Senator the Hon Katy Gallagher

GREG JENNETT, HOST: Katy Gallagher, you’re on the eve of yet another Budget. Does it ever grow old, the lead-up, the endless hours in Expenditure Review Committee? I note that Mathias Cormann did five years. How are you tracking on the fatigue factor?

SENATOR THE HON KATY GALLAGHER, MINISTER FOR FINANCE: You get pretty tired by the time Budget Day comes around. It’s a lot of work. It really starts at the end of last year and continues on for months. So, it’s been a lot of meetings, a lot of decisions, a lot of difficult choices culminate in those budget books that get released tonight.

JENNETT: Alright let’s go to the headline preannouncement of today, a second surplus. This would be twice that the government never budgeted for one but lo and behold, achieved one. This is the end of the line, isn’t it? There are no more in sight from here.

GALLAGHER: Well, I think we’ve been pretty upfront. You know, we’ve got the first back-to-back surpluses in the past 16 years, so that’s a big achievement. And it's an important achievement in terms of the inflationary environment that we've been operating in. So, it certainly helps on that front. But we've also made no secret that the pressures on the Budget continue to intensify. Those five big areas we always talk about, the pressure there is real. And you know, we have to manage that going forward.

JENNETT: Will there ever be a time for the slash-and-burn austerity that you've decried this year? Because one of the growth areas you highlight is obviously servicing interest on debt and you're adding at least $73 billion to that debt – at least, that we know of, before we get to tonight – in the deepening deficits.

GALLAGHER: Well, I think on the debt front, what you'll see is continued improvement on that front. And because we have been banking most of the upward revisions to revenue, that means our debt will be lower and we're paying less interest. I think in the order of you know billions and billions of dollars that we've managed –

JENNETT: But not after this year, though. I mean by definition, deficits add to a debt, right?

GALLAGHER: Yeah, and then we're forecasting those deficit years – I mean, I should again say that there is a significant improvement in the budget bottom line from what we inherited at PEFO [pre-election fiscal outlook]. It is significantly improved. So that means the debt – and where debt peaks and when debt peaks – will be lower. And that's important too, you know? Because it means we are paying less on our interest. But we have to continue to manage and provide services, I think the people of Australia get that. And at times the budget will be under pressure. It's our job to work through that and look at where we can find savings, where we can reprioritise and how we manage those really big areas of growth.

JENNETT: And if you're given a second term, doesn’t it invite a conversation about deeper tax reform to address the revenue side? If you're looking at deeper deficits, as you will publish tonight?

GALLAGHER: Well I think when you put a budget together, you have to look at everything as a whole. You know, we've got reform underway in NDIS. We're looking at what we can do in aged care. The defence department’s doing its bit. We’re trying to lower debt. So, when you're looking at all those big areas of pressure, there is room to move in terms of how you know we make decisions and what we plan for. But you know, budgets – the Commonwealth budget is under pressure, like every state and territory budget is under pressure. No secret there. And there's a lot more work to do.

JENNETT: Alright. Let's go to cost-of-living relief. Jim Chalmers has said this morning that some of the assumptions people have been making about additional cost-of-living relief beyond stage three tax cuts is wrong. In what respect? Who is suggesting that people are going to get relief at the low end, who are incorrect in suggesting that? Does that mean you'll be more targeted than most people expect, which is that it would be limited to pensioners, welfare recipients generally?

GALLAGHER: Well, you'll have to wait for the Budget tonight. Nice try, though. That's – you know, that'll be covered off in Jim's speech. But we've made, again, no secret of the fact that we've got the tax cuts, they’re the centrepiece, $107 billion. Everyone getting one, 1 July, will make a difference. And then we're looking at what else we can do around that, recognising that people across the country are doing it tough. You'll see another sort of a supplementary or a further package of cost-of-living measures. And you'll see unavoidable spending, those areas we’re you know keeping the lights on, keeping the computer systems running, making sure we've got the people who can deliver programs. That's really the focus of the additional spend.

JENNETT: The implication is though, if some of the pre-budget speculation and reporting is incorrect, you might actually be delivering additional relief to a wider group of people than just pensioners and those on income support. True?

GALLAGHER: Well, again, we'll leave the announcements for the Treasurer’s speech, but we have considered the cost-of-living package carefully. We have – it will reduce or put downward pressure on inflation, which is important. And it’s a recognition that this is the main issue for Australians. Everywhere you go, everyone you talk to. Cost-of-living and how they’re managing their household budgets is the number one issue. And I don't think it's any surprise that the government would be looking at what more we can do to help.

JENNETT: Alright. Now, in growth in spending, your published figures averaged over six years. Pulling the inflation factor out of them, how much will spending grow by in the next financial year? Tonight’s budget?

GALLAGHER: Well, all will be released in the budget papers. But there will be additional investments. And it goes to really those two things I talked about – unavoidable spending, things to keep the lights on, programs running, you know, non-discretionary, really, decisions, because people need those services to continue. And then the cost-of-living package. I think those two things together really cover off the additional investments we’ll be making in the budget.

JENNETT: Alright, so if the inflation target is reached and you’ve got a two in front of it or even 3.0 by the end of this calendar year, what additional room does that give you in what we believe to be a March budget of next year? Would you increase spending ahead of an election?

GALLAGHER: Well there’s no shortage of ideas. As the Finance Minister, I can tell you. In every budget, it’s a bit about “look, what’s possible?”

JENNETT: Well, particularly one right on the eve of an election, right? If there is a March budget, a poll will be called immediately afterwards.

GALLAGHER: Well, ultimately, that's a matter for the Prime Minister. But you know, you'll see tonight the budget’s got a lot in it. And I think there's enormous opportunity there to sort of paint the picture of how we're setting up the future growth for the country. And I hope that people see that we've been trying to balance a range of things, whether it's been inflation, cost-of-living and really how do we take the opportunities that come from the Future Made In Australia, so it's a very comprehensive budget. There's a lot in it. And I look forward to talking about it with people once it is fully released. I'm sorry to be so frustrating.

JENNETT: We fully understand the difficulty of talking about the Budget at this time of day, on the second Tuesday in May. Lot of talk around the building, Katy, about women's safety. As there has been for weeks now. Is it reasonable to anticipate additional spending there, above and beyond what was announced after the National Cabinet meeting a fortnight ago?

GALLAGHER: You’ll see some other support there. The big item, obviously, is the Leaving Violence payment, having that continue with nearly a billion dollars. And then on the weekend, the PM announced a further investment of a billion dollars being targeted to women and children escaping violence as part of the housing package. So, that will be reflected in the Budget and there'll be some other work there as well. But it's not just I guess our focus on violence, really what we're trying to do here is drive economic equality and gender equality more broadly. And so things like super on PPL will be reflected, it'll be a big – you know, it's a considerable spend. Over a billion dollars for that item. And that's really about, I guess, putting women in a more – a stronger position, because women's safety is interconnected with a whole range of other things: work, income, assets and security.

JENNETT: That was in the category of pre-budget announcements. In fact, quite some time ago now. Well before we learned that you were sitting on a $9 billion surplus. Why not have brought that forward to take effect sooner than next year?

GALLAGHER: Well, we'll have to have legislation to reflect that change. So, that's part of it. We've got quite a lot of bills logged in the Senate, blocked in the Senate waiting to get through. So, I think that takes into consideration building the system to pay it – hasn't been paid before – and reflecting it through the legislation. But we've signalled the clear intent. This has been – you know I think it's the only employment condition that doesn't have super paid on it. So it's the right thing to do. And it'll be fantastic, particularly for generations that follow.

JENNETT: Alright, well, a long day ahead for you, Katy Gallagher. We appreciate that. And not to put a downer on things, but after a week away from the parliament, you're back into budget estimates, right? That's the fun part.

GALLAGHER: Well, we're really looking forward to that. Get myself ready for it. Yeah, there'll be some long days and that's where we get down really into the detail of things. So yeah, it's gonna be a big month.

JENNETT: We appreciate it. Thanks so much.

GALLAGHER: Thanks, Greg.