Senator the Hon Katy Gallagher

ROSS SOLLY, HOST: So, the Federal Government had some good news today that its predicted budget surplus has actually come in at $6 billion higher than was originally predicted – $15.8 billion is the new budget surplus figure. Now, the government did go to great lengths today to say this is not because we’re all being taxed too much, but there are a variety of other reasons. Katy Gallagher is the Minister for Finance and joins us on the program. Katy Gallagher, good to have you on the show.

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

SOLLY: So, why? How did we get to $15.8 billion when we were originally predicting around $9 billion?

GALLAGHER: So, this is the Final Budget Outcome for 2023-24. So, that always happens at essentially the end of September, when we’ve had time to consolidate and crunch all the numbers. So, what it shows is that revenue – or receipts – were down about $5 billion, but payments were also down about $10 billion. And so, netting those off each other, saw an improvement overall – because the spending side was down more than double the revenue side – that just bumped the surplus up to $15.8 billion.

SOLLY: So, can you explain to me how you get the spending wrong? I mean, surely you budget. If you’re doing a household budget, you look ahead and go okay, I’ve got these bills coming up, I’ve got this – so, you know pretty well what you’re going to spend, how did you end up spending a lot less than we were meant to spend?

GALLAGHER: So, there’s a couple of reasons, really. So, part of the answer is payments to the States. So, for whatever reason, perhaps the agreement hasn’t been signed or a State hasn’t signed up to an agreement – so they don’t get paid the money we were expecting to pay them – or they haven’t met milestones, or there’s just you know some administrative delay in making the payments. So, that’s part of it. The other part of it is largely –

SOLLY: So, it may – sorry, Katy Gallagher, if I can just jump in – so, on that, these may be payments that will have to be made, maybe just not in this budget cycle?

GALLAGHER: That’s right. That’s right. So, they move into the next financial year. But then there’s also a range of demand-driven programs where we’ve budgeted for a certain amount of uptake – so, there were some programs in aged care, the COVID-19 vaccine, not as many people were taking that as we had forecast and so that results in some under-spends in those demand-driven programs. And that’s part of it as well. So yeah, you’re right – I mean, in the Budget, you forecast and provide you know the money that you think will be taken up through these programs and then the Final Budget Outcome consolidates all that and says what the actual spend was. And so, it’s not unusual to see some ons and offs. But in this year, we’ve seen an improvement in the forecast surplus from about $9 billion to about $15.8 [billion].

SOLLY: Yeah. Just back on you saying that some of the State and Territory governments maybe have not taken up some of the money that’s available to them, David Pocock is on the record as saying there’s a long list of Federal Government initiatives that the ACT Government has not taken up, that they’ve not even put in applications for. Now, I know Andrew Barr has since denied this, but David Pocock is adamant – he says he’s been asking questions. Can you tell us – I know this is a question without notice in many, many ways, Katy Gallagher, but I’m sure you’ve had a sneaky little look. Has the ACT Government availed itself of all the money available to it under Federal Government programs?

GALLAGHER: Well, I’m not close to what David Pocock is saying they haven’t applied for, but in most of the national partnership agreements – which is where this money flows through, whether it be hospitals or road and rail transport through some of the funding around the energy transition or school education – the ACT absolutely is in all of those. The big mover was actually – one of the big elements of it was Western Australia and they have slightly different arrangements for under the NDIS and so, the larger movement related – if there was a state that was impacted, it was WA, not the ACT.

SOLLY: They’ve got too much mining money sloshing around there, anyway. They don’t need it probably, Katy Gallagher. But that’s my thoughts.

GALLAGHER: I don’t think they would accept that.

SOLLY: For sure they don’t. So, do you think most Australians would tonight be celebrating the fact that the Budget is in much bigger surplus than originally planned? Or would they be thinking – do you think, Katy Gallagher – if there’s this much money around, why are you not putting more money towards the cost-of-living crisis?

GALLAGHER: So, a couple of things there. I guess the answer – and yeah, I understand some people may be saying that. And you don’t have a surplus just as an end in itself. I mean, part of what we’ve been trying to do is get the Budget in better nick than what we inherited. So, we had debt, a lot of interest being paid on that debt, we had a lot of savings that we needed to find – so, we’ve been doing a whole range of things to get the Budget into better shape. Basically, repairing the fiscal buffers, which you should do to make sure that when the next circumstance arises, that your Budget can respond to that.

SOLLY: But maybe that circumstance is there now?

GALLAGHER: Well I mean, I guess the second point I made is we’ve done all this budget repair, but we still found room for all of that cost-of-living support, whether it be energy bill rebates, the tax cuts that we revised, some of those other programs in rent assistance – so it’s not an either-or. We’ve been repairing the Budget and doing the cost-of-living relief. And then I guess the next question will say, well, can you do more? The other thing we’ve been trying to deal with is inflation and you know, making sure that we are you know being very restrained in expenditure as well, to make sure we’re not making the Reserve Bank’s job harder. And they’ve actually said that returning surplus budgets, when inflation is higher than we would like, is actually helping them with the job that they are doing. So, you know, I understand how and we recognise people are doing it tough and we’ve found room to provide the cost-of-living support we can without adding to the inflation challenge, but part of what we need to do is get the Budget in better nick as well, because we know there’s a lot of you know I guess pressure coming about other things that we need to do with the Budget.

SOLLY: So, if people are listening tonight and they’re feeling that times are tough and they can’t see a way out and they’re really struggling to send their kids to school with new clothes or put food on the table, even though you’ve found this extra money now lying around – well, not lying around – there’s no extra money likely to come to help people through the cost-of-living crisis, then?

GALLAGHER: Well I mean, this is an issue that’s on Jim’s and my desk every day, what can we do around cost-of-living? And so that’s why you’ve seen a lot of the measures that we’ve put in place, like putting those – energy bill rebates are a great example, onto people’s bills, so that it doesn’t add to the inflation challenge. Same with those investments into childcare to make sure childcare costs are coming down. And they have been coming down, but it’s not adding to the inflation challenge. So, that is a tricky kind of set of circumstances that we’ve been trying to navigate. But I would also say the fact that we’re getting the Budget in better shape is actually – I mean, it does have a longer term story. We’re borrowing $150 billion less in debt, essentially, from getting the Budget in better shape. And that means $80 billion in less interest over the medium term. That’s huge. And that’ll make a difference for budgets in the future when I have no doubt governments of the future will be facing similar budget challenges. So, we’re doing it for a range of reasons, but we think we can repair the Budget, get it in much better shape, lower the debt, lower our interest costs and provide cost-of-living relief where we can and where it makes sense to do so without adding to inflation.

SOLLY: But it also sounds, Katy Gallagher, from what you’re saying, that it may be a little bit premature because when the States turn around and finally get their act together and start putting in their receipts and their bills and all of a sudden that surplus will be wiggled away pretty quickly?

GALLAGHER: Well, for this financial year we are forecasting a deficit budget. So, we’ve – when we came to government, I think it was about $48 billion, it’s now $28 billion. So, we’ve improved it somewhat. There’s more work to do, obviously. And those movements of those programs, yeah – we were pretty clear about how we’ve got an increase in the surplus that was forecast and some of that will be funded this year. It’s hard to tell you exactly how much, but we expect, yes, there will be further payments out of that.

SOLLY: On the text line, Phil says, Ross, can you ask if it’s a paper surplus or a real surplus? If it’s a real surplus, can it not be used to pay down debt? Says Phil.

GALLAGHER: Well, we are doing that and it is a real surplus and so we have been returning upward revisions to revenue back into the Budget, which has meant that we’re borrowing less and thereby lowering our interest costs on that debt. So, we are lowering our debt and lowering the interest that we’re paying on that debt.

SOLLY: And Martin says, and I’m not sure if you know the answer to this, Katy Gallagher, has the Mr Fluffy loan been paid off by the ACT Government or has it been excepted by the Federal Government? Do you know the answer to that?

GALLAGHER: I believe that has been paid off. I’ll correct the record if I have to, but I’m pretty sure it was paid off before we came to government.

SOLLY: I feel like I should know the answer to that but as per usual, I’ve been left short on that. On a couple of other quick issues, if I may, Katy Gallagher, before I let you go – you’ve seen a lot of reportage from the weekend about protests that have been happening that have been happening in several capital cities. There was even one here in Canberra. I don’t know – I’ve not seen any reports whether Hezbollah flags were flown at the Canberra protest or whether posters of the now-assassinated Hezbollah leader were waved about, but they certainly were in Sydney and Melbourne. From a government point of view, what are you going to do about that, is that appropriate? Is that free speech or is that just overstepping the mark?

GALLAGHER: Well, people have the right to protest but I think any indication of support for a listed terrorist organisation is, should be unequivocally condemned. So, that’s the point I would make. Obviously, we have law enforcement agencies and others that will be you know pursuing any investigations that need to be made following those protests over the weekend. And you know, we rely on their advice and any steps that they believe need to be taken. So I mean, I understand that with the conflict in the Middle East, it does raise tensions. We’ve seen that over the last year at different times and you know, I think we understand people’s right to protest but don’t believe in any way that supporting or looking like you support or putting up a banner supporting a terrorist organisation is at all appropriate.

SOLLY: And there’s been threats made by some of your colleagues today to rip up visas of people who may be here on temporary visas, et cetera, if they’re found to be part of this protest. Do you think that’s going too far?

GALLAGHER: Well, there is scrutiny of people on visas and the Minister for Home Affairs has made it clear that he would be looking closely – not specifically in relation to this protest necessarily, but you know on any range of you know protests that have been held – to make sure that people are adhering to their visa conditions and not stoking division in the community. There’s a big responsibility for politicians, I think, to stand together and call for unity and calm, not to be out kind of trying to stoke division and threatening consequences when we have law enforcement agencies and the Department of Home Affairs who are appropriately responsible for these matters.

SOLLY: 5:19, we’re having a quick chat with Finance Minister Katy Gallagher. Just one other issue, because we’ll be tackling it later this hour, the superannuation industry, Katy Gallagher, says that domestic violence perpetrators should not benefit financially from the death of their partners. Now, this is in response to a case, a very high profile case where a woman unfortunately took her own life and it turned out that her husband had charges and was responsible for domestic violence. Do you think that it’s appropriate that somebody who is a partner of somebody who takes their own life and has been charged or found guilty of domestic violence, can then access that person’s superannuation?

GALLAGHER: Well I’ve certainly had correspondence from that young woman’s mother and it’s really heartbreaking to read her letter. And I certainly think, and the superannuation industry have raised this separately with me I think within the last month or so – I do want to have a look at this and see what we need to do or what can be done, because if there is an issue, if there is a weakness in the system, we should be looking at how we close that off. Because we don’t want – and it is complex, and there’s a whole range of reasons why the laws are structured as they are and try to give protections already – but you know, certainly there’s a fair bit of advocacy around at the moment including from the family of that young woman about needing to do better. So, definitely want to have a look at it.

SOLLY: I mean, it’s pretty horrible for the family, isn’t it? It’s double insult to them.

GALLAGHER: Yeah.

SOLLY: Katy Gallagher, thanks for your time this afternoon, appreciate it.

GALLAGHER: Thanks very much, Ross.