SENATOR THE HON KATY GALLAGHER
MINISTER FINANCE
MINISTER FOR WOMEN
MINISTER FOR THE PUBLIC SERVICE
MINISTER FOR GOVERNMENT SERVICES
E&OE TRANSCRIPT
TV INTERVIEW
BLOOMBERG
WEDNESDAY, 26 MARCH 2025
SUBJECTS: Federal Budget; defence spending.
PAUL ALLEN, HOST: I’m joined here in the Senate courtyard of Parliament House by the Finance Minister, Katy Gallagher. As always, thank you so much for joining us on what is traditionally a very busy morning, so we really appreciate your time. And we just heard from Jim Chalmers there, talking about the tax cuts, which we did not expect. But there has been some criticism this morning that they’re quite small, the equivalent of about $5 per week depending on how you slice and dice the numbers. So, $17 billion over three years. Perhaps the money could have been better spent elsewhere?
SENATOR THE HON KATY GALLAGHER, MINISTER FOR FINANCE: Well, the Budget’s always a series of balancing decisions and balancing requests for investment and other ways of dealing with all the pressures on it. But we see this as a good way to provide a bit of relief to households. They’re a top up to the tax cuts that were passed and started flowing in July last year. And really when they’re put together with those tax cuts and once fully implemented, it’d be about, for the average worker, about $50 a week. So, we’re not pretending that they aren’t modest, that’s for sure, but they’re topping up the work that we already started a year ago.
ALLEN: Well, that’s true. The Treasurer, Jim Chalmers, also used the word modest when he was describing them. And when you consider the size and the timing of them, was there consideration given to the inflation risk as well?
GALLAGHER: Well, that goes to the timing decision to have them start next year, really to make sure that inflation is back into band and that we are mindful, obviously, we’ve done a lot, Australia as a country has done a lot of heavy lifting to get inflation back down to a more normal range. And we don’t want to jeopardise that, and so the timing of when they come in was factored into our thinking and into the Treasury forecasts.
ALLEN: And when it comes to forecasts around inflation, it’s forecasted to be back inside the RBA’s target range, making it pretty hard here to mount an argument against further easing, right?
GALLAGHER: Well, we obviously leave the Bank to make their decisions. Our responsibilities are contained in the Budget, but we are really pleased the Treasury forecasts have inflation turning sustainably, or coming back sustainably, into the band six months earlier than had been expected at MYEFO. And so, that’s really welcome news, obviously. We’ll leave the Bank to make decisions based on the information they have.
ALLEN: Turning to some questions around spending as well, we were expecting to see perhaps a substantial boost to defence spending considering, well, the geopolitical environment, potential pressure from the US as well. Was there a temptation to go a little bit bigger there, because we’re rising to 2.3 per cent of GDP by the early 2030s?
GALLAGHER: Look, we’ve put a lot of work into working out the priorities in defence and the Defence Minister has led that in conjunction with his department. We’ve found an extra $50 billion over the medium term for defence. That’s not an insignificant amount of money when you think about it. We brought forward some money in this Budget based on Defence advice about their capability needs, so that is met. But I also think you should look at defence and national security bringing in all of the intelligence agencies, the work that DFAT’s doing to stabilise our relationships in the region. It is very uncertain global times, as everybody is witnessing, and so investments in defence are essential but so are investments in a whole range of other areas to make sure we keep Australians safe.
ALLEN: And of course the huge domestic issue in Australia, besides cost-of-living, which I’ll get to in a moment, is the perennial tightness in the housing market. There is of course a ban, now, on foreign buyers buying existing properties for two years from April. There’s some addition to the Help to Buy scheme. But do you feel like there was a missed opportunity here to really throw down ahead of the election?
GALLAGHER: Housing has been a key priority for us. We have about $33 billion going into a variety of programs for all parts of the housing market, whether it be in foreign ownership or in homelessness funding to supported housing, affordable housing, how we support renters. So, I think the investment level we’ve got there is flowing, it’s flowing through this Budget as well. I would love a silver bullet that just, you know, we snap our fingers and we solve all of the pressures in the housing market. That’s not realistic, but there’s no shortage of investment or commitment by this Government to address those supply issues.
ALLEN: We also have a forecast for deficits for a decade. Is there any sense of urgency to do something about that sooner?
GALLAGHER: Well, when you look at the Budget, you’ll see under this Government we’ve had the biggest nominal turnaround, the most significant nominal turnaround in the Budget forecasts of any first-term Government. So, we’ve improved the budget bottom line by over $200 billion. Massive numbers, I know. But we’ve improved the deficits, we’ve delivered two surpluses, we’ve paid down debt and we’re paying – because we’ve lowered debt, we’re paying lower interest bills on that debt. That all matters. So, we have absolutely, since day one, probably the key part of my job is to work out how we make sensible savings and bring those deficits and head the Budget back into balance in a reasonable timeframe. But we also have to be realistic that we have to pay for services, for Medicare, for defence spending, there’s no shortage of pressures on the Budget and the Budget balances all of those up.
ALLEN: I guess to a large extent, the job’s not made tremendously easier by the uncertainty in the trade environment at the moment. How well positioned do you feel the books are to deal with hits from that sphere?
GALLAGHER: Well obviously, that’s covered in the Budget books. The Treasury obviously provide us with advice on that. I think there are some measures there to look at strengthening our trade relationships in other areas, in looking at how we encourage people to buy Australian, but the global uncertainty certainly hangs over this Budget. And I think we’re in pretty good shape to deal with what comes next, and obviously governments need to make decisions based on the facts when they come, but I think we’re pretty well positioned, and the Budget certainly has taken those uncertain global times into consideration.
ALLEN: We’re anticipating an election, obviously, very soon, and one of the things the media loves to look for in an election budget is so-called decisions taken not yet announced. Only $1.5 billion set aside there. Have we had all the big announcements, or can we anticipate some more?
GALLAGHER: Well, it’s a very responsible budget. This isn’t about elections, this is about doing the right thing at the right time. So, the decisions taken but not yet announced are very small relative to other election eve budgets. But we take, Jim and I in our approach to budgeting, is we make the decisions for the right reasons and then the politics takes care of itself.
ALLEN: And in terms of the politics taking care of itself, are you confident that this is an election-winning budget? Are we going to be having this conversation again next year?
GALLAGHER: Well, I certainly hope so. That’s what we’ll be campaigning for. But I think the Australian people will see what we’ve tried to do with this Budget, which is help them where we can with Medicare and tax cuts, but also get the Budget in better shape to deal with all of that global uncertainty as you’ve outlined.
ALLEN: Alright, Finance Minister Katy Gallagher, thank you so much for joining us, recapping the events of the Budget.
ENDS
