Senator the Hon Katy Gallagher

SARAH ABO, HOST: The RBA is this morning warning sticky inflation will persist despite raising the cash rate for the first time in 2 years. To discuss, Finance Minister Katy Gallagher joins us live now from Canberra. Minister, good morning to you. Did the RBA make the right decision?

SENATOR THE HON KATY GALLAGHER, MINISTER FOR FINANCE: Well, they're an independent board, Sarah, they make their decisions based on the information they have. We have a different job to do, which is, of course, look at how we put our budget together that's due in May. But the decision they take is an independent one, and we get that it hits households with mortgages this decision, and that's why our job is to look at how we can provide sensible cost of living relief to help with some of those pressures while inflation remains higher than we would like.

ABO: Your job is to keep a lid on inflation. So, does that mean you're doing your job poorly?

GALLAGHER: Well, I mean, there's a share, we've got a shared role. I mean, the job of the Reserve Bank is to manage across the economy the inflation challenge –

ABO: They can only do what they can work with. 

GALLAGHER: Sure, and we have a job to do, which is around our budget and some of the decisions we take. You know, when we came to government, inflation had a six in front of it. It's much lower than that now, but as you said in your intro, it is higher than we would like. And so our job is to look at what we can do on the budget side, but also deal with some of those cost of living pressures that people have, which are real, and that's the balance we've been playing over the last couple of years. And the job isn't done. We've got more to do on that in the budget coming up in May.

ABO: Minister, though, for a lot of people out there, it might feel as though you aren't necessarily as a government taking responsibility for your actions here and for trying to maintain inflation. It almost sounded yesterday as though the Treasurer was blaming families for taking holidays over the summer break for the hike, and the Governor was at pains to point out that there's much evidence out there to suggest that people are actually banking their savings rather than spending it. So, if households can show restraint, why can't you?

GALLAGHER: Well, we have a job to do. And look, I don't agree with that in terms of your comments about the Treasurer yesterday. I think the point that the Bank made, and they made it in their statement and reflected in the Treasurer's comments, was that, I guess, the up side, the surprise element of what they've seen happen over the last six months is that private demand has been stronger than they expected and that public demand, that is government spending, had been reducing as expected, as its share of the economy. So that's just a factual point but we do have a responsibility, and I mean, we found $114 billion worth of savings since we've come to government. That's a hard job. You know, that is not easy to find those savings, and we have more to do on that. But when you look at how the budget's carved up, I mean the big elements of it are social services, education, health, defence, I mean, these are areas that we have to make investments in, but we have to be responsible about it as well. And that's why we found savings, delivered surpluses, we paid down debt, we've got lower interest on that debt because of that, and so yeah, we take responsibility for that, Jim and I, we always have, and we've got that job to do in May. 

ABO: But I guess my point, Minister, I mean you've got a bloated public service here, you know that that's where a lot of the spending goes. You mentioned social services there, and that expenditure is needed. About 30% of Australians and mortgage holders, they are the ones who are feeling the pain here and not many others, and they're the ones who likely rely on the social services that you need. They're also the ones that the Governor is saying are actually showing restraint. So, there is a disconnect here.

GALLAGHER: Well, I think when you look at, I mean, the way we reach households across the economy, is through some of those cost of living measures. So we've got the tax cuts that will come in in July, another one the year after, when we look at the cost of living relief that we've been providing, we've been providing that in a way that doesn't add to the inflation challenge, because it has been an issue over the last couple of years. But that's support that we look to go right to those households, whether it be, you know, the bulk billing incentive, whether it be opening those Medicare Urgent Care Clinics, this is all about reaching those households that are under pressure, not just because of mortgages, but you know, that's a big part of it, and we've got more of a job to do. I mean, the job is not finished. There's more to do. We understand that people are under pressure, and that's why we use the budget in the most responsible way to meet some of those pressures. And yeah, there's more to do.

ABO: The Treasurer has said time again, the worst of inflation is behind us. Clearly, it's not. Now Australians have to find, a lot of them, an extra $100 a month to pay for this. Can they trust the Labor government to do right by them?

GALLAGHER: Well, inflation is higher, and it's higher than we would like. It's come down a lot, Sarah. When we came to government it was over 6% and rising. It peaked at 7.8%. We have got it a lot lower than that, but there is still pressure in the economy pointed out by the bank yesterday, we have to make sure that the decisions we take, whether it be you know, how we manage the budget, how we look for savings, how we provide cost of living help and those tax cuts coming in, all matters and we take our jobs seriously. This is on Jim and my desk every single day, and it will remain so. 

ABO: Minister, thanks so much for joining us this morning, appreciate it. 

GALLAGHER: Thank you.