Senator the Hon Katy Gallagher

SARAH HARIS, HOST: Finance Minister, Katy Gallagher joins us now. Katy, is this deal a sign the Government is in panic mode about China?

SENATOR THE HON KATY GALLAGHER, MINISTER FOR FINANCE: Absolutely not. This is around a decision we've taken, a big decision admittedly, around replacing an existing capability as our Collins-class submarines come to the end of their life, about making sure that we are equipping our country with the capability it needs for the times we're living in, in the region we are a part of. And that's certainly been supported by a lot of expert advice to Government which led to the decision today.

WALEED ALY, HOST: Big decisions have big consequences. We are already seeing some Chinese Government aligned academics who probably are speaking the mind of the Chinese Government, I think we can probably assume, say this puts a massive target on Australia's back and it moves us into the frontline of the tensions between America and China rather than somewhere that's more comfortable. We spoke earlier in the show with Rex Patrick, a former colleague of yours in the Senate who said this has riled China, but it hasn't deterred China. Is all that in our national interests?

GALLAGHER: Well, again, this decision is about making sure we've got the capability we need for the region we live in. We know that there's been quite significant increase in equipment and operations in our region. And we need to respond in a way that keeps our country safe. And I think that's what the nuclear powered submarines give us the capability for.

ALY: So you're quite happy then if the consequence is that it puts us in China's cross hairs more and it does put us in the front-line and it does rile China?

GALLAGHER: Well, no, I mean, I would say that, you know, how China responds is a matter for them. I'm saying that the decisions we've taken is about, you know, our national security, our national interest, our sovereign interests, and playing a role in this region where we want peace and prosperity and making sure that we've got the capability that supports that. That's the role of the Australian Government. How the Chinese Government chooses to respond is a matter for them.

GEORGIE TUNNY, HOST: Minister, you've committed to managing all the high level radioactive waste generated from the subs in Australia. We're talking about national interests. I'm sure people want to know where it will be stored?

GALLAGHER: Yeah, so we'll undertake a piece of work now over the next year to look at identifying places where that, you know, that would be a suitable location. This would be on defence land or defence-acquired land. And it's important to note that the spent fuel, you know, that you would be looking to accommodate there is several decades away, you know, into the 2050s. So, there is time. But we understand that there'll be a national interest in that and people's views in that and so we'll go through the appropriate consultations and processes over the next 12 months.

SAM TAUNTON, HOST: Now the price tag is dizzying, $360 billion. What are you going to cut to pay for it?

GALLAGHER: Well, this is my job as Finance Minister working with the Treasurer really around how we make room in the Budget for programs like defence. We've been saying for the last 10 months or so since coming to Government that defence is one of those key areas where there is pressing Budget pressure, along with the NDIS, along with health, along with aged care and servicing the debt burden as well. And this is, I should say, over a long period of time – that is over the next 30 to 40 years. So you see those costs, they sound huge and they are large numbers. I'm not pretending anything else. We've got to make room for those as we do with other Budget priorities. So, you know, there'll be difficult decisions ahead. We're going through the Budget now in terms of looking at how we allocate funding and this will be an ongoing task of any Federal Government over the next few decades.

TAUNTON: Yeah but $360 billion, you're the Finance Minister, did you haggle at all? Did you ask for a discount? Did you offer to pay cash? It is so much money!

GALLAGHER: It is a huge amount of money. I accept that completely. And yes, I haggle a fair bit with the Defence Department.

TAUNTON: What did you get it down from?

GALLAGHER: Well those conversations stay in the room.

HARRIS: Classified.

GALLAGHER: But I should say there's a huge economic benefit from it as well in terms of, you know, the industrial base, the jobs that will be created, the support that will go into economies in South Australia and WA. So yes, it comes with a Budget hit, but it comes with, you know, a big uplift in our industrial capability in jobs and supporting economies right around the country.

HARRIS: Okay Minister, thanks so much for your time tonight.

GALLAGHER: Thanks very much