Senator the Hon Katy Gallagher

JIM CHALMERS, TREASURER: Okay, thanks very much everybody. I might say a few things about the progress on our briefings so far, as we begin the hard work on the economy and the Budget. We'll hear from Katy about similar matters and something she'd like to add about updating the health advice in the pandemic. Then I'll say something about the horrific events in the US overnight, and then happy to take your questions.

We're looking forward to welcoming the Prime Minister and the Foreign Minister back to Australia after what has been an extraordinarily successful trip internationally, to engage with friends and allies in the region. Anthony and Penny's engagement in the Quad meeting couldn't have gone better from an Australian point of view. We are very pleased with the level of engagement that Anthony and Penny have been able to do in their first trip overseas so soon after being sworn in as Prime Minister and Foreign Minister. We're looking forward to welcoming them back.

In the interim while they've been away, Katy and I have been busy, as you'd expect, receiving briefings from departments, regulators and the like, to make sure that the hard work of economic policy and Budget management began as soon as we knew that there would be an Albanese Labor Government.

So, from my point of view, I've had rolling briefings with the Treasury since Sunday afternoon in Logan, and continuing this week in Canberra. This morning I met with the heads of the Reserve Bank, ASIC, APRA, the Tax Office and the ACCC. And this afternoon I'll be meeting with the head of the Foreign Investment Review Board and the Australian Energy Regulator as well.

We are inheriting a very serious set of economic and Budget challenges, and there's no use mincing words about that or tiptoeing around the serious nature of the economic challenges that the new Albanese Labor Government is inheriting from our predecessors.

The defining challenges in our economy are skyrocketing inflation and rising interest rates, falling real wages, and not having anywhere near enough to show for a Budget which is absolutely heaving with a trillion dollars in Liberal Party debt.

We need to make sure that we are upfront with the Australian people about the seriousness and the nature and the magnitude of the challenges that our new Government is inheriting from our predecessors. No new Government can flick a switch and make a trillion dollars of debt disappear. No new Government can flick a switch and completely fix, overnight, the substantial issues that we have with skyrocketing inflation and falling real wages.

What we desperately need to see in this country is everybody working together to address these serious economic challenges. That's why we've been engaging with the relevant decision-makers in the economy over the last few days. That's why we have hit the ground running when it comes to the important work that we need to do to grow the economy the right way, to get real wages moving again, and to start to ensure that we actually have something to show for that trillion dollars of debt that we're inheriting from the Liberal Party.

We want to engage the Australian people in a big, national, honest conversation about these economic challenges. We will only solve them together. They have been building for a long time - in many instances for the best part of a decade - they will take some time to turn around. They will require hard work to turn them around, but that hard work has already begun. Katy.

SENATOR KATY GALLAGHER, FINANCE MINISTER: Thanks very much, Jim. Like Jim, since being sworn in – actually the day before being sworn in - I received the Incoming Government Brief from Treasury – from Finance, sorry, and had meetings with the head of Finance on Sunday. They've continued every day this week and will continue. So that's really getting across the state of the Budget, the fiscal outlook, some of the challenges that Jim's acknowledged in his opening comments, including significant deficits and record levels of debt and, of course, Budget pressures in a range of areas.

I think in terms of some of the work that I've got underway immediately, is the commitment around a waste and rorts audit. That's going to be managed between Treasury and Finance to go through line by line the Budget to see where there are areas where we can make sensible savings and return that money back to the Budget to ensure that the money that is being spent is driving those key priority areas we announced in our economic and fiscal outlook, around creating jobs, boosting participation, improving and increasing productivity, generating new business investment, and increasing wages and household incomes. So all of that work is underway. We'll have more to say about that soon.

In another area where I'm currently the Interim Minister for Health, ATAGI has updated their advice around the winter COVID-19 boosters, where they've expanded eligibility for that program. And that advice has been released. But it does increase, I think, by about another one and a half million people who would be eligible for a fourth dose, or what's called the fourth dose. It builds upon their advice from March, which had encouraged people aged 65 years and above, residents of aged-care or disability facilities, people who are severely immuno-compromised, and Aboriginal and Torres Strait Islander people over the age of 50 years. They've now increased that to include people who have health conditions and people who have a disability. And there's a range of, I guess sub-categories under that.

Essentially, I think for people who think they fall into that category, check it out. Make sure you are getting your fourth dose - the winter dose, essentially - to ensure that you are as protected as you can be from COVID-19. The idea behind expanding the criteria really has been to ensure that people who are at greatest risk of severe infection – ie, the worst end of COVID-19; so severe illness – are protected. And the reason why it hasn't been expanded more across the general population is based on evidence. We've accepted the ATAGI advice in full, but that the benefits of having a fourth dose for everyone aren't – you know - ATAGI's view at the moment is that that's not required. So it is, again, just that category of people who have underlying health conditions and people who have a disability.

CHALMERS: Can I just say on behalf of the Government just how heart-breaking and horrific the events have been in Texas. To try and imagine and fathom that a number of little kids were packed up and sent off to school today and won't be coming home and nor will their teacher, it just breaks your heart. And to think of the impact on those families and that community, I'm sure that every Australian heart goes out to everybody who's been impacted by that atrocity and that tragedy.

It's hard to imagine that a great country like the United States can go on like this with this gun violence, these mass atrocities. I speak for the Government – and I think I speak for every Australian – when I say our hearts go out to you who've been impacted by this, the families of those beautiful little kids and their teacher, the souls lost to another senseless act of gun violence in the United States.

JOURNALIST: [inaudible]. Have they indicated what impact rising rates, interest rates, are going to have on the economy? We had some instructional figures today that suggest that the March quarter isn't going to be that flash. I just wondered what the outlook was going from here, considering they haven't updated their forecasts in recent times?

CHALMERS: Obviously, the Reserve Bank has flagged publicly and repeatedly that interest rates will continue to rise. That's the trajectory of interest rates that we've inherited from our predecessors. The Reserve Bank, I think appropriately, has been very upfront about that interest rate trajectory because we do have skyrocketing inflation, which is expected to get worse before it gets better. High and rising inflation means rising interest rates. The Bank's been very clear about that.

That will obviously have an impact on the economy. And clearly, obviously, some of the conversations I've been having with the Treasury officials are about the economic outlook in the context of high and rising inflation and rising interest rates. There is an expectation, obviously, particularly if and when rates continue to rise beyond that first interest rate rise during the election campaign, that will have an impact on the economy and an impact on the forecasts. And we'll update those in the usual way - definitely in the October Budget - that Katy and I will hand down.

But what I would also like to do, is to give a detailed statement to the parliament when it returns – whether that's June or July – give a detailed statement to the parliament which is blunt and frank and upfront with the Australian people about the challenges that we've inherited from our predecessors. Obviously, rising interest rates will be part of that story.

JOURNALIST: Thanks Treasurer, and congratulations to you both in your new positions. You met with the RBA Governor today. Are you able to give an early indication about the RBA review, what your thinking is around maybe the possible model? Would you see, like, a combined Treasury-RBA review, as Phil Lowe and Stephen Kennedy, a sort of preferred model? Or a more independent external person or perhaps a hybrid version of those? And are you going to renew the agreement with the RBA straight away or will that be some time down the track after the review?

CHALMERS: Thanks very much, John. I've had great discussions with the Governor of the Reserve Bank today and prior to the election about the nature of the review of monetary policy that we will be undertaking as part of the new Government, and I've had discussions with the Treasury similarly.

I don't want to preempt cabinet considerations of the final form of the review, but I've been clear in the past and am happy to be clear here to say that this is a really important opportunity to examine the framework, the operations of the Reserve Bank to make sure that we are making monetary policy in this country in the best possible way, and considering the interaction with fiscal policy as well.

I'm incredibly grateful to the Governor of the Reserve Bank and the Treasury Secretary for the way that we've been able to engage in those discussions. I hope to be able to make it clear before long the time frame for the review, the terms of reference for the review, and the structure of the review, which goes to your questions.

On the arrangements in the interim, I will be writing to the Reserve Bank in the coming days before the next meeting of the Reserve Bank Board to indicate that all of the existing arrangements that the Bank operates under, and the Reserve Bank Board operates under, will remain in place until the conclusion of that review.

It makes sense to us not to preempt the outcomes of the review and not to substantially change our statement of expectations when it comes to the Reserve Bank until we've seen the outcome of that review, but we do want to make it clear in the interim that the existing arrangements stay in place.

JOURNALIST: [Indistinct] make a submission to the Fair Work Commission advocating for an increase in the minimum wage and, if so, when? Your comments this morning seemed to suggest that that wouldn't be the case anymore?

CHALMERS: Yes, thanks for the opportunity. The point that I was making this morning was simply that the Fair Work process is already underway and we've made our views clear. But, of course, consistent with the public statements that we've made before, we intend to make a submission to the Fair Work process, but that Fair Work process has already begun. I don't think anybody in Australia – certainly nobody at the Fair Work Commission – is under any doubt about our position. And that is that people on the lowest wages in Australia deserve a decent pay rise which recognises the sky-rocketing costs of living.  I'll work closely with Tony Burke, and with Anthony Albanese, and Katy, and interested colleagues, to make sure that we get that submission right. We've indicated that previously, and I'm happy to confirm that again today.

JOURNALIST: Thanks very much, Treasurer. You talked about inflation as the defining change that you're going to face, and also we all know that it's hard to put downward pressure on inflation because a lot of it is on the supply side. But we've talked a bit about housing construction. Prices there are up 10 per cent over the year. Talking to property developers this morning, they say the thing that can really make a difference amongst the very few options is to get more people into the country to help ease a lot of the labour shortages. And they're asking for – like a lot of the business community – for some kind of sign from the new government that you would be prepared to look again at these migration caps, perhaps as a way to accelerate them to ease some of the issues. Is that something you're looking at and would consider and, if so, when do you think you might be able to make a decision?

CHALMERS: Yeah, thanks for that. First of all, just to recognise that the building industry is under extreme pressure because of this skyrocketing inflation. Some of the conversations that I've been having over the last two days is about these quite extreme conditions that a lot of builders are dealing with because they might have signed contracts twelve or eighteen months ago. We've had this extraordinary spike in inflation and now they're trying to deal with that. And so that is, I think, one of the really pressing problems that we have right now, one of the consequences of skyrocketing inflation, particularly when it comes to building materials and other important parts of their supply chains. So I recognise that challenge and we will work with them to the extent that we can.

When it comes to migration, we've been very clear for some time now that we do need to ensure that we have the best possible mix of training people here for opportunities, a good, responsible, robust migration program, and also making sure that in areas like child care where we've got a big pool of available labour that might be deterred from working more hours and earning more because of the child care costs, that we can deal with that as well.

So we see this challenge in the labour market as something which has a number of solutions, not any one solution or another. It's not a choice between training people or bringing more people in – it's a sensible combination and a sensible balance that we need to strike.

I've been meeting the business community for three years, as you'd expect, but also in conversations since the election, and we recognise we need to get that balance right because there is extreme pressure in our economy when it comes to skills and labour shortages. Migration should never be a substitute for training, but it's an important part of our economic policy architecture.

JOURNALIST: Treasurer, just from your briefings so far, have you come across any unexpected surprises or landmines in there that you didn't see coming. And then perhaps for yourself or for the Minister, when it comes to the waste and rorts audit that you guys do, you're taking into account the various sports grants and things like that. Will it also look at commitments made by the incoming Labor Government in the election too? [inaudible] sporting fields, swimming pools and things like that, coming in?

CHALMERS: Katy might want to add to this in a moment, but the fiscal situation we're inheriting is dire. The Budget situation that we're inheriting from the Liberal Party is of serious concern to us. When we released our costings less than a week ago, we talked about the fact that we'd already found $11.5 billion in Budget improvements, which is a good start when it comes to the task ahead of us.

We can't flick a switch and make a trillion dollars of debt disappear. But whether it's multinational tax reform, whether it's trimming spending on contractors and consultants, whether it's starting to unwind a decade of rorts and waste and mismanagement in the Budget, this is hard and important work that we have already begun, and that work will continue.

From time to time you ask us, will the first Budget that we hand down in October come after a period of going through the Budget line by line. That will happen every Budget under us, because we want to make sure that every single dollar of taxpayer money is invested in the interests of the taxpayers and their economy.

For almost a decade now, we've had Budgets determined solely by political outcomes and not economic outcomes, and that's what Katy and I desperately want to change. Already in our conversations with Finance and with Treasury leading up to that October Budget, we've been speaking with them about the commitments that the Government has made over a decade in office. In our Budget, we intend to implement our commitments but we will always be on the lookout for places to redirect spending from unproductive political purposes into more productive economic dividend. Katy might want to add to that.

GALLAGHER: Just a couple of points. In the early briefings I've had, I do think there's opportunity to find further savings in the Budget and we'll be looking closely at that. It's early days, but I think the commitments we made last Thursday in our costings document around returning the regionalisation fund and the un-allocated money in the community development grants were sensible. I think there are, on my early briefings, I'd say there weren't too many fiscal rules in place in the final terms of this Government. So we do see large pockets of money being allocated in places without a lot of detail, and that's certainly an area of significant interest for us.

We want to make sure that you don't have $400 million buried somewhere without any business cases or any criteria around that money being spent, just to be dolled out through the course of an electoral term. That is not appropriate, and we won't be doing that. So, yes, there's opportunities in that audit.

In terms of your final part of your question about commitments we've made, those commitments we made in local electorates - as every political party going through an election campaign makes – we were upfront with those. The vast majority of them were based on cases from local councils or state and territory governments where the projects stacked up, and we accounted for those in our costings. We were upfront about it. We've found the allocation of money for it and we will be delivering on those. But that's very different for having, say, a $400 million regionalisation fund that's got no rules around it allocated in the Budget. So there is a difference there, and I feel that there are opportunities in that waste and rorts audit to find some more savings to return to the Budget.

JOURNALIST: Thanks, Treasurer. You made some comments about China this morning, so just following up from that – how quickly does Beijing have to get rid of these trade sanctions to make sure repairing relations with Beijing is even a possibility? And just to Katy if I may, Peter Dutton looks sets to be the next Liberal leader. Does he pose a threat as Opposition Leader?

CHALMERS: You go first, Katy.

GALLAGHER: Okay, with a second to think. No. Jim might have further comments to make about that, but it shows it's a sort of last-man standing kind of situation, isn't it? But also, if Peter Dutton is the answer, then it's not entirely clear that they heard the questions that were raised during this election campaign.

CHALMERS: Yeah, I think Peter Dutton's elevation would show that they've learned absolutely nothing from the drubbing that they got on Saturday. Peter Dutton has all of the same characteristics that people didn't like, that they saw in Scott Morrison. And I think we're up for a very divided period when it comes to the Liberals and Nationals.

Now on China, more seriously. Clearly, I'm not going to make foreign policy from this lectern. There are conversations that need to be had with Penny Wong and Anthony Albanese and the National Security Committee of Cabinet, but we've made it very clear that our highest priority in the region is stability and prosperity in the region. That's why Anthony and Penny flew to the Quad meeting, almost immediately having been sworn-in. The China relationship is a complex one that's becoming more so because of China's actions. China has become more aggressive and more assertive, and our responsibility as the incoming Government is to manage that complex relationship in a considered and sober fashion. If there is to be an improvement in relations it makes sense to us for the first part of that, the first step, to be the removal of some of those sanctions and tariffs which are doing damage to our economy and to our employers and our exporters. That would be a good place to start.

JOURNALIST: [inaudible] on the boats and the politicisation we have seen on that issue, a senior Coalition source told Sky News today that Labor's being deliberately misleading, regarding it wasn't technically a turn-back of a boat, it was a take-back. What's your reaction to that? And on stage three tax cuts, you have said you're going to proceed with them, but would they really have been a part of your plan if they weren't already legislated?

CHALMERS: First of all on asylum seeker policy, these guys can't help themselves. They're always looking to politicise what are serious matters of national security and border security, and I think Australians have had enough of that. It was terribly disappointing, from our point of view, to see the way that the Government, in its dying hours, attempted to publicise and politicise and send those text messages out about border security. Australians know, and the people smugglers know, that we remain committed to Operation Sovereign Borders, and the activity that has happened in the last couple of days has been entirely consistent with that. The message we send to the people smugglers, is that people shouldn't begin that dangerous journey, because they will be processed in the same way after Saturday as they were before Saturday.

And when it comes to stage three tax cuts, we've made the obvious point that they are legislated. We voted for them in the parliament. People should expect those tax cuts to flow in a couple of years' time on the usual time frame.

JOURNALIST: Treasurer, congratulations. You talked about how difficult it will be to turn around the trillion-dollar debt, but what is your long-term goal? Do you actually want to see – do you want to be a Treasurer that brings that back to balance, and how will you do that? Will you contemplate further spending cuts that you haven't announced before the election? Would you go back to some tax reform ideas that have been previously controversial, say franking credits, trust or negative gearing?

CHALMERS: We're not interested in going back on some of those commitments that we've taken to earlier elections and ruled out before this election. That's not our priority. Our priority when it comes to tax reform is multinational tax reform. And, as you know, there is really welcome developments around the world when it comes to that, and we want Australia to be part of that. We want multinationals to pay their fair share of tax here in Australia so that they can help fund the services that people desperately need and deserve in this country. So that's our priority on tax reform.

More broadly – and Katy and I work closely together as a team on the Budget – our aspiration, our objective, is to make sure that Australians actually get bang for buck for the taxes that they pay in the Budget. We think it will take generations to pay down a trillion dollars in debt, but we want there to be a generational dividend for all that debt that has been wracked up. So the first step, the most important step initially, is to try and take some of the unproductive spending and make it productive spending. Obviously, beyond that, there is a substantial task of Budget repair.

JOURNALIST: Treasurer, you said you'll be meeting with the Australian Energy Regulator later today. They're expected to release some numbers later on this week around the standing offer of prices, showing Australians will be paying more for their power bills. What is the most significant cost of living issue you want to address, and how will you do it? Secondly, if I may, you said previously that you wanted the Murugappan family to get home to Biloela as soon as possible. Have you been briefed on when that could be? Could it be in time for Tharni's birthday, which I understand is two weeks away?

CHALMERS: First of all on inflation and cost of living pressures, I think everybody does expect that there will be a spike in power prices, which will make it harder for Australian families to make ends meet. When you combine that with the spike in petrol prices, the spike in electricity prices, you combine that with child care costs, health costs - there are a range of pressures on families across the board. And families don't get paid a certain amount to pay their child care, and a certain amount to pay their power bills, so it's all in the same family budget, and those family budgets are under extreme pressure.

As you know, there's some cost of living relief in the Budget already. Some of that runs out towards the end of the year, and our job is to responsibly fund cost of living relief that goes beyond that. Our priorities are child care, cleaner and cheaper energy, obviously, medicine prices on the PBS, and also getting real wages moving again. We see that all as part of the same challenge.

On the Biloela family, as the interim Home Affairs Minister, I've made some substantial progress on this in the last day or two. I hope to have a conversation with the Prime Minister when he returns from his international trip. Obviously, there are a series of steps that I would need to appropriately take in order to give effect to our long-held view that that family must get home to Biloela, to the warm embrace of one of the most wonderful Queensland towns.

And if you'll forgive me a moment of parochialism, as a Queenslander born and bred, I am so sick and tired of Queensland being caricatured as a certain way when it comes to some of these sorts of issues. It warms the heart to see the way that that town of Biloela has gotten around this beautiful family and campaigned long and hard for this family to be returned to their home in Biloela, where they are making such a terrific contribution to the local community.

So I have made some progress on this. I have received advice that I sought, almost immediately, having been appointed the interim Minister for Home Affairs. I hope to be able to announce progress on this case very, very soon.

JOURNALIST: [inaudible] returning to the Budget, the March budget forecast deficits, or projected deficits, as far as the eye can see - the entire ten year projection period. Is it your hope that at some time – perhaps not in this Budget but some time soon – those projections will change so that there is at least one balanced Budget in the ten year projection period? And notwithstanding what the Finance Minister has begun, might it be that savings aren't enough, that you'll need some revenue measures somewhere in the next ten year period, in order to have any hope of changing that projection?

CHALMERS: First of all, on the first part of your question, I'm obviously not going to get ahead of ourselves and over promise and under deliver when it comes to getting the Budget into better shape. We've seen that movie before. Our predecessors promised surpluses in the first year and every year, we are not going to make that mistake. What we will commit to is doing the hard work, line by line in the Budget, to improve the quality of the Budget as a first step, and then ideally to improve the bottom line beyond that.

When it comes to the appropriate mix of revenue measures and savings measures, our priority right now is on the savings side of the Budget, but we do have that multinational tax reform that we want to progress. So that seems to be an important way to make a contribution on the revenue side, so does the extension of some of the compliance measures that the Government introduced.

JOURNALIST: A question to the interim Health Minister. When could four doses be extended more widely to the whole population? Is there a supply issue or is ATAGI just waiting for more evidence on the cost benefit of doing that? And are there other health measures that you're considering to curb COVID?

GALLAGHER: Okay, so on the supply side, I'm advised that there are no supply issues. And we would encourage anyone who hasn't had their booster dose, or who may be eligible for this fourth dose, to make arrangements to get that dose. But the Health Department advice to me is that there are no supply issues and that this can – certainly the extension of the fourth dose - can be, will be operational from the 30th of May. What was your other bit?

JOURNALIST: For the whole population, not just the 1.5 million?

GALLAGHER: Well, this is based on ATAGI advice. So ATAGI's advice to me - which I've read and either if it hasn't been released would be released in line with normal arrangements - is that the extension of the winter dose is about protecting people from severe disease from COVID. That the evidence in terms of protecting people from infection, or from being infected, like, a healthy person, isn't there at this point in time. But it remains under review. So their clear advice is that the fourth dose extension is for those people who would be most susceptible and most vulnerable to severe disease from contracting COVID.

JOURNALIST: [Indistinct] to COVID under consideration?

GALLAGHER: Well, there'll be a full briefing being requested, particularly by the permanent Health Minister, when they are put in place next week, about all matters relating to COVID, absolutely. And those arrangements are being put in place.

JOURNALIST: Treasurer, OECD head Mathias Cormann said that the international rewrite of tax rules is probably delayed by a year. What does that mean for your Budget? And briefly from Minister Gallagher, the consulting spend cuts, where and when do you start with that process?

CHALMERS: Obviously, we'll take advice on the implementation of the multinational tax changes which Mathias Cormann has been an important part of, as has David Bradbury, who would be familiar to many of you around this building. Australians are playing a key role in these international developments and we should be pleased about that.

We will engage with the international community on those two pillars of the multinational tax reforms, but we've also said that there are at least two other things that we can do - which we announced quite early in the election campaign - to begin the process of multinationals paying their fair share of tax. So we will look to implement those two measures independent of the global developments, and we look forward to implementing the outcomes of those global developments as soon as possible as well.

GALLAGHER: So on the save that we had built in, so I've had some good discussions with Finance about kicking that work off. I think one of the issues - and it's one that I've had and been pursuing in Senate estimates for a number of years - is that there isn't any APS-wide baseline data on the extent of the use of consultants, contractors and labour hire. There's been some improvements made in the last year, but that work needs to be done. So that's underway. And then Finance will provide me with an implementation arrangement. I mean, those savings we have in our costings, so those savings will be made. Finance will be briefing me in the not-too-distant future about that. But it is work underway and I think there's opportunity in terms of priority. I've indicated that I think labour hire is a sensible place to focus on because they are in those areas where there's high use of labour hire in permanent jobs where they are more expensive than permanent jobs. We can start looking at that re-balancing work there.

JOURNALIST: Thanks, Treasurer. When you come to your October Budget you're going to have a fairly significant uplift in revenue from the resource sector. I'm just keen to get a bit of an idea about what your approach will be to that revenue? You've talked about the expensive cost of living issues that are going to be coming up over the next six months, and on radio this morning you indicated that there are things perhaps you might like to do in the cost of living space. Will you be looking to - with that additional revenue - bank it, or will you be looking to perhaps use it to provide further cost of living relief? Just keen to get a bit of, obviously, that detail, but just a broad strokes perspective?

CHALMERS: Yeah, understood. First of all, I'd encourage you to be really careful about assumptions about improvements in the Budget. Commodity prices have been stronger than what the forecasts have assumed for a little while now, but there's no guarantee on that uplift in the Budget. There are other factors working against us, including some pressures on the Budget which were not disclosed or booked by the previous Government, and I'll get into that at a subsequent opportunity.

But you shouldn't assume automatically that the Budget, absent of any policy decisions, will necessarily be stronger in October than it was in the Pre-Election Fiscal Outlook. Remember, that even the developments in the economy - which I think Pat and others have asked me about - there are issues. Inflation is worse than what Treasury and the Reserve Bank thought not that long ago, and there are other factors as well. So a long way of saying be careful not to assume necessarily that the Budget is automatically improving over time. Commodity prices is one part of the story but not the whole story, and we are inheriting a set of challenges which commodity prices cannot on their own fix.

When it comes to if there was a Budget improvement, how would we invest it. I was upfront on radio this morning in saying there are more good ideas than there is room, in a Budget heaving with Liberal Party debt, to do everything. And we've said - really for as long as Katy and I have been working together - that we can't do everything that we would like to do. We have to prioritise, we have to sequence, we have to weigh up our priorities, and work out what we can responsibly do, and when we can do it, and that inevitably means that some things that we would like to do will take a bit longer for us to find room for in the Budget.

JOURNALSIT: Treasurer, central banks over time have not covered themselves in glory in lifting interest rates to deal with inflation without driving the economy into recession or making material slow down. Is that in your mind an issue as the RBA starts to lift interest rates? We've already seen a slow down of housing prices, for instance, which the RBA has expressed concern about previously. And, Minister, the former Government, in its first two Budgets, actually had a set fiscal rules of how to repair the Budget, which included an automatic banking of revenue entries. Have you considered formalising fiscal repair rules as part of your program?

CHALMERS: Well, first of all on the monetary policy part of it, I'm not going to get in the habit of second-guessing the independent Reserve Bank. I will rely, as you will, on the comments that they make publicly about the trajectory of interest rates. And they have said clearly, repeatedly, that interest rates will go up further for the rest of the year in some way or another.

I'm reluctant too, to kind of get into forecasting the impact of those interest rate rises, except to say at some point they will bite and they will make it harder for Australian families to make ends meet. We've got a full-blown cost of living crisis in this country, and interest rate rises will add to the pain of that, everybody understands that and realises that. But the independent Reserve Bank is independent for a reason. I have a mountain of respect for Phil Lowe and for the Board and for the institution. That's why I want to do this review to make sure that we can make it as strong as possible into the future.

But part of that relationship working closely with the other decision-makers in our economy, is making sure that we're not second-guessing them, we're not wandering across their independence. They're independent for a good reason, and it's for them to explain the thinking that goes into interest rate rises and the likely consequences.

GALLAGHER: Okay, well, it's clear from the briefings I've had that under this Government there haven't been any fiscal rules for quite a while. In our October Budget you would expect a fiscal strategy to be outlined, but we have also, through the course of the election campaign, made clear that our rules around quality spending - which I outlined at the beginning – was creating jobs, boosting participation, increasing productivity, generating business investment and growing wages and household incomes - that that guides any new spending decisions. And I think both of us have been clear during the election campaign too, that we will be running a fiscally responsible Budget process and Budget overall. This is the main game, and Jim and I are on the same page on that.

CHALMERS: Yep, great.

JOURNALIST: What are those unexpected pressures on the Budget? What did they leave you that you didn't know?

CHALMERS: I'll have more to say about that on another occasion. Thanks very much.