Senator the Hon Katy Gallagher

MELISSA CLARKE, HOST: With the Prime Minister about to head to Washington, the Opposition Leader here outlining her economic vision in a speech here today, there is certainly a lot going on in the economic agenda. So, I have here in the studio with me to talk about these things is Finance Minister, Katy Gallagher. Katy, thanks for being with me. 

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

CLARKE: So, the speech today that Sussan Ley has delivered. It’s been her first big economic speech outlining her vision for how a Coalition government would approach the task of government if they’re to return. She said there needs to be stricter fiscal guardrails if the Budget position is to become sustainable. Is she right?

GALLAGHER: Well, I had a quick look at her speech today, and I think what it said to me was it’s the same old Liberal Party. Very similar themes to what they took to the election. Sort of, punching down to people who rely on public services. Having free range on areas they want to prioritise. Talking about savings. I think the thing for me is, if you haven’t learned the lessons of the last election, that’s a bit of a concern. We’ve got fiscal guardrails, we’ve done a lot of cleaning up of the budget, getting rid of a lot of the waste and rorts that we inherited, paying down debt, getting the budget bottom line in better shape. And the reason we do that is so that we are in a position to deal with some of the big challenges we are seeing across our economy, so we can deal with the pressures in aged care, in Medicare, and play a useful and constructive role in the transition to net zero, the biggest economic transition we have seen for decades. So, the Budget has to serve a purpose, but certainly the approach Jim and I have taken is one of very tight budget responsibility.

CLARKE: But there's more work to do, isn't there? We've got deficits now forecast for well off into the medium term. We do have a position where many areas of government spending are growing at faster than inflation. So Sussan Ley’s is not wrong to make the point that more work needs to be done to bring the Budget into a strong fiscal position. 

GALLAGHER: Well, the approach that we take has been exactly that. At every budget update we have found savings, we reprioritised, we found room for those areas that were underfunded or just had funding stopped. Like, I mean, under the former, under the last time Sussan was in government, they had a whole range of fiddles with their Budget that made their budget look a lot better than it was. Like Community Legal Centres, for example, weren't funded in an ongoing sense. What, is anyone going to suggest that the Community Legal Centre is funded on the 30th of June and then not the 1^st of July? So, we've had to deal with a lot in trying to get that Budget, make those decisions so we get the Budget in a much more stable way. But yes, you're right. Defence, aged care, the NDIS, health, interest on government debt – all of those areas are growing, and we're having to manage the decisions that come with that. 

CLARKE: Just before we heard from your shadow counterpart, James Paterson. He said that the Coalition would offset any new spending with cuts or reform. But that wouldn't apply to defence spending, that defence and national security, you have to take a different approach fiscally when it comes to those crucial issues. Is that a way you can manage a fiscal budget? Would you be prepared to take an approach where you quarantine defence and national security from the fiscal rigour that you say you have brought to the Budget to this point?

GALLAGHER: Well, I think we approach defence in the way we approach other areas of government. So, where there's a capability that's needed, and the PM has been really clear on this, where a capability is required in order to keep Australians safe, then we will fund that, and that's what we've done with all of our decisions. But there has to be discipline right across the board. I mean, no area of government just gets a get-out-of-jail-free card. We have to make sure that the rules that apply consistently across the Government apply to Defence as well. That doesn't mean that their budget isn't going to increase, I expect it will. We're living in pretty uncertain times. The demands on Defence are very high, and they're continuing to grow as well. That's why it's in one of those top programs that's growing faster than, you know, other areas of government and we will continue to meet that need. But we've tried to bring an approach that adopts fiscal discipline across the board, and that's what we'll continue to do.

CLARKE: The Coalition would point to the tax-to-GDP ratio as an example of not being strict enough in your approach to fiscal rectitude, pointing out that they had that at a lower ratio when they were in government. Is that somewhere that your government could do more work to ensure that tax isn't becoming too high on that ratio?

GALLAGHER: Well, what they don't say is the highest tax-to-GDP ratio was under the Howard Government, and it has been consistently under that since those days. This is something we are – when you're putting together a budget, there's a whole range of different considerations you have. What you have to do, what's the revenue side looking like, how are you running some of your savings programs across government? The Budget, at the end of the day, is a series of different decisions to make sure that you get, you know, you fund the things you need to fund, you're doing it in a responsible way, and you're mindful of what you're doing with the revenue that you're bringing in. But these are things we look at every budget update, every budget we do the same, we bring the same approach. But at the end of the day, you have to make responsible, thoughtful, thorough decisions that don't often fit in six second grabs.

CLARKE: Look, we have seen plenty of consideration from the Government in the recent Economic Reform Roundtable that was had about the intergenerational equality issues. And Sussan Ley has pointed to this as a reason to need to be tight with the Budget, given that any growing debt has a burden for the next generation. She's suggesting that even where there is existing government spending, support payments and other areas of expenditure, that more can be done in terms of tightening eligibility, putting more caps on demand, those ways of making sure that assistance, especially in government payments, is in areas where it's most needed and not spread too far. Is that somewhere the Government could find agreement on? Tightening eligibility around certain payments in an effort to improve the longer-term budget position, with that intergenerational equality in mind?

GALLAGHER: So, a couple of things on that. I mean, if there's a concern around intergenerational equity, I would wonder why they didn't support the HECS debt reductions, and why they've voted against our housing policies. Because both of those are the Government responding to some of the areas where we think younger Australians are under particular pressure, whether it be in housing or on student debt. You know, looking across the board, and again, referring back to her speech, I think it's probably a very polite way of saying ‘crack down on welfare.’ And we've seen that at times under the former government, when they were in place. Or-

CLARKE: But there are other areas. It could be Family Tax Benefit for example, where you could tighten eligibility?

GALLAGHER: We look at payments across the board. Again, every budget we have a look at payments and where the payments are going. Of course we look at that. The PM’s always made that clear. Usually, the pressure is on to increase those payments, whether it be JobSeeker, pensions, you name it, there's a lot of feedback the Government gets about the fact around the adequacy of those payments. So I think it's not easy to just say ‘oh, we'll tighten up on eligibility on that.’ If you're talking about things like early education and care, for example, and I saw a brief reference to that, you know, we may have a different view to Sussan and her colleagues where they see early education and care as some sort of welfare support, as opposed to something that drives women's economic equality. If you're able to have, you know – women tend to have the burden of care, of unpaid care. If you're able to access paid care, then maybe you have more choices available to you. And they’re some of the debates I have no doubt we’ll continue to have.

CLARKE: I do, on one very specific measure of economic reform, the changes to superannuation tax concessions on superannuation accounts over $3 million. When are we going to see that get through Parliament?

GALLAGHER: Well, our priority in the last couple of sitting weeks has been a whole range of other pieces of legislation. Obviously, our HECS debt reductions, they’re now through. The Cabinet will make those decisions around future sitting weeks-

CLARKE: So no firm date? Not that urgent?

GALLAGHER: Well, we've got a big legislative agenda. And it takes a lot, as I know from bitter experience, to get legislation through the Senate, so we have to phase our program accordingly. But, you know, we went to the election with a series of campaigns about things we’d do. We're knocking them off one by one.

CLARKE: On another matter, we've got the Prime Minister heading off to the US shortly. We're expecting he will have a meeting with Donald Trump, it seems from Donald Trump's comments to our reporter in Washington that that meeting is going to happen. So what's at the top of the agenda for Anthony Albanese? There's obviously so many areas with which the Australian and American governments intervene. What's the number one issue and priority for that meeting?

GALLAGHER: Well, we'll see. I mean, I'm not across the PM’s diary, day to day- 

CLARKE: I’m sure you talk about it around the Cabinet table.

GALLAGHER: We certainly have long talks about all the upcoming events and things. And he is looking forward to going to the UN. It's a busy period of the year and a great opportunity to engage with a number of world leaders. Obviously, there's a number of big world policy debates going on at the moment, whether it be in climate, whether it be the role of social media. And particularly with America, I imagine our close alliance, you know, our relationship in a defence sense. I'm sure all of that will be front and centre of our leader's mind.

CLARKE: There’s certainly plenty to talk about, and thanks for talking about a few of those things with us today. Katy Gallagher, thanks very much.

ENDS