Senator the Hon Katy Gallagher

PATRICIA KARVELAS, HOST: Finance Minister, welcome to Afternoon Briefing.

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

KARVELAS: Katy, you were at the first session with the RBA Governor Michele Bullock. What was her message for the changes we need to be making to our economy?

GALLAGHER: Yeah, look, it was a great session. We heard from the PM and the Treasurer and then went to Michele Bullock, who's the Governor of the Reserve Bank, and she gave a scene setting presentation, in a sense, where the Bank was, what it was thinking. And really, I thought gave quite an optimistic presentation about acknowledging some of the challenges and things that have been thrown at us, but at the resilience and capacity of the Australian economy and, you know, I think answered questions, but it was an optimistic presentation.

And I think urged all of those around the table to lean into the opportunity that's presented by the round table to think of ways to, you know, improve the productivity and resilience of the Australian economy. So I think she, in a sense, threw out a bit of a challenge, and I think it was a challenge that was accepted by all those sitting around the table.

KARVELAS: Now the Prime Minister has been reported as having a dig at the RBA boss. I want to read the quote here. He said, “There are some economists, perhaps some in this room, who thought that you couldn't get inflation down without getting unemployment up”. He said, “Well, that's not my government's way. My government is focused on looking after people on the economic journey.” That is a clear dig, isn't it, at the RBA Governor's view?

GALLAGHER: Well, I certainly didn't take it that way, and I don't think anyone in the room did. And in fact, the Governor spoke about their dual mandate to keep inflation in the band, and to work towards full employment and so she spoke about the, you know, that those two responsibilities that the Bank has, that she has as Governor.

But it is, I think I said on your show last week, it is actually quite remarkable that in the Australian employment like in our labour market, that we've been able to keep unemployment at historic lows whilst inflation was much higher than we had expected. And I think common economic theory is that when you are reigning in inflation, you would see a spike in unemployment. And the strength of our labour market has meant we haven't seen it to the degree that was expected. And I think that is remarkable and it's a shared outcome across the economy. It is good for everyone. It's not just government. It's good for everyone that people remained in employment and in fact, in the last month we saw unemployment go down.

KARVELAS: Now Treasurer, Jim Chalmers says he's hoping to draw up a statement of intent to capture the agreed outcomes of today's economic reform Roundtable, specifically on skills and training, which has been a focus. The Australian Industry Group Chief Executive, Innes Willox, has said the Roundtable has acknowledged the system for getting skills and qualifications recognised in Australia, his language was that it's being glued up and needed to be simplified. Is that going to be, I mean, it's only going to be, you know, very soon a Finance Minister, one of the moves out of this, the sort of harmonisation of, of skills and actually acknowledging skills, especially overseas skills as well, to try and get that barrier out of the system?

GALLAGHER: Well, I wasn't in there for those sessions. But I think it is an area where certainly in the meetings I've had with people who are sitting around the table, but also other leaders across the community, I think it is an area where there is a lot of agreement that perhaps improvements can be made to current processes and systems and should be made. I know that things like recognising occupations across jurisdictions has been something that's been on the agenda for a while, but hasn't been able to be progressed, but also recognition of prior learning, recognition of previous skills, even if they're coming, or qualifications from overseas. I think we saw that in the review, I think it was the Kruk Review, that was done into health and talking about how long it took to get an overseas trained doctor into Australia, comparing it with other countries. So, we've done a bit of work there, but I think that is room for furious agreement hopefully, and some further progress. Definitely.

KARVELAS: Okay, so further progress. This is a three-day meeting, in terms of tangible outcomes, we had the New South Wales Treasurer earlier saying, Daniel Mookhey saying that, yeah, he's representing State and Territory Treasurers, that it was time to get some agreement to move forward on a road user vehicle charge. So everyone who uses the road makes a contribution through tax. Is there a consensus really growing on this now and do you think that is likely to be something that the government moves on?

GALLAGHER: As you know, PK, there was work underway before the Roundtable, in fact, before the election around this. And I think there is a lot of agreement across jurisdictions about the fact that we need to be seriously looking at this and looking at what road user charging or something similar might look like. So it's no surprise that Daniel has made those comments today. I think there's obviously more discussions to be had, but this is how we actually provide infrastructure funding for our extensive road system, which is so important to the productivity of the economy, is something that this Roundtable should be looking at heavily.

KARVELAS: And the consensus, of course, on tax is all coming. The Prime Minister mentioned that the Cabinet would look at these issues kind of immediately. You obviously have been part of that decision making process. Can you explain how that works? Because every day there are very long meetings with people invited who are not elected and are not in your Cabinet. How does the Cabinet interact with this process to make real time decisions on some big ideas?

GALLAGHER: Yeah, that's a great question. And it's good to try to explain it, I think. So, there's been a lot of engagement in the lead up to this, as you would expect, across particular offices, that the Treasurer has been leading. Particularly as the submissions came in, over 900 submissions coming in pretty quickly. We've had another 40 Roundtables that have kind of led into this national one. So we've been picking up themes and they've obviously been talked through, whether it be with the Environment Minister or the Housing Minister, or the Minister for Industry and Innovation through Minister Ayres, and Andrew Charlton.

So, there's all that being underway. This meeting will be happening then, you know, I don't want to pre-empt what might happen over the next three days, but I would imagine there'll be a piece of work that comes out of it that would need to return through our Cabinet processes. That is, go back through a submission for further agreement, but there may be things that we can do outside of that as well. I can't sort of sit here and predict on day one what the outcomes on day three would look like, but I think certainly the Cabinet is going to be involved. It's been involved already, and it will remain.

KARVELAS: And in terms of artificial intelligence, which has been hugely contentious, there are reports that there is consensus growing on that, that of course is pretty key to business. Is it the government's view still that coming out of this Roundtable, there will be perhaps a statement of intent that you don't want to be heavy regulators of AI despite some people calling for the government to come in on this.

GALLAGHER: So, Minister Ayres and Minister Charlton have been doing a lot of work in the lead up to this Roundtable as part of their normal ministerial responsibilities. So, I think certainly everyone is aware of the issues that have been raised around AI. That is obviously something that would come back for, you know, further decision. It's hard to know without the outcome of, of the week about how it would be treated. But, for example, I'm going to do some work at the Roundtable about how we are managing AI within government. What's the role? How are we offering protections? What are the opportunities, what are the challenges? So I think we can demonstrate a bit about where we are within our own public service, but also how we manage it across the whole economy, which is a bigger issue and, you know, as you say, has mixed views about how that, how that will operate. And there's those that want it very tightly regulated. And there's those that want, light touch regulation or indeed, I've had some meetings with people who think the existing legislation already is able to, and responsibilities they have under that is already able to accommodate new technologies. So there, as you say, there's a very broad spectrum of opinion on this. I think the discussions will be useful and they'll add into the work that's already been done.

KARVELAS: According to YouGov polling, Minister, 65% of people believe improving productivity will see Australians working harder with benefits flowing mainly to employers. That is clearly a hard baked view among many Australians. How do you address that?

GALLAGHER: Yeah, I mean we, that was touched on this morning as well. I think that people's understanding of why are we pursuing productivity improvements and ultimately it's to ensure that people have higher living standards.

It's not about working longer or harder, but I think the real focus, and I imagine it'll be the focus throughout the three days, is if you are driving productivity improvements and you are getting those gains, how are they equally shared? And a feeling, and I think this is something that I don't think the ACTU would mind me saying is that, you know, a view put by the ACTU is that in the last couple of decades, there's a feeling that those gains haven't been equally shared.

So things like getting wages moving again, getting that balance right on industrial relations has been part of the work we've been putting in place to make sure that the gains from any productivity improvements are fairly shared across the economy and, you know, the YouGov polling, I think it's, it's no surprise that there's a feeling that that isn't about me the worker, that's about somebody else. And so we do have a job to do there.

KARVELAS: I just want to change the topic dramatically because it's a big shift in the bipartisanship we've been seeing for some time. But the Shadow Foreign Affairs Minister Michaelia Cash says the deterioration in the Australia Israel relationship is concerning, Israel's decision to revoke the visas of Australian diplomats is regrettable though. The Leader of the Liberals Sussan Ley says it's a sad day and that you are, well, your government bears a responsibility here. Your government talks about needing to have open lines with Israel and wanting to have this relationship, but by cancelling a visa of an MP in their parliament, does it make that harder?

GALLAGHER: So on the cancellation of the visa of the Israeli Member of Parliament, that was really, that was a decision taken by the Department on character grounds and I think the Minister has been very clear about the fact that, visas will be cancelled if it looks like you're coming here to stir or try to I guess, disrupt and take away from some of the social cohesion which we know already is under pressure. So that is a position we've taken across the political spectrum, and that's the one the department made in that regard. In relation to having the cancellation of our diplomat in the occupied Palestinian Territories. We do regret that. And, we think that dialogue and opportunities for diplomacy and close discussion is really important, particularly in an area like the Middle East at the moment.

That is obviously a decision of the Israeli Government, but it's one that we think is very unfortunate, and where we would try to open dialogue and open discussion, and even though we might have difference of opinions and different positions at time, we will always stand for dialogue and diplomacy, particularly in times of conflict.

KARVELAS: But Penny Wong suggests that Israel is isolating itself. Aren't we, however, trying to isolate Israel?

GALLAGHER: No, I don't, that is not the basis for the decisions that we've taken. We've taken some decisions about recognition of the Palestinian state based on a firm view that a two-state solution and a pathway to peace includes the recognition of the Palestinian state. So, we've made that quite separately. We want diplomatic and open channels of discussion with the Israeli Government. The PM takes that seriously. That's why we had those conversations and no matter how difficult they are with the Prime Minister and President of Israel, that’s the position we take.

KARVELAS: And do you think the response we've seen in cancelling these visas for our own diplomats is a tit for tat that, that it is punishment for Australia, that it shows that the Israelis are feeling pressure?

GALLAGHER: Well, we have seen similar action taken against other countries when they've made particular decisions. I think Norway springs to mind. So, in that respect, it's not unsurprising, but these are matters for the Israeli Government. We would urge dialogue, and diplomacy, and we would always rate that very highly when it comes to discussions between countries.

KARVELAS: Would you say that the relationship is now broken?

GALLAGHER: No, not at all. Not at all. I mean, Australia has to be able to have positions on matters about other countries or in this, in this case, recognition of a Palestinian state and still maintain relationships with other countries. We are not going to agree on everything. I think from our point of view, it is about open dialogue, discussion, even if there are areas of disagreement. And that's been our position all along and it's the way we will continue to operate across the world. Led by Penny Wong and the Prime Minister.

KARVELAS: Minister, you've got a big couple of days. I appreciate your time this afternoon. Thank you.

GALLAGHER: Thank you.