Senator the Hon Katy Gallagher

TOM CONNELL, HOST: There's plenty on the Government's to do list for the rest of the year, they've got to sort out what's going to happen with gas and electricity prices, give relief to consumers and businesses, and also get wages moving. That can only happen according to the Government, via a controversial industrial relations bill. I spoke a short time ago to the Finance Minister, Katy Gallagher. Minister, thanks for your time.

SENATOR THE HON KATY GALLAGHER, MINISTER FOR FINANCE: Thanks.

CONNELL: It's all about industrial relations, the Government keeps saying we need to get wages moving. They are moving, 3.1% increase in September - that's the fastest growth in a quarter since 2013. 

GALLAGHER: Yeah, so that's welcome. I mean, we've had a decade of stagnant wages. So seeing the, you know, starting to see the increase in wages is good. But we still want to fix the bargaining system, and we know that the bargaining system hasn't been working. The whole purpose of the industrial relations reforms is to get that back where it needs to be to give bargaining power to workers and bring employers to the table. And, you know, we'll continue to argue for that, over the course of this fortnight, hopefully, in a position to get it through.

CONNELL: Private sector is actually up more than public as well. So, if you want to do your bit, does the Federal Government need to go out and be a lot more generous with public servants? 

GALLAGHER: Well, the public sector definitely has a role to play, and we have seen sort of wage restraint in the public sector, particularly through the pandemic and things as budgets have had to realign and go into other spending priorities. We tried in this first offer, to go to 3%, which is higher than you know, what was being offered under the former government. We're going to have to manage that going forward. So we are —

CONNELL: But you say 3% is not moving enough for the private sector. So, shouldn't you be offering more for the public than 3%? 

GALLAGHER: Well, I don't know that I've said that in the private sector. I mean, we wanted to see wage growth. I think if you look at public sector wages, they have been sitting in around 2.5%. We're offering 3% as an interim offer, under our wages policy. We're developing up a wages policy to go over, you know, from September next year, and we'll look at some of these. I mean, part of the issue, as well, for me with my finance hat on, as well as public service hat, is the Budget, the budget pressures, you know, so we have to be looking at how we're managing the Budget, but providing reasonable wage offer to public servants.

CONNELL: As in something that's a real wage increase, which 3% isn't? 

GALLAGHER: No, it's not a real wage increase. And we haven't pretended it is. I mean, obviously, with inflation, where it is, I don't think anyone's pretending that we would be offering wages in the order of 6% or 7%. But we know we have, you know, we want to be a model employer, we want to be able to attract people to the public service. 

CONNELL: Okay.

GALLAGHER: And part of that is offering good wages and conditions. 

CONNELL: The Bill itself, it's noteworthy, I think you haven't ruled out splitting it up, which a lot of the key players are telling you, you need to.

GALLAGHER: Well, look, that's not a matter for me. I know it keeps coming up in the negotiations, our position is that it shouldn't be split. That, you know, to take out one bit, sort of compromises other parts of the Bill like to take out essentially, the controversial part of the bargaining reforms, when you're trying to fix bargaining can compromise your overall effort. So our preference is to keep it all in. It's drafted in a way that would make it quite difficult to take segments out, in that it's a schedule, you know, and that's just a drafting matter. But, our preference is to deal with it in its whole. I know, people would like to separate out the controversial bits. But that's more about a process rather than actually forming a position.

CONNELL: I guess, as well, that's what might actually be able to be passed... that will play out over the next couple of weeks. 

GALLAGHER: Well we'll see, we'll see, yeah.

CONNELL: Yeah, so IR changes in the theoretical are fine, what about how it actually works? The Minister says that it will get childcare wages up, and he's called them out specifically, Tony Burke. The Government went, of course 100% on aged care wage increases, but not the same on childcare. Why not?

GALLAGHER: Well, on the aged care one, that was before the Fair Work Commission, so that was a case that was taken there for a work value case. And, you know, the Government has been clear, we've got a significant role to play there in addressing aged care workers' wages. I think, you know, there's no avoiding the fact that we will have to look at childcare. What that means and how that goes -

CONNELL: What do you mean, we? As in?

GALLAGHER: As the Government.

CONNELL: The funder?

GALLAGHER: Yeah.

CONNELL: Okay.

GALLAGHER: I think it's unreasonable to pretend that that won't become an issue, because we've got NDIS wages or wages in the disability sector, we've got wage increases; the disability sector leads the care economy at the moment, aged care will get their wage increase. Then you'll have childcare...

CONNELL: Childcare is left behind at the moment.

GALLAGHER: Exactly. And we know what will happen, you'll see movement between the care economy as, as you would expect, if you can go and get a better paid job somewhere else. And that will place pressure on early education and care. So, look, I've had some early meetings with the childcare sector, with unions. It's a real issue, and we're going to have to manage that as well.

CONNELL: So the sector if there's a pay increase, the sector would generally pass that on. That's what would happen, right?

GALLAGHER: Yes, in the absence of, you know, other ways of providing that increase.

CONNELL: And in that situation? So we know childcare is essentially funded with a government subsidy. So if a parent at the moment is paying 50%, and getting a 50% government subsidy, a pay increase for childcare workers would mean, parents are paying 50% of that and that circumstance, that's how it would play out?

GALLAGHER: Well, again, it would look, I mean, it's hard to speak about hypotheticals, you'd have to understand, you know, if a case goes before the Fair Work Commission, what happens through that case. I mean, obviously, they get wage increases to the minimum wage adjustment. But if there was something over and above that and look, for my discussions with the early education and care sector, they are very focused on wages and getting wage increases. And I think the Government has to be a part of that discussion. As to how it would be finalised —

CONNELL: Yeah and that's the question, I guess. If it happens in that normal way, that's what would happen. Parents would pay their share. Is it on the table for the Government to say, we're trying to get childcare prices down? We'll fund the pay increase? Is that on the table?

GALLAGHER: Well, I guess at this point, in the absence of you know, anything concrete, I would say the approach, we would want to be a reasonable participant and discussion in how you make childcare wages increase. We are a funder of that sector, through the subsidy, this industrial relations bill actually, you know, involves funding bodies in terms of some of the bargaining arrangements. So we would definitely be at the table. And yes, we, you know, we've got another piece of work going on about what are the drivers of cost increases in childcare. Because we've seen such big increases in recent times, not all of that or not, most of that has gone to childcare workers. So that piece of work is running alongside this. We've got our childcare reforms, which we'll, we're going to pass in the Senate this week, that will again, provide more funding to parents.

CONNELL: That'll be more but then that's the problem. And then if there are wages, I mean, aside, part of that benefit might get taken away? 

GALLAGHER: Well, I mean, we've made no secret, we want to look at how we can make childcare more affordable; that's the legislation, the review, and working collaboratively with the unions and providers.

CONNELL: Just wanted to ask about gas as well, the principle here is it revenue neutral, whatever happens? As in, if you're raising money, it goes to consumers and businesses paying these high prices?

GALLAGHER: In terms of the options that we're looking for?

CONNELL: Whatever the option. Is it a revenue neutral approach? 

GALLAGHER: Well —

CONNELL: Whatever you get goes to people, or you want to raise some money for the Budget as well?

GALLAGHER: Well, we haven't been looking at it in terms of Budget repair, I can say that. We've been looking at how do we manage our way through this pretty tricky situation we're in now. What are the interventions that Government can do to take pressure off manufacturers and households? There isn't an easy solution. I don't think, you know, I think if there was an easy solution, someone would have found it by now and it will be rolling out. But there, you know, understanding the impacts of the intervention, what are the different options is really important. And that's why we're taking our time. Jim's made no secret of the fact we prefer a regulatory response, looking at the voluntary code and how that can become mandatory, that type of thing. I mean, if you asked us 18 months or a year ago, or even 6 months ago, would Government be considering options to intervene in the energy market, you would have got a different answer to what we're doing now. So now we have to do the work to make sure that decisions are proper. 

CONNELL: When you can see already the possible campaign being ramped up against you. If you're saying we're just raising whatever money we get, we might get, it goes to the consumers. We're not getting it. It's a pretty powerful argument back against it being some sort of government grab for money, isn't it?

GALLAGHER: Well, again, you know, we haven't finalised our position on it. We've got a preferred regulatory pathway that we are looking at, we are looking at —

CONNELL: Just on that when you say preferred, essentially, if companies want to come to the party and ensure that local users of gas only pay a certain amount, pay less than the high prices now, then you wouldn't have to intervene? Is that the message?

GALLAGHER: Look, I think working with the companies and looking at what can be done to take pressure off local manufacturers and businesses and households, you know, is sensible, but we are looking at other options too, because you know, these price rises are happening now. The 20% ones coming through, that was over the last 12 months. We've got others coming this way. We've got businesses telling us that they are in real strife. We've got to look at what is the best way to intervene. But as I said, Tom, none of these are easy decisions and understanding the impacts of those interventions is important too.

CONNELL: Finance Minister Katy Gallagher. Thanks for your time. 

GALLAGHER: Thanks very much.