Senator the Hon Katy Gallagher

PATRICIA KARVELAS, HOST: And joining us now is Katy Gallagher, because yesterday it became clear that the cost-of-living crisis is still biting, with yesterday’s inflation figures rising from 3.6 per cent in the year to April to 4 per cent in May. It has some analysts concerned that it could tip the RBA to lift interest rates again before the end of the year. Katy Gallagher is the federal Finance Minister and joins me now. Katy Gallagher, welcome to the program.

SENATOR THE HON KATY GALLAGHER, MINISTER FOR FINANCE: Thanks for having me on, Patricia. Hard act to follow, from your previous guest.

KARVELAS: Well, you are a senior minister, so all acts welcome on RN Breakfast. Look, before we do get into the economic questions which are huge for our listeners, just – there seems to be a real break, if you like, in terms of the response to the Prime Minister calling Julian Assange. Real criticism that he’s being treated like a hero. Is your Government treating him like a hero? Do you see him as a hero?

GALLAGHER: Look, I think the Government’s pleased to see him home and it’s been through the efforts of the Australian Government, Prime Minister, Foreign Minister, Attorney-General and of course Stephen Smith and Kevin Rudd that we are in the position where Mr Assange was reunited with his family. And I think it was a big event to see him land in Australia and I think generally, outside of the Opposition, this has been welcomed as an appropriate move for something that had gone on for so long. And I don’t think it’s a surprise that the Opposition seek to either try to write themselves in or seek to divide and be negative about this. I think overwhelmingly it’s a positive event that happened, it happened over a number of years as you heard from your previous guest.

KARVELAS: But is he a hero?

GALLAGHER: Look, I mean, people have different views about Julian Assange.

KARVELAS: What’s yours?

GALLAGHER: Well, I mean, it’s – I don’t know that’s particularly useful today. I mean, people have different views about what he did. But I think everyone agrees that this had gone on for too long. I understand the Opposition to feel that way too and that he needed to be brought home. And it’s been through careful and considered and strategic diplomacy, working with lots of people of course who’ve been supporters of Julian Assange and his family and his legal team, to make sure that this was able to be – his freedom was able to be secured. And I think overwhelmingly that is a positive outcome and again, I think it’s been through a huge effort of a number of people that this has happened.

KARVELAS: Let’s get to the economy. Because that is, I’ve got to say, the most important thing for most people listening and their own lives. Does this rise in inflation officially rule out any chance of an interest rate cut this year?

GALLAGHER: Patricia, I think you’re going to know my answer, which is really that that’s a matter for the independent Reserve Bank. They make decisions about interest rates. The Government’s job is to make sure we’re doing what we can to put downward pressure on inflation but also try and help people with those cost-of-living pressures, which you rightly point out is the top issue facing households across Australia. And that’s why our Budget has sought to do that and it’s why everything the government does is – we are considering in the cost-of-living frame for people because that is the number one issue.

KARVELAS: So, yes, of course you can’t comment on what the RBA does, but obviously if inflation is as persistent as it clearly is based on the figures that came out, this is going to be harder to tackle, right? This makes the RBA’s job much harder?

GALLAGHER: Well, I think all of us have been you know saying that we’re – inflation is remaining higher than we would like for longer than we would like. But I should point out that it is continuing, in a sense, to track down from what it was when we came to Government. Which was around 6.1 per cent. And so we have seen welcome moderation in inflation. The monthly figures do move about a bit, as you know, and they do measure different goods and services. So, we’ve got other economic data, no doubt, that will be coming out in the next month or so, that everyone will – analysts will be looking at, the bank will be looking at, and of course we keep our eye on as well. But our Budget, which comes in – you know, some of those measures, cost-of-living measures – in four days, really has been designed to make sure that we’re putting downward pressure on inflation. And I think the ABS data yesterday supported that by saying that you know in those areas like electricity and rent, that the increases in those would have been higher had it not been for some of the measures like rent assistance and energy bill relief that we had provided in the last Budget. And that will continue with the next financial year. So, that’s our job. We’re focused on that. And we’ll continue to implement those measures and you know, we’re very hopeful, and the Treasury forecasts are, that inflation will continue to moderate.

KARVELAS: Other than the Reserve Bank’s lever, what more can be done to turn the figures around?

GALLAGHER: Well, there’s no doubt that we’re seeing – and this where I think it’s a range of data that’s used to look at how the economy’s tracking. I mean, there’s no doubt that those 13 interest rate increases have really hit households. And we can see it in you know some of the retail numbers, we can see it in household consumption, we can see it in GDP growth. So, there’s no doubt that those increases are having an impact. I mean, we in terms of our approach, not only is it the cost-of-living measures that we’re implementing but it’s also our fiscal policy, which you know we’ve delivered one surplus, we’re on track for a second, and the Bank itself has said that that is helpful in terms of easing the inflation pressures in the economy that we are delivering two surpluses. So, we’re pulling the levers that we’ve got available, and you know, we’ve all got a job to do, but you know the Treasury forecasts are that inflation will continue to moderate and that is very welcome. We want it to get back to band. But the Budget is carefully calibrated to support that.

KARVELAS: You said the Budget is carefully calibrated to support it, but clearly if inflation is persistent, Minister, you’re going to have to look at all of these settings again. I mean, the Budget established a set of settings, if you like. And if they’re not shifting the dial on sticky inflation, might you need to cut back? You’re the Finance Minister. Is there more money you need to take out of the economy?

GALLAGHER: Well, as I said Patricia, we’ve delivered surpluses. We’ve also delivered savings within that –

KARVELAS: Sure. I’m referring to further action, I know what you’ve already done.

GALLAGHER: Yeah. But that, I mean, that’s my point. That the measures we’ve put in place are targeted and calibrated to continue to support the lowering of inflation. Of course we look at what’s happening in the economy. You know, I think Jim and I have been clear from the beginning that our decisions are made on you know, the best interests of the economy and the data that we’re receiving. But the Budget kicks in on 1 July, that will give cost-of-living relief. So, tax cuts, energy bill relief, cheaper medicines. All of those measures are in there and we’ll continue to monitor what’s going on across the economy. But you know it isn’t unusual, when you look at the international experience, where we’ve seen economies that have actually peaked higher than our inflation peak as that moderates, there’s a bit of movement up and down. It doesn’t necessarily taper in a straight line. And we’ll obviously continue to look at this data as it comes in, but it doesn’t change the plan that we put in place in the last budget or this Budget to deal with the inflation challenge.

KARVELAS: Just before I let you go, Minister, Fatima Payman has been asked not to attend Caucus for the rest of the sitting fortnight after she crossed the floor on that Greens motion to recognise Palestine. Now the beginning of yesterday I spoke to the Deputy Prime Minister, he said there’d be no punishment and he explained the rationale around social cohesion. What changed?

GALLAGHER: Look, as I understand it, the Prime Minister had a discussion with Senator Payman. You know, and the result is that she won’t be attending Caucus for these sittings, which is next – you know, we usually meet once a week –

KARVELAS: So, was it a captain’s call?

GALLAGHER: Look, I think – we have tried to be pretty sympathetic and supportive of Senator Payman and I think the Prime Minister has brought that approach. We recognise, as every parliamentarian has in some way recognised, the awful situation in the Middle East and the fact that you know everyone’s concerned about the ongoing conflict and particularly what it means for the people of Gaza. And we have, you know, we have rules within our party, or, you know, conventions within our party. You know, there’s been a mature discussion that I wasn’t privy to. We’ve tried to be supportive and understanding but, you know, we are also a collective of politicians that you know, stand together. So, you know, I think this has been dealt with in the most appropriate way by the Prime Minister.

KARVELAS: Do you understand why someone like Louise Pratt, who you know had to vote against gay marriage, might be kind of cranky that she didn’t get the same leverage?

GALLAGHER: Well, again, I think these are dealt with in individual circumstances. And I think as Labor politicians, as in any member of a party, there are times when you know you might disagree or agree or there’s a range of views within the Caucus. And one of the things is our collectivity, our solidarity, is one of the strengths of our political organisation. But I think for Senator Payman, as a Caucus, we have tried to be mature, sympathetic and supportive. But ultimately there are also consequences for decisions individuals make. And in this instance I think the response from the Prime Minister has been absolutely appropriate.

KARVELAS: Are you worried now though that Greens, on other sort of issues that are exercising them, will try to pick off your MPs and there’s a new precedent that’s been set?

GALLAGHER: Well, the Greens – I mean it’s not unusual that the Greens political party seek to try and wedge Labor, so for a progressive –

KARVELAS: Yeah, so are you worried now that this response sets a new precedent?

GALLAGHER: Well, I would urge the Greens political party to concentrate on political opponents that don’t actually you know support some of the things they stand for, like climate change. Like, I would say to the Greens political party – whilst it might be more attractive to pick off progressive politicians or try to wedge Labor, how about you turn your sights on the people that are trying to bring in nuclear reactors right across Australia? And that’s been my advice to them. They choose not to follow that –

KARVELAS: Okay. They’re unlikely to listen to your advice, Finance Minister, they’re another political party. I get that. I’ll bluntly ask again though, does it set a new precedent now that you know, you can cross the floor and the ramifications aren’t too harsh?

GALLAGHER: No. I don’t believe so. I don’t believe it does.

KARVELAS: Okay, thanks for joining us.

GALLAGHER: Thanks, PK.