Senator the Hon Katy Gallagher

SARAH ABO, HOST: Look, I mean, Katy, I am happy to see you. But yes, Australia’s economy is now growing at the worst pace in 30 years as Aussies struggle to cope with soaring prices and sky-high interest rates. Finance Minister Katy Gallagher joins us now live from Sydney with more. Katy, apologies, we’re just gathering ourselves here. That was such a beautiful interview from Karl. Thank you so much for your time this morning. This isn’t ideal news for the government – outside of the pandemic, this is the worst economic result since 1991. It’s not the greatest milestone.

SENATOR THE HON KATY GALLAGHER, MINISTER FOR FINANCE: Sarah, hi. Thanks for having me on. And can I just acknowledge that incredible segment you just had – it’s a hard act to follow. What an incredible champion and all of our champions over in the Paralympics, but I was having a wipe of my eye there too. What an amazing story and family. So, yes, now to the economy after all of that. Look, I think the results yesterday were expected. You know, the numbers are soft, the economy’s soft and subdued and it really tells the story of what every household is feeling right now, which is that it’s challenging times, cost-of-living is number one, but it also shows that some of the decisions we took at budget were the right ones to make sure that we were investing and supporting the economy as we work our way through these difficult times with the inflation challenge that you know everyone is living and experiencing.

ABO: Yeah, Minister, I reckon some people might beg to differ on that note you just make there – I mean, this is the sixth consecutive quarter that GDP has fallen per capita in this country. More importantly, every household in this country is right now feeling those effects of a recession. And this has all happened on your watch.

GALLAGHER: I mean, government has to make decisions in the best interests of the country based on the economic circumstances of the time. We inherited inflation with a 6 in front of it, it’s now got a 3 in front of it, it’s moderating in welcome ways. So, it’s coming down. But there’s pain associated with that. You know, we’ve had the wars in Europe, conflict, price pressures globally. And then you know, how that translates here, particularly with interest rate increases, has meant households are feeling the pinch. And at a time when that’s happening, it is important that government supports the economy. So, with our tax cuts, with our energy bill rebates, with things like that that just try and give people an extra bit of a help as we navigate through these times.

ABO: That’s the issue though, I think, Minister. No one’s saying that the economy is easy to manage, right, and you have got external factors which we keep hearing about. But everyone in Australia is just focused on their own bottom line, here, the bread and butter on the table, basically paying their mortgages. Government spending is the highest it’s ever been, that’s just a fact. That spending has fuelled inflation.

GALLAGHER: Well, that’s not what the Reserve Bank says. I know there’s been some commentary around it. It matters about what the spend is and how you spend and how you phase it. And that’s why our decisions have been critical. But for example, if we hadn’t been investing and providing people with a bit of extra help during this time, those results would have been more difficult yesterday. I mean, the important thing is our economy is still growing, we’ve got more people in jobs than we’ve had before, you know, there are some bright indicators –

ABO: And that’s because of migration, I mean it’s migration really that’s propping up the economy at the moment. As we know, Jim Chalmers is criticising the RBA, you are too, for the high interest rates. It’s your spending that’s keeping them at that level, though. I mean, RBA rates are set and dictated to by the state of the economy.

GALLAGHER: And again, that’s not the advice that we have, Sarah. I know there are certainly views around and about and that’s been put, including by our political opponents. But providing cost-of-living relief during this time has been a really important way for government to help people. We’ve been very mindful of how much we spend and how it’s spent, so we haven’t done it in a way that’s going to exacerbate inflation, but actually put downward pressure on it. We’ve been giving careful thought to this, we get that households are doing it really hard and that’s why we’ve been trying to look at ways to make sure we can provide that support in a way that doesn’t exacerbate the inflation challenge. And inflation is half of what we inherited when we came to government. So, it’s moderating in welcome ways but it remains the challenge, but so does supporting growth for us – which is why we took those decisions at budget time.

ABO: Alright, well, hopefully you can turn things around. 1991 is not the best milestone to measure it on. Katy, thank you so much for joining us this morning. Appreciate it.