Colour head shot of Katy Gallagher, current Minister for Finance.

Senator the Hon Katy Gallagher

Minister for Finance

Radio interview - ABC PM with David Lipson

Minister for Finance
Minister for Women
Minister for the Public Service
Senator for the ACT

Bigger tax cuts for middle Australia, cost-of-living relief

DAVID LIPSON: The Finance Minister is Katy Gallagher. She joined me earlier. Katy Gallagher, thanks for your time. But the cost-of-living crisis is temporary. In fact, we're told inflation has already peaked. Why are the tax changes permanent?

SENATOR THE HON KATY GALLAGHER, MINISTER FOR FINANCE: Well, we've supported tax changes and returning bracket creep. I think all governments do that at the right time. We want people to have more money in their pocket, more of what they earn. And that's why we've looked at a sensible and responsible way to revise the tax cuts that were planned into a better way that gets to more people and gives more people a bigger tax cut.

LIPSON: Yes, it does give more people a bigger tax cut. But as I say, it does so in a way that will remain in place long after the cost-of-living crisis is over. Is that appropriate?

GALLAGHER: Well, certainly from our point of view, we think it is. These changes going to be legislated. They will be ongoing. But they certainly, with coming into effect on 1 July, will give households – particularly middle Australia – more money in their pocket to help deal with some of those cost pressures they’ve been seeing. And we've managed under this package – and we've carefully considered it, we've looked at all the possible options about how to best do this in a responsible way. But we wanted a way to reach more people and to return people's money through the tax system back into their pockets. Particularly with this sustained cost-of-living pressure people are under.

LIPSON: The changes mean the government will rake in $28 billion in additional tax revenue over the decade due to bracket creep. Are you concerned that Australians will be paying much more tax in the medium to long term?

GALLAGHER: Well, as the Treasury advice shows – and we released that advice today – that the average taxpayer will pay less of their income tax for at least the next decade. And that’s as far as the projections go under our plan. This gives the biggest benefit to more Australians. It provides a better way to provide relief from bracket creep. And we're recognising that middle Australia are under the pump. I think we're always looking for ways to provide relief where it's possible and where economic and fiscal circumstances allow. I think all governments seek to return bracket creep. And it's open to future governments to do so.

LIPSON: Explain for us how this will help women in particular?

GALLAGHER: Well, we know that women predominantly – well, large numbers of women – are in the lower- and middle-income brackets. We know women are also more represented in part time employment. Lower paid, part-time work. And this package will ensure that 100 per cent of women get a tax cut. Which is not the way under what was legislated under Scott Morrison’s plan five years ago. Really importantly, 90 per cent of women workers will get a bigger pay cut – sorry, tax cut. Which is actually going to those highly feminised industries like aged care, like teachers, like nurses. Those areas where you will see upwards of 90 per cent of people working in those industries getting a much bigger tax cut. This has been through a gender impact assessment. The advice from Treasury is very clear that the proposal that the Prime Minister put forward today has a significantly positive impact on women workers across the board.

LIPSON: You’ve said there were discussions and work on this package over summer. Did that work and those discussions begin before or after Christmas?

GALLAGHER: Well, I think late last year we had a think about taking further advice. I think the Prime Minister was clear on that over the Christmas break. That he had sought that advice. And we've been working through that over the last couple of weeks, through January, and went through our government processes. In the last week, the ERC met earlier this week, the cabinet met, the ministries met and caucus met yesterday to consider this proposal.

LIPSON: As recently as last week, the Prime Minister said he was committed to delivering the original stage three tax cuts as promised. Clearly there was an attempt to manage the message here. Because the work was already well underway, although it hadn't been through cabinet. You know, there were ads prepared to be rolled out today. Has the government chosen political expediency over integrity here?

GALLAGHER: Absolutely not. The cabinet agreed on Tuesday to a change to our position. The Prime Minister is a strong believer in cabinet government and showing the cabinet the respect that it deserves – and the caucus – around making decisions. We've taken it through our processes. The Prime Minister's addressing the Press Club today with the top journalists in the country questioning him. That’s all about integrity and it's all about being upfront. It's all about taking responsibility for what has been a change in our position. And we acknowledge that and you know, we are answering questions and being upfront with people and letting them know that this tax plan will deliver bigger tax cuts to millions and millions of Australians who are doing it tough right now.

LIPSON: Do you worry personally about being branded a government that doesn’t keep its promises?

GALLAGHER: Well, I think the Prime Minister has addressed this front-on today. We recognise that there will be politics associated with this. But we have put people, and addressing cost-of-living pressures, ahead of those politics. And it's our responsibility to go out and explain why our position has changed. And you know, as the PM said today, his job and his responsibility is to do the right thing by people, not the necessarily the easy thing. And that's why we've been out talking about this today. Absolutely, you know, fed into the decisions we've taken about making sure that we can give more Australians millions and millions of Australians a bigger tax cut come 1 July to help them through this sustained period where cost-of-living pressures are real.

LIPSON: Finance Minister Katy Gallagher, thanks for being with us.

GALLAGHER: Thanks very much, David.