Senator the Hon Katy Gallagher

JOURNALIST: Katy Gallagher is the Minister for Finance and the Minister for Women, here to explain why and what the new version of these tax cuts will mean for you. Minister, since the Prime Minister made this announcement of these changes, there's been plenty of criticism of the broken promise element. Newspoll makes it clear that pretty much most people support it anyway, but the PM did frame this as a matter of his personal integrity. So, even if people like the new policy, can we trust what this government says going forward?

GALLAGHER: Yeah, look, I think there's been a lot of discussion about this. And we knew this going into the decision. We knew that changing your position in politics is hard and it comes with consequences. But when we considered that, we had to weigh that up against not responding or the counterfactual, which is not doing anything, not changing our position. And that would have meant that for millions of Australians, they would have got a smaller tax cut, or no tax cut at all, at a time when people are doing it really tough. So, we went into this knowing it would be difficult. I guess our view was we needed to put the – you know, make the right decision for the right reason and then explain the change in position. Front up, explain it, you know. It's not something politicians do lightly, to change the position from what we took to the election, but it was just the right thing to do. And therefore, you wear the consequences.

JOURNALIST: So, you are taking a big political risk, though. And given that you are taking this risk, why did you choose to give people an immediate tax cut rather than, for example, a complete overhaul of the tax system. Was this an opportunity missed?

GALLAGHER: There's always people with views around tax reform, and you know, what you should do and what you shouldn't do. There's no shortage of ideas. I guess we were faced with the fact that we support tax cuts, we support the return of bracket creep when it's responsible and affordable to do so, and the legislated tax cuts that were in place from five years ago, when Morrison put them to the Parliament, had an element of that to them. But we just wanted to see it distributed more evenly across the income brackets. So, under the former plan, people under $45,000 – earning under $45,000 – didn't get any tax cut at all. And young people, workers, part-time, casual workers – that meant millions of Australians would have missed out. So, we think this is reform but it is also relief. And, you know, tax reform is difficult in this country. I think we also need to be upfront and honest about that as well. So, this allowed for tweaking of the Morrison plan, but allowed 11.5 million Australians to get a bigger tax cut and to get a tax cut right through the income scale.

JOURNALIST: Yesterday, you said that people expect their governments to manage economic circumstances of the time, and that's why we've changed our position on tax. The housing crisis has only gotten worse during this period of government. Why should the government break this promise on tax cuts – in order to fix the cost-of-living or help with the cost-of-living – but not get rid of negative gearing to help fix the housing crisis?

GALLAGHER: Well, our position on housing has been to focus on supply. I think we've suffered from a decade of indifference from the former government who didn't see a role for the Commonwealth to play in social and affordable housing and leaning in on the supply side. And so, we've got a shortage of housing – which, you know, pushes prices up, pushes rents up – and so our focus on that has been around supply and increasing supply. Because that's the immediate thing you can do, as opposed to changes to the tax arrangement. And the one we have put in place is the build-to-rent to try and incentivise investors to build for the rental market. And that was a change we put in the last Budget. So, we changed our position on tax, it was about immediate relief, what can we do for immediate relief for people's household budgets. Those changes come in on 1 July. The best thing we can do on housing is to increase supply and work with the states and territories and local government about getting rid of some of the blockages that have put supply constraints on housing. But you know, you can't undo essentially 10 years of neglect in 18 months. This is shoulder to the wheel stuff. And it's going to take some time, but we're on the case.

JOURNALIST: Can we expect changes to negative gearing before the next election?

GALLAGHER: The government has no plans around changing those tax arrangements. I'll tell you what we do have, though, because we do have quite a full book on tax. We've got high-end super balances, we've got PRRT, we've got multinational tax reform and we've got these income tax arrangements in the legislation going to the parliament. Some of those pieces of legislation are stuck in the Senate and we need to get them done so that we can put in place arrangements around high-balance super accounts and PRRT. And that's a pretty full book for anyone that's trying to get stuff through the Senate, which is one of my other jobs. Which is, you know, a pretty challenging chamber at the best of times.

JOURNALIST: On the impact that this package will have on women and men, you are the Minister for Women. But how will the government’s tax cut changes affect women and men differently? 

GALLAGHER: Look, the proposed plan that we've put to the parliament today will significantly improve the situation for women taxpayers. So, under the former arrangements, under the Morrison plan, the vast majority of the tax cuts went to men. And that's really because they were targeted at high-income earners. And you see, men dominate the high-income brackets in this country. Women, and their earning capacity, is much more concentrated to the low income, low- and middle-income thresholds. And because we’re evening this out, because we're spreading or sharing the benefits right through the income scale, it means all women taxpayers will get a tax cut and 90 per cent of women taxpayers will get a bigger tax cut. And particularly those highly feminised industries – like teaching, nursing, aged care, disability, early education and care, where we see a lot of women working in that workforce – they will be significant beneficiaries of the new arrangements. Which, you know, they'll get more tax back and have more money in their pocket each fortnight.

JOURNALIST: Why are the changes still skewed towards the rich?

GALLAGHER: Well, I think under this plan, we were conscious that everyone get a tax cut. Stages one and two concentrated on the low- and middle-income brackets. This stage three, as under the Morrison plan, was much more skewed to people earning over $180,000. This arrangement that we've put in place means everyone still gets a tax cut, but it's more evenly shared. So, every single taxpayer gets a tax cut. The biggest beneficiaries are happening – you know, that occurs in the middle-income brackets, but it still puts those on higher incomes, still get a tax cut. And we think that's important, too, returning bracket creep and providing relief right across the income scale.

JOURNALIST: You mentioned that the most wealthy people in Australia, more of them are men than women. And there's this quite shocking graph, I think, in the Treasury advice that you received about the stage three tax cuts, which is that about half the people earning zero to $43,000 a year are women. But as the income goes up, the share of women earning it goes down so that only 30 per cent of those people earning over $170,000 are women. What's the government doing about that problem?

GALLAGHER: Well, that's a much bigger problem to solve. But again, we're happy to lean in on it. We want to make sure that women are treated equally across the economy. It's one of the big constraints on gender equality in this country is women's economic independence – or lack of, in many situations. So, we've got to come at this in a number of ways. We've got to ensure that we're dealing with the violence against women and children. That is a big economic handbrake on women and their ability to earn and live the way they want to. But we've got to make sure we're dealing with wages in the highly feminised industries, we've got to look at how we get young girls into the jobs that are high-paying and traditionally in those areas like STEM. When I look at this problem, it's a problem that we have to come at from primary school all the way through a woman's life. Because there's periods within a woman's life where – whether they're having children, caring for those children, caring for older people having a relationship breakdown, enduring violence – where it really interrupts their earning capacity. And we've got to try and deal with all of that. Otherwise, we're not going to see a shift to women getting into those higher income brackets. But we're determined to give it a crack, and we've got a lot of work underway to make sure we do it, but it's not going to be solved with one single solution.

JOURNALIST: And can the government guarantee that the cost-of-living is going to go down by the end of this term of government?

GALLAGHER: Well, we're working on it. I mean, obviously, there are some things in our control and some things that aren’t. You know, the global economic situation is uncertain, but we have to respond to that as it unfolds. But we're seeing good moderation in the inflation numbers, which is what has been really hurting people either at the supermarkets, at the petrol station, with renting. We're seeing that come off those high points of about a year ago. And that's really welcome news, but we're going to keep working at it. This tax relief is one part of it. We've got to keep focused on cost-of-living measures, and we'll do so in the Budget.

JOURNALIST: When people are explaining this policy, there's a lot of percentages, a lot of numbers. I think a lot of people may not really still understand what these changes mean. Can you give us the 30-second elevator pitch for what these changes are going to mean for people at 1 July?

GALLAGHER: That’s a real test. So, 30 seconds. From 1 July, every taxpayer in Australia will get a tax cut. 11.5 million Australians will get a bigger tax cut. This provides relief at a time when people are doing it tough. People should keep an eye on their pay packets, because it will come in from 1 July.

JOURNALIST: That was Katy Gallagher.