SENATOR THE HON KATY GALLAGHER
MINISTER FINANCE
MINISTER FOR WOMEN
MINISTER FOR THE PUBLIC SERVICE
MINISTER FOR GOVERNMENT SERVICES
E&OE TRANSCRIPT
RADIO INTERVIEW
RN BREAKFAST
MONDAY, 24 MARCH 2025
SUBJECTS: Federal Budget; cost-of-living; JobSeeker; tax system.
SALLY SARA, HOST: Well, this was the Budget that almost never was. Had ex-Tropical Cyclone Alfred not thrown plans into disarray, the Federal Government had been widely expected to call the election a fortnight ago, which would have avoided the need to hand down a fourth Budget. Now we’ve been told to expect a Budget with few surprises and a deficit when the Treasurer Jim Chalmers gets to his feet tomorrow night in the House of Reps. The Federal Minister, Katy Gallagher, is my guest in the studio. Minister, welcome back to Breakfast.
SENATOR THE HON KATY GALLAGHER, MINISTER FOR FINANCE: Good morning.
SARA: You say this Budget contains around $2.1 billion worth of savings. Around a third of those are from consultants. You’ve already pulled back on the use of consultants substantially, how do you ensure that you’re not going too far, particularly to essential services?
GALLAGHER: Well, we’ve been at the same time, Sally, making investments into the public service. So, it is about striking the right balance, but we believe that there is more savings to be found from reducing the public service’s reliance on consultants and contractors. It’s a very expensive form of labour, in terms of how it measures up next to permanent public servants. And over the last three Budgets, and you’ll see more of this tomorrow, we’ve been rebalancing that. Investing, in this instance – the significant one tomorrow is in the NDIA, where it had been very reliant on contractors. We don’t believe that delivers the best outcome to people and so, there’s room to convert that external labour or labour hire into public service, permanent, good, secure jobs.
SARA: The Coalition is putting 36,000 jobs in Canberra in the spotlight. Under Labor, will there be any room to move in trying to draw some savings from the number of public servants by a few thousand? Or is there any view to bring down that number at all?
GALLAGHER: Well, I think what we’ve tried to do is look at the public service and say, what is the right size for the public service to be to deliver the outcomes that we want? And that is better outcomes for veterans, better outcomes for people engaging with Services Australia, better outcomes for people processing their Medicare claims, and we’ve been through a pretty methodical process in this. In each Budget we’ve kind of tried to deal with various departments. And so, I think the public service is roughly the right size now. There’s always ons and offs and programs that stop and all that sort of stuff, but the public service as a proportion of population is smaller now than it was in 2006. So, there is absolutely no evidence to say that it’s grown out of pace with the work that it needs to do. And over that time, we’ve had very significant new responsibilities handed to the public service such as the NDIS, for example, but also in areas like defence with the submarine capability that we need. And so, this has all been part of our thinking. But on your second kind of element to your question, absolutely, can we find more savings within public administration? Yes, I think that’s ongoing work for government. You have to constantly, every Budget, look at where you can find savings, where you can reprioritise. And over the four Budgets, we’ve found $95 billion worth of savings. That’s not an insignificant amount. And our opponents found zero in their last Budget. So, this has been a theme of the Treasurer and my approach to budgeting, has been to find savings and make them where you can so that you can invest in other programs, like Medicare.
SARA: The Government has announced that you’ll extend energy subsidies out until the end of the year. That’s $150 for each household and for small business. What happens after that? How long does it go on for?
GALLAGHER: Well, this isn’t a permanent payment. So, this gives an additional six months, recognising that energy bills, electricity bills in people’s homes, has been one of those pressures for households. So, this is the third round. We did one round that was targeted, we did the second round which went to every household and small business, and this one will extend it. And what we’re trying to do is support households as we rebuild, essentially, the electricity grid to make sure that it can get more renewables in, because we know that’s the cheapest form of energy. So, we are trying to balance those costs households are getting with the work that needs to be done and the investments that need to be done to make sure that we’ve got the energy system we need to deliver cheaper and cleaner energy to households.
SARA: In the previous election, the Prime Minister promised that power bills would come down for households. Will you be promising that again? They didn’t.
GALLAGHER: Well, Sally, I think you’ve seen – this is the third round of energy bill rebates. We’ve seen electricity prices go up, largely off the back of a war in Europe and a global inflation coming out of COVID. That did change things. And we’ve had to make decisions based on the information we have. So, when we saw those prices increase because of largely those two events, we made decisions to relieve pressure off households with those energy bill rebates. And you’ve seen the extension in this Budget to get us to I think another six months. It is a reasonable investment, though, and when you budget under pressure, you have to make these decisions based on what you can afford as well.
SARA: COVID had already happened and the war in Ukraine had already begun when the Federal Election began. In retrospect, was that an unwise promise to make?
GALLAGHER: Well, I think in the context of that promise, it was around shifting to a renewable energy future. And renewable energy remains the cheapest form of energy. And our pitch at the last election was, after a decade of neglect and not dealing with the energy crisis that was looming with aging coal-fired power stations breaking down, et cetera, that we needed to map out a way to reduce our emissions, invest in a new energy system, and that we would see households benefit from that. We still believe renewable energy – not just believe, it’s true. Renewable energy is the cheapest form of energy. Now, yes, the war in Ukraine had just started. I don’t think anyone expected it to be going for three years. The inflation challenge, which every country saw, was really on its way up when we came to Government. It continued to go up and we’ve managed to get it back down again. And that has placed pressure on services. So, we’ve been dealing with that. One of the ways we can help households in dealing with those price increases has been through energy bill rebates, and that’s why you’ll see them extended in the Budget.
SARA: To help people out with cost-of-living, why have these energy bill rebates, rather than increasing the level of JobSeeker, which would help those most in need and has been recommended by the Government’s own committee?
GALLAGHER: Well, the Budget has to do a lot of things, and you’ve seen payments on JobSeeker increase in every budget that we have handed down, including additional payments on top of indexation. We’ve increased the Single Parenting Payment and eligibility for that. We’ve made sure that bulk-billing is funded properly, including for concession cardholders. So, we’ve had to come at this cost-of-living challenge from a number of different ways, but one of them has been to make sure that we are supporting households who rely on income support, essentially, to get through. But the Budget is under pressure. And I don’t think the Treasurer and I have ever pretended otherwise. We’ve got a lot of calls on the Budget, a lot of pressures on the Budget from various areas, whether it be defence, or health, or aged care, or NDIS, or the debt that we’ve managed to get down, or the interest payments on that debt that we’ve managed to lower. So, when you see a Budget, a Budget is hundreds and hundreds of decisions that are layered upon each other. And certainly, responding to people who are on income support payments has been a feature of this Government.
SARA: There’s been a chorus of voices, including economists, the crossbench, former Treasury head Ken Henry, urging the Government – whether it will be Labor or the Coalition – to have a national conversation about tax reform and also asking when’s it going to start. What’s the answer to that?
GALLAGHER: Well, we have through this term in Government, put forward a number of pieces of legislation that seek to adjust the way we collect tax, whether it be in high-balance super or multinational tax reform. Again, I don’t think there’s any shortage of ideas from those outside Parliament about ways to improve the tax system. You know, we listen to those views, we respect many of them –
SARA: But the Government hasn’t fundamentally reformed tax during this term.
GALLAGHER: Well, I don’t know about that, Sally. Not perhaps to everyone’s ideal, if you listen to Ken Henry, but we’ve done income tax reform to make sure that every taxpayer gets a tax cut, and that wasn’t just to deliver that, it was also to change the thresholds and the income brackets. So, we’ve done that. We’ve got super stuck in the Senate, a relatively modest, uncontroversial adjustment to high-balance super accounts, and it’s stuck in the Senate. We’ve done multinational tax reform. There are a number of areas where we have moved in three years in a busy agenda that this Government has had. But I have no doubt that discussions about tax will continue, particularly from those outside the Parliament.
SARA: Katy Gallagher, thank you very much for coming to the studio this morning.
GALLAGHER: Thanks for having me, Sally.
ENDS
