Television Interview – Sunday Agenda

KIERAN GILBERT, HOST: Joining me live in the studio now is the Finance Minister, Katy Gallagher. We will talk to Andrew later. Katy Gallagher, thanks so much for your time. Let’s pick up on this infrastructure announcement today. Are these essentially honouring the election commitments?

SENATOR THE HON KATY GALLAGHER, MINISTER FOR FINANCE: Yeah, that’s right. Catherine King has been working hard going through all of the infrastructure investment program, funding our election commitments, looking at other projects that are in there. And, you know, infrastructure is going to be a big economic driver over the next few years. And we had big plans in this regard and you’ll see those delivered in this budget.

GILBERT: Are you worried about the inflationary risks of injecting government dollars in at the moment when the RBA is obviously trying to cool things down?

GALLAGHER: Well, largely, we’re working within the infrastructure program, as it was announced, it’s in the order of about $120 billion. We’re also working closely – Catherine King, with states and territories, about the delivery of these programs, because obviously, we work with them. And there’s no doubt there’s, you know, issues around skills and supply and things like that. So we’ll work through those, but largely, it is working within the envelope that had been factored into the Budget. So we’re not adding in a whole lot new. But we’re reshaping and delivering on our commitments.

GILBERT: So it’s within that envelope. Does that mean that the other spends that the former government had in place that that’s high on your list of the waste and the rorts that you’ve been looking at in terms of your audit? Is the regional infrastructure spending on the chopping block?

GALLAGHER: Well, Catherine will go through this as part of the Budget process, and she’s been working closely with me. There is some work that’s been done around re-profiling and inside the infrastructure investment program, look, you know, there is some additional money going in, in line with our election commitments. But I guess my answer to your question is we’re not going to be adding to inflation through this program. We were managing it responsibly. And through the Budget more broadly, we have been looking for savings. As you know, through that audit.

GILBERT: Barnaby Joyce is convinced that you’re going to cut the regional programs that he secured as part of the net zero deal with Scott Morrison to get the Nats on board. Is that right?

GALLAGHER: Well, we’ve been looking at them. To be fair, I mean, we’ve been going through – are there business cases, were there any detail underpinning some of these big injections that were made, basically, to pay Barnaby Joyce off through that arrangement. And you know, if it stacks up we were pretty supportive but there are areas where we’ve got to reduce spending and reallocate in the Budget. We’re looking at that across the board. We’re not picking specific programs, necessarily and targeting them. But we are genuinely looking to rebalance the Budget and make sure that every dollar spent is going into something that’s needed and also there’s something that’s going to deliver an economic dividend and something that’s been worked out properly.

GILBERT: So it’s not simply to the detriment of regional areas as the Nats are warning?

GALLAGHER: Not at all. Not at all. Not at all. I mean, again, if it stacks up, it’s got a business case, it’s delivering on that quality spending, it’s going to deliver an economic dividend, you know, we’ve gone through every budget measure of the previous government, the March Budget measures looking at it in this regard, and I think you’ll see the results of that. You’ll definitely see the results of that in the Budget. But you know, if it meets those tests, we will proceed with it.

GILBERT: Is it important to transition – I know there’s a story today on the fuel excise versus a road user charge, but with more electric cars, the transition has to be made, doesn’t it from fuel excise, which will increasingly will be generating much less to a broader road user charge. Is the government considering that?

GALLAGHER: Well, I know Catherine King, again, working with colleagues, this is a matter that the states and territories raise. I’m sure there’s there’s a discussion to be had. It hasn’t been the focus of my attention through this Budget. This is really about delivering on election commitments, easing cost of living responsibly, where we can, making sure we’re driving economic dividend and returning some savings, or reallocating money through the Budget.

GILBERT: Is the parental leave, that increase in the number of weeks, that is a few years down the track. So again, I guess that you’re framing that in the context of the inflationary environment right now, that’s not going to add to inflation either because it’s what 24 to 26, that that’s going to come in.

GALLAGHER: That’s right. So there’ll be a gradual increase – 18 to 20 in July next year, and then moving up by two weeks every year after that until you get to 26 weeks. And the idea there is: yeah, it’s it is a stepped increase, we’re moving in the right direction. But yeah, we have to manage the Budget responsibly within the envelopes that we’ve got available. But I think on parental leave, this is a big – sometimes you got to take a big step up. You know, this hadn’t been boosted really since 2011. We know it’s an issue that affects women’s economic participation. That’s a real economic focus for us, you know, in driving our growth stories. Actually making sure women are able to work the hours they want and feel supported when they are having children and more broadly, parents. We need to get more dads, we’re seeing that, more and more dads are wanting to being able to spend time with kids in those early years. And that’s a great outcome too. So this initiative is about continuing on that journey.

GILBERT: It’s one of the – is it one of the few good news stories out of the Budget?

GALLAGHER: I think the Budget will have a lot of good news stories. I mean, it will be, you know, our commitments around childcare, about medicine, infrastructure, making things in Australia, all of those things. It’s a great economic story.

GILBERT: So it’ll be positive, because in the lead up to it, you’d forgive forgive me, and thank the viewers for thinking, Jim Chalmers is talking about the grim outlook and things been so difficult. It sounds like it was going to be sort of a slash and burn budget?

GALLAGHER: Well, I think we’ve made it clear, we will be finding savings, that’s definitely – you’ll see stage one of the audit into waste and rorts, you’ll see the results of that. So there has been that focus. But we also said it’ll be delivering on our election commitments, helping with cost of living pressures, where we can do that without adding to inflation. But we’re also being upfront with people, you know, the Budget is in structural deficit, we’ve got a lot of work to do. Not everything’s going to be answered in this budget. But every single budget will have to have a focus on budget repair, and building those buffers that the Treasurer has been talking about in light of what’s happening around the world, but also making sure we’ve got room to fund aged care, hospitals, NDIS, defence and service the trillion dollars of debt.

GILBERT: On that conversation, the Treasurer talks about the need to have a conversation on exactly those points you’re talking about. As Finance Minister, where can we get greater revenue from? It’s got to be a tax mix, doesn’t it the tax change?

GALLAGHER: Well, I think the conversation is with the community and I think we’ve had previous government that tried to either pretend things were all okay, and, at the same time, not deal with any of these things, which is why we’ve got an energy crisis, a crisis in aged care, because they kick the can down the road, it was easier to do that. So I think the first part of the conversation is really getting an understanding from the community about what services they value, and how we’re going to meet some of those costs. You know, and for my job as Finance Minister, it’s really, and work I’ve been focusing on in this budget, is looking at what we’re currently spending, and looking at areas where we can shape and shift and make room. And that’s, I think, the job of a good finance minister. And we’ll continue to do that. But first of all, we need to have that honest discussion. It’s not easy, you know, we’re not going to stand up and just pretend that the budget is in good shape that there’s no problems. There are problems, and we have to manage them.

GILBERT: On the stage through tax cuts. Did you and the Treasurer, float that or fly that kite, so to speak, only to be reined in by the Prime Minister? Is that how it works?

GALLAGHER: Look, we were having a conversation about just the subject we’re talking about, which is, you know, we’ve come in, we’ve looked at the Budget, we’ve got all the advice, we’ve got a whole range of pressures there. From my point of view, it’s the information I’ve got now is, is much greater than I had in opposition. So sort of coming and adjusting that point of view, and then opening up that conversation. And again, I think people are ready for it. Like, I don’t think they want people to just say, ‘nothing to see here, we can deal with all these problems’ and or we can pretend they don’t exist. And so I think Jim and my approach since coming in was to say, this is the situation we have inherited. But I would also say our immediate priority, and for October, has really been landing, those key priorities through the Budget process. Election commitments, cost of living relief, driving economic growth, and managing or looking at the audit of waste and rorts.

GILBERT: Was the stage three process, those tax cuts, was it seriously looked at being amended? Because my understanding is that didn’t even go to Cabinet and so a commitment like that, when the Prime Minister has been pretty clear several times that that would be delivered, that if you were going to change it, you’d take it to Cabinet. So was it seriously looked at?

GALLAGHER: I think, what you saw was us having a very honest discussion about the the issues that we were identifying through the ERC process. I’m not going to go into what goes to Cabinet and what goes anywhere else, but you could understand that putting a budget together, you’re looking at everything. I mean, you have to. You can’t pretend that you’re seeing this in a year by year thing. You’re making decisions that go out beyond the forward estimates in into the medium term. So you know, I don’t think it’s any surprise that we looked at all aspects of the Budget.

GILBERT: The Treasurer has said it’s a dangerous international economy. It certainly is for the job of UK Chancellor, he lasted a couple of weeks. It’s volatile. And do you think that it’s inevitable that we will see recessions in countries like UK, the United States, for example. And Jerome Powell told Jim Chalmers that he will crush inflation, one way or another. It sounds like they’re, they’re willing to have a recession if need be?

GALLAGHER: Well, I think the Treasurer has been pretty clear. I mean, it’s been really great that he’s been able to go to the US and have those face to face meetings with all the key leaders in the global economy, because that’ll feed into some of our thinking back here and he brings that back with him. And he’s been clear that the chances of a recession in, in some of those key economies like the UK and USA is probably shifted from possible to probable, and that that central banks everywhere, including here, taking pretty swift action to deal with the inflation problem we’re seeing in the economy.

GILBERT: Is it more than probable? Do you think it’s inevitable from the sounds of what we’re hearing from the US?

GALLAGHER: I think it’s probably better that we listen – we leave that to the central banks and economists in those countries. I think the Treasurer has been clear; possible to probable. I think the thing we do know is that it’s going to be a pretty rocky next 12 months. And we are not immune from that. We’ve got strengths in our economy here that that makes us a little bit different to those, but it’s going to be a pretty rocky 12 months.

GILBERT: And on energy prices, finally. Will the Government use the competition watchdog to rein in gas producers if need be in terms of their prices in our domestic market?

GALLGHER: Well, this is an ongoing piece of work, for sure. We’ve seen the excellent work that Madeline King has done in terms of securing supply and getting that heads of agreement in place. But I can guarantee you the Government is very focused on energy prices. What’s happening, not just with gas, but electricity as well. You know, these are hitting households and where the Government needs to be is to make sure that we’re focused on it and looking at what options there are available to us to make sure that consumers and businesses are getting a fair deal.

GILBERT: Finance Minister, Katy Gallagher. I know it’s a busy time for you in the lead up to the Budget. I appreciate you making the time this Sunday. Thanks.

GALLAGHER: Thanks very much, Kieran.