SENATOR THE HON KATY GALLAGHER
Minister for Finance
Minister for Women
Minister for the Public Service
Senator for the ACT
Date: Thursday, 25 January 2024
ALI MOORE, HOST: But that announcement today by the Prime Minister made at the National Press Club was also where he defended the decision by the Government to redraw the stage three tax cuts to redesign them. The Prime Minister said it was the right thing for the right reason. So, a broken promise or an economic necessity? What do you think? 1300 222 774. Katy Gallagher is the Finance Minister, Katy Gallagher, welcome to Drive.
SENATOR KATY GALLAGHER, MINISTER FOR FINANCE: Thanks for having me on Ali.
MOORE: The Prime Minister made it very clear today that a lot has changed in the economic landscape between 2018 when these cuts were initially designed, when did it become clear that the original plan wouldn't work?
GALLAGHER: Well, I think the Government hasn't made any secret that we've been looking at ways to reduce cost of living pressures on Australians. We recognise that inflation has been high, very high, and it's moderating now, but people have been really feeling it. We've had some targeted measures through our Budget, into you know, through our increases in Medicare and cheaper medicines, childcare, income support payments. But over the summer, I think, you know, the PM tasked Treasury and Finance really to have a look at more ways we could support particularly middle Australia those you know, working Australians, many of them with mortgages who've been really feeling the pinch of interest rate increases.
And, you know, we took advice on that, we've gone through our decision-making processes, but it was clear that this was a way we could reach millions of Australians, return bigger tax cuts back to households, so they can manage some of those pressures. And that's what led to the decision that was taken earlier this week by the Cabinet and for which we are out explaining now.
MOORE: I guess I just go to some of the things that the Prime Minister was outlining today as being the different circumstances I mean, we've had COVID. We've had a war. We've had 13 interest rate rises - the cost of living is not a new thing, in the context of that, and a building troubling economic outlook. Do you regret holding the line for so long on the tax cuts as they are currently legislated?
GALLAGHER: Well, the Cabinet took a decision on Tuesday to change that position. And that was up until that point. You know, we, the previous tax cuts were coming in on the first of July, but we have made no secret that it's our job and the Prime Minister has made it clear, the Treasurer and myself to look at ways that we can support and address some of those cost-of-living pressures and increasingly became clearer and the Treasury advice has been released. And that goes to this point about who's been feeling those increases the most, and it's clear that it's you know, it's middle Australia, it's those on low and middle income.
MOORE: Sure. But is this going to make it harder next time? Finance Minister, next time the Government wants to make a commitment, or promise, or outline what you want to do, is it is it now a case that everything is only really set in stone, until it's not?
GALLAGHER: Well, I think we always knew that there would be you know, I think attention paid, it's fair to say, and some controversy around changing our position, but we have taken the view that putting people first, doing the right thing, was more important than holding a position that on the first of July, was going to mean that millions of Australian taxpayers didn't get any tax cut. And we, through the assistance of Treasury and others, and through the work that Treasurer has done, worked out a way to have a better arrangement that reaches more people. Everyone gets a tax cut; every single Australian taxpayer gets a tax cut that wasn't the case. 84% will get a bigger tax cut. Women are very significant beneficiaries of the changes that we have outlined in the proposal, and it’s our job to argue that.
MOORE: Sure. Putting the changes to one side though, does it matter? I mean, I'm just going to that issue of trust and integrity because I completely understand what you're saying that the situation has changed. It's not like it was in 2018. You had to change course as the words of the Prime Minister the right thing for the right reason, but does it matter if people then become cynical or don't? Next time you say you're going to do something they think, Oh, well, maybe they will. Maybe they won't. I mean, do you think that matters? Do trust and integrity matter in politics?
GALLAGHER: Yeah, trust and integrity do matter. And you build trust by explaining to people why you've taken the decisions you've taken and you know, and the PM went to this in his speech today has made it clear that doing the right thing isn't necessarily the easy thing, or necessarily the politically convenient thing, but you build trust, build your credibility, you build on your integrity, by making it clear about why you have changed your position and being upfront about that. And you know, we took a decision on Tuesday, the PM fronted the nation today to explain why that decision has changed. And it's all about the fact that Australians and every media outlet has been covering this for some time, cost of living pressures are the main thing that people are feeling around their household tables, about making their budgets work, and we've come up with a way, a better way to reach more people, give them more money back, in some cases, double what they were going to get, and certainly for millions who weren't going to get a cent, to give them a reasonable tax cut so that they can help deal with these cost of living pressures. But yes, all those things matter. But explaining it, being upfront, you know, turning up, dealing with questions is part I think of the relationship that we have to have with the Australian community when we make these decisions.
MOORE: Of course, you do now have to get the changes through because it is legislation that will need changing. The Greens assuming that the Coalition is not going to play ball, you're going to need the Greens.
Here's what the leader of the Greens Adam Bandt had to say today:
GRAB - ADAM BANDT, GREENS LEADER: But why is Labor still giving politicians and billionaires a $4,500 a year tax cut? That's three times as much as what the average wage earner is going to get.
MOORE: That’s Adam Bandt there.
Katy Gallagher, are you going to need to negotiate? Are you going to need to give something else to get the Greens support for these new tax cuts?
GALLAGHER: Well, we'll be working through the Senate in the chamber that I am in, to get the proposal as we've designed it through the Senate. I mean, obviously the easiest pathway through is if the Coalition support, you know millions of Australians getting a bigger tax cut, but like all pieces of legislation, we've got our work to do to get it through the Senate, but I'm very optimistic that at the end of the day when it comes to the vote, Senators will see that, you know, providing this relief, billions of dollars to millions of Australians is the right thing to do while these cost of living pressures remain so high.
MOORE: And just a final question Minister, the ACCC, a 12-month inquiry. Can you tell Australians that this inquiry will lead to lower prices?
GALLAGHER: Well, look I'll leave the ACCC, they're the ones with the powers. But we certainly are really keen on getting this inquiry underway. There'll be an interim report in 2024 and a final report 2025. So, I think there hasn't been an inquiry like this since 2008. So, it's really timely and I think the other important thing for listeners is we're supporting the consumer group - Choice to provide some more transparency and comparison reports and I know people use Choice a lot around, you know, essentially a basket of goods. So hopefully more information to people in the short term as well. We know that you know, grocery prices and understanding how it all works and who's getting a good deal. And I think it's probably fair to say customers don't feel like they're getting a good deal and farmers don't feel like they're getting a good deal. We need to get to the bottom of that.
MOORE: Katy Gallagher, I know that you have other commitments. Thanks very much for joining us.
GALLAGHER: Thanks very much Ali.
MOORE: Katy Gallagher, there Finance Minister.