Senator the Hon Katy Gallagher

PATRICIA KARVELAS, HOST: The economy is still growing, but only just. That’s the takeout from the latest GDP figures showing Australia has recorded its weakest rate of economic growth in years, with economic activity expanding 0.2 per cent in the June quarter. Annualised GDP now sits at just 1 per cent, representing the weakest growth since the 1990s – in fact, as we were emerging out of the recession in 1991. That of course is excluding the COVID pandemic, where, as you know, the economy kind of effectively shut down. Senator Katy Gallagher is the Minister for Finance and our guest. Minister, welcome back to Breakfast.

SENATOR THE HON KATY GALLAGHER, MINISTER FOR FINANCE: Thanks for having me on, PK.

KARVELAS: GDP came in as forecast, but it’s not a rosy picture. The economy remains in a per capita recession. How prepared is your government to step in and help households again, beyond what’s already in the system?

GALLAGHER: Well, the National Accounts yesterday showed I think in numerical form what people are feeling and experiencing in their households. And we’ve made it clear since coming to government that we will make our decisions based on the economic circumstances of the time. So, in answer to your question, we consider all of those things as we receive economic data and work through our budget processes. I think we’ve shown, though, in the decisions we’ve taken, that we are prepared to provide targeted and phased cost-of-living support that doesn’t add to the inflation challenge in the economy. So, we’ve been doing that through our budgets and the decisions we’ve taken and we’ll continue to make decisions like that going forward, because I think it’s really important – if we hadn’t been taking those decisions and making those appropriate investments, you know, the data yesterday could have been very different.

KARVELAS: Can you see yourself being in a position where you need to stimulate?

GALLAGHER: Well, I think the Treasurer made it clear at budget time that you know while the primary challenge since coming to government has been dealing with the inflation challenge, that you know we also have to turn our mind to growth as well and supporting growth in the economy. You see that in the National Accounts yesterday with public spending supporting the growth figures we saw yesterday. So, I think you know it’s a very – it’s a balance, about how and when you make those decisions. But I think we’ve been clear since the budget that that’s something we’ve been you know paying a bit of attention to and giving some thought to.

KARVELAS: The Reserve Bank governor, who will speak today, actually, has previously said not long ago there will be no interest rate cuts this year and the deputy governor has talked about the economy running a bit hotter than previously thought. Has the RBA underestimated the degree to which households are struggling?

GALLAGHER: Well, I have no doubt obviously with the governor speaking today, I’m sure she will provide some commentary on that. I have no doubt they will use the data from the National Accounts to inform their thinking as well, just as we do. But the data’s pretty clear when you look at the consumption figures, particularly around discretionary spending. You know, that’s dramatically or significantly fallen in that quarter, that gives you a picture of how households are feeling. So, definitely, you know, from a household point of view, the data is pretty clear on that – that they are struggling and they’re cutting back and particularly in areas where there is some discretion about it. But I’ll leave the Bank to make – obviously, we don’t speculate on what they say or the decisions they take –

KARVELAS: So – of course – I get all that, but Australians listening do rely on the Bank quite enormously, as they do the government. And both have to be held to account. Has the RBA underestimated the degree of pain in the economy?

GALLAGHER: Well, again, PK, I’ll let the Bank speak to what they think and how they respond to that –

KARVELAS: But do you think they’ve underestimated it?

GALLAGHER: Well, I’m not going to pass judgement on the RBA and their decisions. You know, Jim and I, the Treasurer and I, focus on the decisions we take and based on the advice that we get – and we rely on that – and it’s very clear, you see it reflected in the budget decisions, that we’re aware about how households are struggling and that we believe that there is a role for government to support them during that time. It has to be you know targeted and phased properly and that’s what we’ve done with energy bill rebates and obviously reshaping the tax cuts they’re having an impact as well, just to provide a bit of extra assistance. But there’s no doubt that there’s been pain felt and that pain’s been felt in household budgets.

KARVELAS: So then the discussion has to be who’s responsible, ultimately, and there seems to be a bit of blame game going on potentially here. So, I just want to get some crystal clear clarity from you. I mean, if this is the weakest growth since the 1990s, at the end of the 1990s recession, which was not a happy time for many Australians, excluding of course the COVID period – that’s happened under your government’s watch, hasn’t it? Is it fair to blame the RBA or anyone else? Do you take responsibility for the fact that that has happened under your government?

GALLAGHER: We certainly take responsibility for all the decisions that we’ve taken. When we came to government, inflation had a 6 in front of it. It’s moderated in welcome ways since then. We’ve been creating jobs. We’ve got cost-of-living rolling out, we’ve rephased the tax cuts, and we’ve made all of those decisions based on the economic data. But this inflation challenge, you know, it has impacted significantly on how people are feeling across their households and they need a government that’s prepared to take decisions and support them during these times. And that’s what we’ve been doing. And we’ll continue to do that, PK. This is our job, and we take responsibility for that, for sure.

KARVELAS: If you’re just tuning in, you’re listening to Radio National Breakfast this Thursday morning and our guest is Senator Katy Gallagher, the Minister for Finance. Now, Katy Gallagher there’s a few other things I want to ask you about. National Cabinet is meeting tomorrow. What will the focus be of National Cabinet? Will you be providing a response to this Rapid Review into the way we deal with domestic violence?

GALLAGHER: PK, National Cabinet – so, this is a really important meeting on Friday. It is the comeback, in a sense, from that first historic meeting on gender-based violence and men’s violence against women in particular, which was held a few months ago. So, this was the one where decisions will be made about what needs to be done. Certainly, the Rapid Review will be informing decision making around the table. That was a review for all governments and so they need to have that discussion tomorrow. But I can say that the Commonwealth will be taking, the Prime Minister’s been leading this and shaping this because he really wants to make sure that we’re doing the right thing here – this violence against women is such a terrible, has such a terrible impact on our society, and the PM’s been leading the work there. And he’ll take a substantial package to National Cabinet tomorrow for further investment in this area.

KARVELAS: Can you please give me a little more detail? You might not be able to give me the ultimate sum, but when you say substantial package, piques my interest, what sorts of things? Are we talking about more frontline services that have been demanded? More legal services? More women’s refuges? Is that the sort of scope of this?

GALLAGHER: Yeah look, I think it won’t be any surprise that the focus should be on frontline services. The PM will have more to say about it, PK. I don’t want to pre-empt the discussions that he’ll be having with First Ministers. But I think the approach you’ll see from the Commonwealth is that we don’t want this to be a states versus the Commonwealth kind of argy-bargy that’s had at National Cabinet, often. We want it to be the Commonwealth showing the leadership that we need to show, prepared to put some dollars on the table and we want to shift the dial here. We want to see an end to gender-based violence in this country, not only because of the social impacts of that, but the huge economic cost of that as well. And of course for all those women and children who experience it, we want that to end.

KARVELAS: So, there will be an answer to the question that I hear from many people working in the sector, which is that they have to turn away women in need.

GALLAGHER: I think we’ve heard loud and clear that people want extra investment in frontline services and that is a real focus, I think. It’s been shown through a number of reviews. The PM is very focused on trying to make a difference there and the Commonwealth is prepared to come to that meeting with a substantial package to talk to the states and territories about.

KARVELAS: There’s one other issue I want to ask you about and that’s in relation to something very specific in this Rapid Review. It said that you need an amendment of alcohol and gambling regulatory environments to prioritise the prevention of domestic violence. Will that be on the agenda and are you willing to pursue that?

GALLAGHER: Well, obviously we’ve got some work underway that Amanda Rishworth and Michelle Rowland are leading in relation to gambling reform to build on some of the reforms that we’ve already put in place. And government will have to take some decisions about that fairly soon. On the area of alcohol, I think that has received, quite rightly, some attention and I think particularly some of the issues that I’ve been getting around stakeholder meetings has been around the sale of alcohol online and the fact that there’s different regulation there. That really is a state and territory matter but I’m sure there will be some discussion around that, because yeah, it’s certainly emerging as a significant issue that needs our attention.

KARVELAS: Minister, thank you for your time this morning.

GALLAGHER: Thanks very much, PK.