SENATOR THE HON KATY GALLAGHER
Minister for Finance
Minister for Women
Minister for the Public Service
Senator for the ACT
Date: Thursday, 1 February 2024
JOURNALIST: You're obviously pleased with the numbers, but Australians are still suffering, prices are still up. Housing, insurance, health. When will we see those prices start to go down? What are you doing to address that?
SENATOR THE HON KATY GALLAGHER, MINISTER FOR FINANCE: Look, the numbers, the CPI numbers yesterday, were really encouraging. It shows inflation moderating and moderating faster than some had predicted. And what that means for households is that some of those areas we've been seeing big price increases, that they'll see easing in those areas. But the job isn't done. We're still outside the target band for the RBA and we need to keep working together to keep those prices coming down. We're expecting to see that over the next 12 months. And the government's job is to work in areas where we can – like in health care, our bulk billing incentive, investing in Urgent Care Clinics so that people don't have to pay to see a doctor. They're all areas where the government can make a difference. And we're focused on doing that.
GALLAGHER: I mean, obviously, economists will have their own views and they argue those views and back them up, you know. But our advice and the Treasury advice is that our tax cut changes won't have an inflation impact. And that's because they're revenue neutral, but also that there's some improvements in supply of labour that offset any spending from lower income households. So, we looked at that carefully. I mean, we weren't going to make a decision that made the inflation challenge worse. Everything we've done since coming to government has been trying to manage the inflation dragon in our economy. And we're confident that the tax cuts on the first of July won't add to inflation. And we think they're an important way of getting money into people's pockets to deal with the cost-of-living pressures that are there.
JOURNALIST: There is speculation that the Coalition is going to pass Labor's tax cuts but add on the relief that was originally legislated to those in the higher income tax brackets. Would that plan deal better with bracket creep than your current plan?
GALLAGHER: Well, our plan does deal with bracket creep. It does that by lowering the tax rates and increasing the tax thresholds. And that's clear from our plan. In relation to the Coalition – if they do that, they'll have to explain I guess where they get an extra 39 billion across the forward estimates for. Because we've made that package revenue neutral so that it doesn't add to inflation, but also, that the work we've done to repair the Budget isn't destroyed by additional spending. And you know we've been careful in terms of how we've designed it. But that's a matter for the Coalition to explain. I'm hopeful that they will back these tax cuts, because 84 per cent of Australians will get a bigger tax cut and I don't think any parliamentarian should be standing in the way of people getting more money in their pockets while they're doing – while we're seeing these, you know, cost increases in the economy.
JOURNALIST: Have you begun early negotiations with the Greens on the stage three tax cuts?
GALLAGHER: Sorry, have I?
JOURNALIST: Have you begun early negotiations?
GALLAGHER: Look, I'm Manager of the Senate. So obviously, I talk with all crossbenchers and anyone else who, frankly, wants to talk to me about getting legislation through the Senate. I've had some discussions with the Greens. I'll be talking with Senator Pocock this afternoon. I'll be engaging with Senator Lambie. That's sort of what I do in the lead up to a sitting week. But we're, you know, the plan we take to the parliament will be the plan that we've outlined and that we've been talking about over the last week or so.
JOURNALIST: Are you open to hiking JobSeeker, though? Is that something you'd be considering in the May Budget?
GALLAGHER: Well, we consider, you know – I think we've said, Jim and I have said, every Budget, we look at what we can do to ease cost-of-living pressures across the board. We've increased JobSeeker, we've increased Parenting Payment Single, we’ve increased Commonwealth Rent Assistance. We've targeted our other cost-of-living pressures, whether it be energy bill relief to the concession area, you know, for Australians. And so, I think we've shown that we are prepared to look – and we have looked – at how we can make sure that people who are doing it tough are supported. But we do that every Budget. In relation to what the Greens are saying, it's not unusual for them to come and say, we want this and we want that in order to get our support for something else. We think this tax package stands on its own and that's what we'll be relaying to them and have relayed to them.
JOURNALIST: Minister will more people pay more tax in the long run given that some of the thresholds have come down and tax breaks for higher income earners have been slashed? Over the next decade the Opposition is citing some analysis that in 2033 it would actually be worse off, even though they get the tax breaks now.
GALLAGHER: Well, I note that that's the only thing the Opposition can complain about, because they can't complain about the fact that on our plan, more people get bigger tax cuts. You know, there is obviously over the medium term, if nothing changes ever, if governments don't take any decision – and I think governments of both political persuasions have looked to return bracket creep where they're able to do so, where it's responsible and affordable to do so – so, I think the argument that in 10 years' time a government might not have made any decision about tax is probably a bit unrealistic. But in the forward estimates, in the period that matters right now for people when they're putting their household budgets together, they will get – 85 per cent will be getting more, 100 per cent will be getting a tax cut and those on the higher income brackets will still be getting a very substantial tax cut in the order of $4500.
JOURNALIST: The cost of spirits has risen almost as much as tobacco. The industry is blaming higher taxes, is that reasonable?
GALLAGHER: Look, in relation to the indexation arrangements that are around alcohol, this is something that happens. They're adjusted, I think, twice a year. This happens, again, as normal kind of course of business for governments of both persuasions, these are the tax arrangements that remain in place. And obviously, you know, we look at these matters every Budget, we look at what's possible, what's affordable, but getting the Budget in better shape, making sure we can invest in Medicare, making sure we can deal with pressures around housing, is part of the reason why we raise taxes in the first place.
JOURNALIST: Why not index tax brackets? So, you know, it will better address bracket creep. And as Zoe Daniel said yesterday, stops governments coming out every few years and spruiking tax cuts that pretty much should have just gone up in line with inflation anyway.
GALLAGHER: Yeah, look, I've seen some of those comments. Our tax brackets haven't historically been indexed. And it has been open to government to make changes to either thresholds or the rates – and that wouldn't necessarily follow an indexation pattern – where it's affordable and able to provide more relief that may be over and above indexation, that's available to governments. But these traditionally have been decisions of government and I expect that they will remain so.
JOURNALIST: Can ask why, instead of changing or tinkering with thresholds every few years?
GALLAGHER: Well, because I think you know governments respond to economic conditions of the time, and it's open to them. That's one of the jobs when you sit around the ERC is you have to look at what your revenue is, what your expenditure is, what your pressures are. I mean, I've said more than you probably want to hear. Defence, NDIS, aged care, Medicare, interest rates on our debt are all coming at us faster than they have in the past, and we have to balance all of those expenditure decisions with the revenue that's coming in. So, that's why it's open to a government to do more on tax and spend less on services. These are the decisions that governments have to face when they're finalising budgets.
JOURNALIST: The Opposition is seizing on the comments about how you're framing negative gearing – the fact that there's no planned changes, that's not your plan. That's the exact same language that the government has been using for months and months when it came to tax cuts, and then the position changed. So how do you address the argument that the Australian people can't trust you because you're using the same quote unquote, sneaky language that you did before the tax cuts? When you're not categorically ruling out anything to negative gearing? What’s to say that in six months, there's not Treasury analysis that you cite to say, you know, economic conditions have changed?
GALLAGHER: Well, I think trust is built by people, governments making decisions and explaining those decisions. And that's what we've been trying to be doing over the last week or so. You know, we've had – every media outlet, any person you talk to in the street has been talking about cost-of-living pressures and what more can be done to get more money into people's pockets. And we have responded to that. We have fronted up, we've changed our position, we've done the work. It's no surprise to me that the Opposition are trying to talk about everything other than the tax plan that's brought before the Parliament. So, they’re wanting to make the discussion about something that it's not. This is about tax cuts, bigger tax cuts to 85 per cent of Australians. They want to talk about things that aren't on our agenda. I can tell you we've done no work, we have no plans on negative gearing. And you know, when our position has changed, we've fronted up and being clear about that.
JOURNALIST: [Indistinct] voters have swallowed the broken promise because they're receiving more when tax rates fall. Do you think that if the Coalition goes to election promising lower taxes, voters will also swallow the fact that you know, budget deficits might be greater, or there might not be a surplus, if they're going to be receiving more back in tax?
GALLAGHER: I mean, parties will put their election plans together as normal, I guess. And that's about winning elections. I think people would be supporting these tax cuts because it's a plan that puts people before politics. And you know, the Australian community aren’t silly, they get it, they look at the detail, they see what we're trying to do. And I have no doubt that they – over time, if they see how it applies, then will support it. But governments – we’ll put together our election policies. Part of what we will be talking about is our responsible economic management, getting the Budget back in shape, because it does matter. The biggest and fastest growing cost to the budget at the moment – that we're spending billions on every year – is interest on our debt. We want to get that down so that money can actually go into services like Medicare, like NDIS, like our defence needs. And so, managing the Budget, managing affordability for tax cuts, that's all part of a balance that we're working on. And hopefully the Coalition will support our tax cuts plan when it comes before the Parliament.
JOURNALIST: Just on electoral reform, do we need to make reporting on election funding and byelection funding real time? Does it need to be reformed? Considering that, you know, we still don't know – and we won't know until February next year – how much got spent on the Aston byelection?
GALLAGHER: Look, I think the Labor view is, faster reporting around electoral donations is important. Certainly, in the ACT, where I come from, that has been a focus. So, making sure that we lower the donation threshold so we're reporting more about who is funding what campaign and the sooner we can provide that information to the community, I think it's something we should focus on.