Senator the Hon Katy Gallagher

PATRICIA KARVELAS, HOST: For more on all things pre budget, I want to bring in the Finance Minister, Katy Gallagher, who's been deep in the Expenditure Review Committee, the ERC, as it's called, to settle the budget. So she knows, let's see how much we can get out of her. Katy Gallagher, welcome to the program.

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

KARVELAS: Minister, the treasurer said yesterday that the NDIS was the single most important savings that would be found in the budget. Can you give us a sense of what's number two, three and four?

GALLAGHER: Well, like other budgets, PK, we've been looking across the board. We look right across government, in every portfolio and every agency. You know, it's part of our approach to fiscal discipline.

We know there's a lot of demands coming at the budget for requests to do more, and at the same time, we have to look across the board at areas to find savings, to reprioritise, and continue the efforts we've done over the previous budgets. We've found $114 billion in saves over those budgets and reprioritisations. This budget will do more of that.

On the NDIS, part of the work that Mark Butler has been leading on that is really how to make sure that the NDIS is sustainable into the future. How does it live up to the original purpose of the scheme? And, you know, certainly he'll have more to say about that tomorrow, but it has been a key part of our considerations through this budget process.

KARVELAS: And it seems pretty obvious that registration for providers has to be at the top of that list, right?

GALLAGHER: Well, I'll leave it for Mark and Jenny McAllister to go through the approach we're going to take, but it's really centred from, and I'm a big supporter of the NDIS. In fact, I was the Chief Minister that signed up to the NDIS all those years ago. You know, it's really about staying true to the original purpose of the scheme. And what we've seen is it's changed quite considerably over time, and that's placing certainly very significant financial pressure on the budget, and we need to deal with that, as well as take care of people who have a disability in Australia.

KARVELAS: The Treasurer met with his state and territory counterparts in regards to the NDIS. Are you confident they're on board with looming changes, and will put their hand in their pocket to try and deliver on this Thriving Kids program?

GALLAGHER: Well, the NDIS really is a partnership in terms of how we provide funding for it. So, the states and territories do have an interest in making sure the scheme is sustainable over time. Because whilst, you know, there's been considerable pressure on the Commonwealth budget in recent years, unless we take some action now, there will be growing pressure on state and territory budgets, and we know that they're all under pressure as well.

So I think we'll take the approach that the Prime Minister always takes in these matters through national cabinet: we seek to work together across all governments to make sure we deliver again for people with a disability, but also that we're able to manage some of the financial impacts that we've seen in recent years, and indeed that are forecast to continue to grow.

KARVELAS: Last year when the Thriving Kids program was announced, some of the states said they felt blindsided by the announcement. That won't happen this time?

GALLAGHER: Well, there's been a lot of work done through national cabinet. I think all Premiers, Treasurers and Disability Ministers understand some of the issues facing the scheme as a whole.

And, you know, there's more work to do. Obviously, we're having a conversation with them, we have to. I think it's in the national interest, actually to make sure that we get these decisions right, and we need the states and territories to work with us and help us with that.

KARVELAS: Just a couple of other questions on other issues. Obviously, the Middle East crisis, the fact that the war is continuing, is of ongoing concern. How likely is it that we are going to have a recession?

GALLAGHER: The updated forecast from Treasury will be released in the budget, but that's not the advice from the Treasury to the government. No doubt we, you know, even if you look at some of the forecasts that came out of the IMF last week, there's no doubt there's economic consequences from the war in the Middle East, and the longer it goes, the more significant they will be.

And I think the IMF has pointed out that we will continue to see growth across the global economy, but that growth will be slower. Australia is not immune from those types of pressures. We're seeing that from a war far away that we would like to see ended as soon as possible, but there will be consequences, and they'll all be released as part of our budget.

KARVELAS: Okay, so the Treasurer has told us that there's been lots of different iterations, if you like, of this budget. How much have you had to change?

GALLAGHER: I agree with the Treasurer. I think I heard him either on this show or another interview where he said the budget that we had at the start, which we usually start not long after MYEFO, so that was in December, is different. It's a different world. We've got to respond to those challenges that are thrown at us, and you would expect us to do that.

So it's been probably the most difficult budget to finalise, in that sense, because of some of the uncertainty that's happening around us in the global economy and the local, domestic impacts of that, but we are in the final stages now. And it will be a responsible budget that focuses on those issues we've been talking about: inflation, productivity, reform, resilience - all of those issues are still as important as they were from the beginning.

KARVELAS: So we heard about belt tightening from the treasurer, that was one term he did use on this program. I remember it very directly, and now it seems like some of the spending cuts that were planned have also been pulled back. Is that right, that you're still going to make cuts? You've made that clear already on this program, but that you're not going to go as far as you perhaps were going to because of the crisis?

GALLAGHER: All I can say there and I'm not trying to avoid your question, PK, we really are in that difficult period within a month of the budget being handed down, which limits what I can say. We've always said since coming to government, we will hand down a budget that responds to the economic circumstances of the time.

Now we know that inflation was higher than we would like. We've got to deal with that. We know there's a productivity challenge across the economy. We've got to deal with that, but we've also have to deal with these issues that are coming at us as a consequence of the war in the Middle East around fuel security and resilience in the future, made in Australia and within that, we've also got to look and make sure that every dollar spent across government is doing the job we need it to do. So there will be a heavy focus, and it's been part of my job to look at savings across the budget.

KARVELAS: Are they as severe as they were going to be? I just want to nail you down, Katy Gallagher, on whether that's been pared back a bit.

GALLAGHER: Well, we respond to the economic circumstances of the time, PK. That's all that's…

KARVELAS: I know a bit about economics, just a bit. I'm not pretending to be an economics professor. Does that mean that you see this crisis as you can't go too hard with spending cuts now?

GALLAGHER: Well, we've always taken decisions, I think, that are responsible and then deliver the outcome that we want to see. Some of that involves savings. Some of that will involve, you know, expenditure on the expenditure side of the budget. We have to balance all of those issues up as we navigate through what has been a very uncertain time over the last three months.

We've been working closely with ministers where we can find sensible savings. We will take those, and there's always work that continues on through government. In a sense, this job is never finished, even though the budget gets landed. The work around driving savings and looking at how you reprioritised continues. It never stops.

KARVELAS: Okay, Australia's national debt is on track to surpass a trillion dollars in the coming weeks. Do you think you'll have to legislate an increase to the debt ceiling so the government can borrow more?

GALLAGHER: Well, we've been clear since coming to government about paying down debt where we can. And, in fact, debt is considerably lower than the forecasts that we inherited when coming to government, and that's because we have been able to use some of the revenue that's come into the budget to pay down debt, to not only lower that debt by, I think, about 170 billion, but lower the interest on that debt, which is also, you know, a significant cost.

KARVELAS: So how about on that question of legislating the debt ceiling?

GALLAGHER: That's not our expectation, and we are managing. And, indeed, I think we've got a proven record. And I hear our political opponents raising concerns about this. They weren't that concerned when they were in government and they doubled the debt before the pandemic hit. And it's a convenience, I think, that they seem to forget all that that we inherited much higher debt. We've been managing that, we've been lowering that as we've been repairing the budget over time, and that has been a key focus for us, and will continue to be.

KARVELAS: An inquiry into the taxation of gas began today. It's chaired by the Greens senator. Just level with me: is the government still considering a gas export tax?

GALLAGHER: Our policies on that haven't changed, PK. I haven't caught up on the inquiry today. I know it's getting a bit of attention, but our policies on that haven't changed. I think if you see what the Prime Minister has been doing in the last week, the focus for the government has been on securing fuel supplies and securing commitments with our nearest neighbours in South-East Asia. That has been the focus, and will continue to be the focus, because I think that's what the Australian people expect.

KARVELAS: And is it your view that imposing an export tax would hurt us with the reputation, our reputation, like, with our nearest neighbours?

GALLAGHER: Well, I know that strengthening international partnership with our nearest neighbours and providing certainty to them is as important as providing certainty to us, around some of the needs that we have around fuel supply and fuel security that the Prime Minister has been articulating in recent months in response to the Middle East conflict, and those international commitments are important.

KARVELAS: So, I've been told that the government was looking at different proposals for a gas export tax and has now determined that because of the crisis and because of those relationships, it is unwise. Is that accurate?

GALLAGHER: Well, I think I answered that. You know, essentially, I can't go further than my previous answer, which, our international relationships are important,

KARVELAS: And are they guiding this decision-making?

GALLAGHER: Well, no, I mean, the government makes decisions around tax policy. But what I'm saying is the focus that we've had since the war in the Middle East broke out, has been to focus on making sure that we are doing, lifting every lever, using every lever we have available to us, to ensure that we are guaranteeing fuel supply coming into the country, and that is linked to those important international relationships we have with our nearest neighbours.

KARVELAS: I have to ask, because he's your competitor in the ACT, and I know that things get a fisticuffs in the ACT. David Pocock is a big champion of this. Do you acknowledge that it's actually a really popular idea?

GALLAGHER: Well, I think one of the benefits of being independent is you don't have to consider these matters as a whole. You don't have to actually deliver anything, and you don't have to make decisions that are mindful of a whole range of competing pressures. You're not in government. Government is about making difficult decisions and weighing up information and responding to the challenges and opportunities that are before you. That's not something the independents have to think about, and they don't.

We make decisions in the national interest based on all the information we have, and mindful of our job as custodians, you know, as members of parliament, but also in government, and we weigh all these things up. I'll be interested and no doubt the Senate will have more to do in relation to that gas inquiry. It's the Senate doing its job as the scrutiny arm of the parliament.

KARVELAS: One of the arguments actually that I must put to you, Richard Denniss put, he's from, of course, The Australia Institute, but he put this argument that it would make our gas cheaper in Australia, because these gas companies would sell it to us, because, obviously, it would be cheaper to do that than to export it. Do you agree with that thesis?

GALLAGHER: I haven't seen that specifically from Richard, but I know there are a lot of experts about how the gas market works, and views about price. I mean, what we did when we came to government was put in caps, because the gas price was so much higher. All the work that's been done on a strategic reserve, or gas reserve, is being done by this government. I mean, we are doing all of the work to make sure that Australian households and businesses are able to access affordable gas supply in this country. Now that's not easy to turn around in one year, but the work is being done by this government, not by anyone else in previous governments.

KARVELAS: Katy Gallagher, I know you've got, like, 3000 meetings to go to, so I appreciate your time.

GALLAGHER: Thanks so much, PK.