in that work and we have we are changing that. So that is one of the problems – so, there's a there is a tendency when and certainly when I came into government that if you need to do something you have to buy in that work and we are trying to change that but it is going to take some time. But I think the message we're sending through public sector reform, through development of our in-house consultancy and the messages we're sending departments, which is, you know, start building up your own policy capability that's been eroded so that you don't have to continue to go out and seek this external advice for matters that should be and should properly be done at the public service level. There will always be things that you need to, I think, seek external advice from but at the moment, the balance is out of whack.
KARVELAS: Just finally on the weekend, Labor lost the by-election in the safe Liberal seat of Fadden and as your side of politics has said you expected this result, but was there a message around cost of living pressures from that electorate and are you listening to it?
GALLAGHER: Well, a couple of things there, PK. I think from our point of view this was an expected outcome. We've never held that seat, or we've never held that area of the Gold Coast and we didn't expect to win the by-election. I think the matters aren't necessarily linked, but we are certainly focused on cost of living pressures. We understand and that's why our budget was so targeted to take some of that pressure off and without adding to inflation. So, of course, we're mindful of all of these issues. That's the whole job of government is to make sure you're responding to issues felt across the community. But I think in relation to that by-election, it was an expected outcome from our point of view, and we ran an excellent candidate who ran an excellent local campaign on the Gold Coast. It's right that people should have had the choice. But you know, we didn't expect to win that seat.
KARVELAS: Just a quick one, minister, on this ‘Yes’ campaign pamphlets that's been drafted. Have you read it?
GALLAGHER: Look, I've been on leave for the past week, PK, so I haven't actually read it but I have 100% trust in the nominees who have been negotiating that pamphlet or that content across the Parliament.
KARVELAS: Thank you so much for joining us, Minister.
GALLAGHER: Thank you.
Lisa Glenday 0403 931 209 | Gallagher.Media@finance.gov.au