Senator the Hon Katy Gallagher

JOURNALIST: How seriously is Labor looking at scaling back capital gains tax?

SENATOR THE HON KATY GALLAGHER, MINISTER FOR FINANCE: Look, I think I’ve just said this morning in the interviews, there’s three elements to the Budget we’re putting together. So one of them is managing the inflation challenge, the other is looking at productivity, and the other is looking at reform. There are ideas that came out from the Economic Reform Roundtable, reform that stakeholders put to us all the time. We’ve got reform underway with our tax cuts that are coming in. We’ve got the superannuation, a better targeted superannuation reform, that we need to get through the Parliament. So we’ve got work underway, but you will see further decisions in May.

JOURNALIST: The government has long said it’s not looking at capital gains because it doesn’t think it will do enough to impact supply. Is that still your view?

GALLAGHER: Well, our housing policies haven’t changed. So, I can be very clear about that. We have not changed our position on housing and the tax arrangements around housing. We have made the point, and we do accept that there’s intergenerational issues around affordability and access to housing. Our focus has been on the supply side. How do we manage the supply side? How do we just generate supply as the best way of dealing with accessibility and affordability of housing.

JOURNALIST: Will this latest interest rate hike change your considerations around cost-of-living relief in the upcoming Budget?

GALLAGHER: Well, it’ll certainly feature as part of our considerations, managing inflation. It’s really been a feature since we came to government in 2022 when, if you remember, inflation was over 6% and it was rising. It peaked at 7.8. It’s much lower than that now, but it remains higher than we would like. So we’ve got to factor that into our thinking, as you would expect, and on some of that, it looks at: how do we make sure we’re finding savings and continuing to find savings in the Budget, which we’ve done. But also, how do we support households as we’re going through a period when they’re under pressure, and we get that.

JOURNALIST: Are you thinking about targeting the cost-of-living relief, generally, generationally, so that the spending issue is actually coming from the people, as we know that people with higher incomes are already going to be spending more, which is contributing to inflation. So, will some of that cost-of-living relief be targeted more generationally?

GALLAGHER: Well, we certainly, when we look at cost-of-living relief, we have looked at how, that’s part of our considerations, how do you target? So, if you look at the HECS debt relief, obviously that’s targeted, because it targets a population that has debt from study. If you look at some of the energy bill rebates, when we first put them in, they were targeted too. But then there’s other areas, like the bulk billing, cheaper medicines, areas like that, where that is more relief that gets across the economy more broadly but doesn’t impact on inflation. So they’ve been the considerations we’ve had: how do you target, but also, how do you provide cost-of-living relief that doesn’t put pressure on inflation at a time when the Bank’s trying to manage that. And you’ll see that again in the Budget, we’ll continue that.

JOURNALIST: Does that mean then you think the energy subsidy, the energy rebates, contributed to that inflation, given that everyone got some?

GALLAGHER: Well, I mean, in the first round they were targeted. It was quite administratively complex; it was run through the States. So the decision when we extended those was to make them more accessible across the board. But those energy rebates have come off. We said they were time-limited, and they have stopped, and you’ve seen that have an impact on the inflation numbers as those rebates have come off. But we always look, when we are trying to provide cost-of-living help, we are always considering how to target it and also how to provide it without increasing inflation.

JOURNALIST: Should Australians be preparing for more interest rate hikes this year?

GALLAGHER: Well, that’s a matter for the Reserve Bank. I mean, they have a job to do. Our job, the Treasurer and my job, is to put together a Budget in May that deals with the economic challenges that we’re facing right now and also deals with some of those future needs as well. That is the position we’ve taken. We’re responsible, we’re methodical, we work through all of the issues, and we make decisions based on that.

JOURNALIST: Given the economic circumstances we’re dealing with right now, why then will it take almost a year since the Economic Roundtable for anything to be implemented from it?

GALLAGHER: Well, I don’t accept that. I mean, there have been a number of recommendations that have come out of the Economic Roundtable that we’re already working on, whether it be in housing, whether it be in data and digital and AI, those are already being progressed. But there is more work to do. I mean, one of the things you find in government is that the job never ends. The challenges never stop. And your job is to manage some of those and respond to them as you need to. And the Budget will do that.

JOURNALIST: This might be out of fashion, but there are other tools, like price controls, credit controls, rationing, establishing buffer stocks. Like, these kinds of things seem to have been ruled out as out of fashion. Like these things can also help control inflation. Do you have a response for that?

GALLAGHER: Well, our job in the Budget, I mean, the government has a specific role to play in the economy, and when you look at the Bank’s Statement on Monetary Policy yesterday, when they talk governments, they’re talking all governments, State, Territory, and Commonwealth governments. Our job in putting the Budget together in May will be to deal with this inflation challenge, the continued challenge there to deal with productivity, to get our productivity increasing, and to look at reform. They’re going to be three components we look at. Obviously, we’re at the sort of beginning of that process now. There are many more meetings and work to go until we land that Budget in May.

Thank you.