SENATOR THE HON KATY GALLAGHER
Minister for Finance
Minister for Women
Minister for the Public Service
Senator for the ACT
Date: Tuesday, 12 December 2023
SABRA LANE, HOST: The Federal Government's midyear budget update will be released tomorrow, and it will show there's been at least $10 billion in either cuts or spending changes. It comes as the Government tries to show it’s doing its bit to reduce inflation and ease cost of living pressures. The Finance Minister is Katy Gallagher and she joined me earlier. Minister, what’s included in this almost $10 billion in cuts and spending changes?
SENATOR THE HON KATY GALLAGHER, MINISTER FOR FINANCE: So, this is almost $10 billion that we have found across the budget. Included in that is some of the infrastructure savings that Minister King has found, but there's other savings on top of that. And it's all about trying to get the budget in much better shape so that we can find room for other spending priorities. We’ve done this in the October budget, we did it in May. And the savings that we’ve found in this budget will bring it to a total of almost $50 billion across the forward estimates.
LANE: Last financial year there was a budget surplus. The Treasurer seems to be talking down the chances of a second. You're forecasting a $14 billion deficit this financial year. Is that expected deficit going to be lower than that? Or might there be perhaps even a surprise surplus?
GALLAGHER: Well, I think the Treasurer has made it clear that we won’t be forecasting a surplus in MYEFO. We are working hard to get the budget in much better shape. And it's not only our savings, but it's also looking at how we bank some of the revenue to make sure that we are doing what we can to put downward pressure on inflation, get the budget in much better shape, and find room for other spending priorities. And that’s been our approach since October. Obviously, that would help pay down some of the debt that we’ve inherited as well. So, our focus is really on making sure that we’re being fiscally responsible in this environment when inflation is high and repairing the budget that we inherited. It’s really important.
LANE: You touched on inflation. Many voters are feeling cost of living pressures, will there be new relief measures in next year’s budget? Or are you hoping that now that inflation is easing, that won’t be required?
GALLAGHER: Well, we keep a watching eye on all of this. Obviously, we've got our $23 billion worth of cost of living measures that are flowing out across the economy now. They're targeted and they're timed so as to not add to the inflation challenge. But we’ve made it clear that we’ll always monitor the economic circumstances of the time and make decisions accordingly. So, this MYEFO is more of an economic update. It’s straightforward in that sense. But we’ll obviously keep a watching eye on what we need to do to make sure that we are easing the pressure on households where we can, but not adding to the inflation challenge as it moderates.
LANE: The May budget shows the federal government was hoping to save $74 billion over ten years by curbing the growth in the National Disability Insurance Scheme. Now that the government is going to split the costs with the states, of providing more disability supports outside the NDIS, does that mean that those expected savings are going to disappear?
GALLAGHER: Well, the numbers that are factored into our budget is slowing down the growth of the NDIS. So, it is actually continuing to increase in expenditure across the forward estimates and the medium term. But we'll work through with states and territories around what's called foundation supports and work that through. And when we finalise that, that will be reflected in the budget. But the significant easing or slowing of the growth is really important. It’s important that we achieve that. The target is to get it to 8 per cent growth as opposed to the 14 per cent it is currently growing at.
LANE: Sure, but the foundation supports and the money now that’s going to be set aside for that, that’s going to eat into the proposed forecast saving of $74 billion over ten years.
GALLAGHER: Well, there will be costs associated with foundation supports when that is finalised and they will be reflected in the budget. But as I said, we are expecting to spend more on the NDIS every single year going forward. What we are trying to do is moderate the growth in the scheme. So, part of our focus on getting the budget in better shape is so that we can make room for the spending that we are going to need to do. Whether it be in the NDIS, or defence, or servicing the debt which is a significant cost on the budget now. That’s all part of our fiscal strategy.
LANE: If I could just turn to the climate talks in Dubai, is the federal government disappointed that it looks like the conference is not going to come up with a deal that has strong language in it about phasing out of fossil fuels?
GALLAGHER: Well, I think there’s more work to be done through the night and today about where COP28 lands. But from the government’s point of view, we want a strong statement, and Minister Bowen's been leading that. But it doesn't change the work that we’re doing here, which is to shift our energy grid into more renewables and to make sure that we are seizing the opportunity that comes with that transition. And you’ve seen that in the policies that we’ve rolled out, including recently with the Capacity Investment Scheme.
LANE: Sure, but is the government disappointed that it looks like the strong language won't be happening?
GALLAGHER: Well, let’s just see what happens Sabra. I think there’s still talks going on. Obviously, Minister Bowen and Minister McAllister are there representing Australia. There’s more work to be done. We’ve taken a position. We’ll see where COP28 lands.
LANE: All right. Minister, thanks for talking to AM.
GALLAGHER: Thank you very much.