Senator the Hon Katy Gallagher

ISABELLA HIGGINS, HOST: Here in Australia, it'll be up to the Treasurer, Jim Chalmers, and the Finance Minister, Katy Gallagher, to do most of the explaining. Senator Gallagher joined me earlier. Minister, thanks very much for your time on AM this morning. Households have been hit with rate rise after rate rise, and they are looking to the government to say, ‘Can you fix this, and can you fix this fast?’ So, can you?

GALLAGHER: Well, the inflation that we're seeing here in Australia, and it's higher than we would like and it's been higher for longer than we'd like, is a factor of a number of different issues. One of which is impacting significantly, and impacted in the latest data, is the war in the Middle East. And you're seeing that through fuel prices and in supermarket prices. So, there's no doubt that those global pressures, and we're seeing in every advanced economy where inflation is going up and central banks are having to wrestle with that. So, the job that we have to do is to make sure that the decisions we take aren't adding to that pressure. That's why we found savings in every budget, and it's why we'll find more savings in the next economic update in December.

HIGGINS: And Minister, are you promising that there will be a net save at that mid-year financial outlook?

GALLAGHER: Well, as I've been explaining over the last couple of days when answering that question, the ERC is meeting regularly now to take all of the decisions required in MYEFO. So, I'm not going to get ahead of those decisions. They need to be taken thoughtfully and carefully through our processes, and they will be. But the Treasurer and I and the PM have all flagged that there will be savings, and we've done that in every budget and every budget update. We've repaired the budget, we've found those savings, and the deficit is much smaller than it was when we inherited it, and that's the focus of our decision-making.

HIGGINS: Spending has been growing, though. Why not just promise this will be a net savings outlook?

GALLAGHER: Well, because the end result is the result of all of those decisions being taken and MYEFO being finalised. But what I've been explaining again is that, yes, we are having to meet pressures on the budget, whether it be in defence or aged care or NDIS or, for example, disaster funding. A 280% increase in disaster funding that we've been spending since we've come to government because of the number of natural disasters. So, there's a lot of pressure on the budget, and we're managing those pressures at the same time we're finding savings. The end result of that will be when we release it in December, but we've got a lot of decisions to work through over the next few weeks.

HIGGINS: You're talking about all that pressure that is on the budget for some time. There's also been a pressure for the government to provide cost-of-living relief. With this economic climate, is it time to say to Australians that era of cost-of-living relief is over—the government, the economy cannot afford it?

GALLAGHER: Well, we're being very clear where we have provided that cost-of-living relief. It's been able to be provided in the way that helps households and doesn't add to inflation. But the times we're in now, with inflation where it is and the impacts of the war in the Middle East and how that's affecting Australians, means that we have to be very careful with some of the decisions we take. And we will be. As we have done in every other budget update, we've always said we'll make decisions based on economic circumstances at the time; we'll tailor those decisions. And we know that inflation is higher than we would like. It's being impacted by factors outside of our control. But there are some that we can control when it comes to the decisions in MYEFO, and we'll be making those very carefully.

HIGGINS: So, Minister, reading between the lines there, is this the government saying to Australians, ‘You do need to be prepared for economic pain that is going to continue for months. There is not relief coming’?

GALLAGHER: Well, I don't think I need to say that. I think people are really feeling this. You know, they're feeling it in household budgets, they're feeling it when they fill up their car, they're feeling it at the supermarkets. The government's job is to make sure that where we are providing investments, it's going to help that cost-of-living pain, but it's also not having a negative impact on inflation. So, that's why we've been doing things like cheaper medicines, bulk billing, Medicare, urgent care clinics, so we can take some pressure off households on those costs while they're managing other pressures. And these are the decisions we've taken before MYEFO, and they're the ones that, you know, we'll consider all of these matters in the next economic update.

HIGGINS: And Minister, do you think Australians need to be prepared for a coming recession?

GALLAGHER: Well, that’s not the forecast that the Treasury have. They'll be updated in the normal way through the MYEFO process, but again, numbers tell a story but people are feeling this very much in their own lives, in their own circumstances, and we understand that, which is why the decisions we make in MYEFO are really important. And we've done what we can to support households with cost-of-living pressures since coming to government, and we continue to weigh up all of these issues as we finalise MYEFO.

HIGGINS: Finance Minister Katy Gallagher, thanks very much for your time this morning.

GALLAGHER: Thank you.