Jim Chalmers:
Hi, everyone. Thanks for your patience. I think you will understand why we delayed the start of the press conference. We wanted to be upfront from the very beginning and say that obviously, we understand that this week is not about the Mid‑Year Economic and Fiscal Outlook. The country and the government is singularly focused on this horrifying act of antisemitism and on mourning and grieving with the community after the events of Sunday night.
So we’re proceeding today, releasing this mid‑year budget update with some reluctance and with a heavy heart for the victims and their loved ones and for every Australian who is mourning and grieving today. We didn’t think it was appropriate to wait until the week of Christmas. We didn’t want to get officials back rerunning the numbers early in January, but we want to release this mid‑year update in a way that respects that people are grieving.
We’ve also made sure that there’s an extra $104 million in the contingency reserve for security at Jewish sites, announced by the PM earlier in the week, and also for Jewish House Bondi for crisis services as well. Obviously, there’s good reason why that’s not printed in the material that was prepared at the end of last week, but there is this contingency in the contingency reserve for that $104 million in extra support and extra security for obvious reasons.
Now, the overall story of this mid‑year budget update is delivery, responsibility and restraint. We are strengthening the budget, we’re reducing debt, we’re delivering on our commitments, and we’re ensuring that responsible economic management continues to be a defining feature of this Albanese Labor government. The figures you have now, they show a stronger budget position since the election and a much stronger budget since we came to office.
In fact, this is the only mid‑year update since they began in the mid‑90s to have a combination of these 3 features simultaneously – a better bottom line each year of the forwards; less debt every year of the forwards; and net policy decisions that improve the bottom line. On this combination of measures, this is the most responsible mid‑year update on record.
In our first term, we delivered the biggest nominal improvement in the budget ever. That included those 2 surpluses and a much smaller deficit last year. And today, we build on that very substantial progress. This year’s deficit is now $5.4 billion smaller. The budget is $8.4 billion better than it was at the election. It’s better every year of the forward estimates. It’s $233.5 billion stronger since we came to office. Gross debt this year is $28 billion lower than at the last election. It’s $176 billion lower than forecast at the election before that. Gross debt peaks at 37 per cent of GDP – much lower than the 44.9 per cent of GDP that our predecessors left us. Now, all of this means around $60 billion less in interest costs over the medium term.
Now, all of this progress has come despite $35 billion of pressures and payment variations that we had to find room for. And, really, the main task for Katy and the ERC colleagues and myself has been to make room for that pressure on spending, to make room for our election commitments in a way that we could still ensure that this progress continues in strengthening the budget.
We’ve been able to do this by ensuring that our decisions improve the bottom line. For the first time in 8 years, net policy decisions are positive. We’ve found another $20 billion of savings, which means $114 billion on our watch. It also means we’ve returned every dollar of the revenue upgrade over the forward estimates for the first time since the Rudd government. Real spending growth is 1.7 per cent over the 7 years we’ve been responsible for it, compared to 4.1 under our predecessors, or 2.6 before COVID. And if you look at the 3 years that have finished, I think it averages 1.2 per cent for spending growth over the 3 years that have been completed on our watch.
Payments as a share of the economy fall over the forward estimates and that’s laid out for you in the documents as well. Now, we’ve made clear that this is not a mini budget. The main game is in May. But there are still some new policies in the mid‑year update that we are especially proud of. The $1.1 billion for mental health services that we promised. An extra $233 million for the CSIRO in addition to the billion dollars a year that we already fund them. There’s $435 million to boost the lower income super tax offset, something that we are very proud about in delivering in this MYEFO. There’s funding for the 100,000 homes for first home buyers that we promised at the election. There’s $98 million to fast‑track trades, also obviously very important for our housing agenda.
So overall, what you see in this document is we’ve made room for our priorities, we’ve made good on our promises, we’ve made difficult decisions, we’ve made good progress, but we know, as always, that there is more work to do. Responsible economic management is a hallmark of our government. It is the defining feature of the mid‑year update as well.
I wanted to thank our colleagues for the work that’s gone into this document. And I particularly wanted to pay tribute to the Finance Minister, Katy Gallagher. Katy will say a few words now, and then we’re happy to take some questions.
Katy Gallagher:
Thanks very much, Jim. And I just want to begin by associating myself with the remarks Jim made at the beginning of this conference and also pass on our condolences to all of those impacted and suffering under unimaginable grief and loss as a result of the Bondi terror attack on Sunday.
So just a few quick comments from me. The MYEFO delivers, as Jim said, it is around delivery, so on our election commitments, we said this would be a MYEFO that wasn’t a mini budget. It was about delivering the things we said we would do and also continue our work trying to repair the budget over time. And that allows us to find room for the things that are coming at us, the pressures that are coming at us. They are increasing, not decreasing. And so we know that this job isn’t done. But every update we have been involved in, we’ve been in charge of, we have found savings and reprioritisation, because that allows us to build that room that we need.
So when we look at that, there are a number of election commitments which Jim has run through, but there’s also those savings and reprioritisations. The large part of that is down to our save that we took to the election, which was a $6.8 billion save on the use of external contractors and consultants across government, non‑wage‑related costs. That has been informed by the Audit of Employment and Strategic Commissioning Framework, which we’re also releasing.
But I think every minister has taken the job that we asked them to do. They’ve looked at their own departments to find saving and reprioritised within that. That work will obviously continue in the lead‑up to the Budget, and we appreciate the work that they did in partnership with Jim and I and the ERC.
The payment variations were a big part of a lot of the work we have had to deal with in finalising MYEFO. A lot of that obviously are those demand‑driven programs but also increases in indexation and payments. So the aged pension, for example. A big chunk in disaster relief funding because of the frequency and the intensity of disasters that we are seeing. Extra money into schools, veterans and we’re seeing an uptake of access to childcare because of the some of the changes we’ve made to early education and care.
I might leave it there. I’m sure people have questions. But this MYEFO, like all of them, I guess, is a balancing act with things coming at us, how we manage some of those big payment variations, how we find savings. In total, there’s about $114 billion worth of savings that we have delivered through our budgets and the updates to those budgets since coming to government. That’s not an insubstantial amount of savings when we have the pressures that we’ve got facing the Budget.
Journalist:
I notice in the MYEFO when you talk about the top 5 pressures on the budget, I think it’s debt interest, defence, health, NDIS and aged care. I notice childcare has now snuck up ahead of aged care. Is that a consequence of aged care flattening or childcare getting more expensive, or both? And given you’ve announced all these savings and you’ve had this $40 billion in receipts since MYEFO and you still barely touched the sides in terms of the deficit over the 4 years, is now the time to be considering universal childcare given it’s already now a top 5 expense?
Chalmers:
I’ll throw to Katy on the pressures in a moment, the fast‑growing pressures, but on your broader point and the number that you cited for revenue upgrades include GST obviously, and the states get a big chunk of that. What we’ve been able to do for the first time I think in more than 15 years is bank all the upward revisions to revenue. If you think about the overall fiscal stance of this mid‑year update, not that long ago on the old figures the IMF said that they’d considered our budget position to be broadly neutral. I think the OECD talked about a modest tightening. We’ve been able to make the budget better still, and that’s because of the difficult but responsible decisions we’ve taken to bank all the upward revisions to revenue to find the savings.
And because of those efforts we’ve been able to get the deficits down in every year. We’ve been able to get debt down every year, net policy decisions making a contribution to the budget, and that’s the first time that we’ve can find in 30‑odd years of MYEFOs that that has happened.
Now, one of our motivations there is to make room for these big pressures that we’ve spoken about with you for some time. We’ve made good progress on some of them – the NDIS – we’ve made good progress on aged care. And one of the reasons why payments as a share of the economy is a little bit higher than the quarter of the economy that we had in our first year is because some of these pressures from the care economy. Katy?
Gallagher:
On the childcare and aged care – you’re right, it’s a bit of both. So we’ve got obviously reforms that will flow through into aged care with some of the co‑contributions that are coming, and we are seeing a faster than expected uptake of early education and care based on I think the changes that we’ve made and also with some more to come in January with the activity test, or the 3‑day guarantee. So it’s a bit of both.
On NDIS – but, you know, we’re going to have to keep working on all of these big, you know, spending pressures. Obviously defence is going to need more. NDIS, when we came to government it was running at 22 per cent growth. It’s now just over 10, and it is on track to head towards the 8 per cent that we set ourselves. So it’s going to be every budget and every budget update I think that we’re working away on this. But specifically in childcare and aged care it’s a bit of both of those reasons.
Journalist:
So should you be pursuing universal childcare given that it’s already starting to creep up the ladder in terms of expenses?
Gallagher:
Well, on that, I mean, the 3‑day guarantee is essentially the next step into that space where, you know, every child is guaranteed subsidised 3 days of childcare. That is, you know, certainly the PM’s view around universality of early education and care, and we see it not as a social security measure. We actually see it as part of our economic plan around ensuring that families are able to make choices about, you know, whether they work and how many days they work without being penalised.
But there’s a lot more work to do there. You know, we’ve obviously got to deal with the workforce, we’ve got to deal with the childcare centres, building enough, childcare deserts. All of that has to be stepped up.
Journalist:
Just looking at your longer‑term outlook for payments and receipts, it really looks like there’s a step up. If you take out the pandemic effect, which was a one‑off, payments will be higher for longer than really they’ve ever been in the last 50 years and receipts are heading that way as well. Do you think you have a mandate for government to be bigger? I’m looking at page 57. Is that a calculation you’ve made? You’ve won 2 elections now, is that the lesson you’ve taken that that’s what Australians want and you’re prepared to stare down your political opponents on that issue?
Chalmers:
That’s not how we come at it. We don’t describe the challenge of finding room for our priorities in the way that you described it. It’s important to remember that payments as a share of the economy go down over the forward estimates. That’s one point. The pressure on the medium term or the additional pressure on the medium term in this budget update, a key reason for that is actually the sensible provision we’ve made for the hospitals deal that we hope to strike with the states and territories. And so that’s put some extra pressure on the budget, especially over the medium term, and that explains part of the very modest weakening of that over the 10‑year period.
When it comes to tax revenue, again, the tax‑to‑GDP is lower than what we saw under the Howard government. You know, from time to time yourselves or our political opponents will hold that period up as some kind of model. The Howard government is the only government in the last 30 years or so to have tax‑to‑GDP running at 23.9 or higher. They did it 5 times. And so what you see here is we’re returning bracket creep through 2 additional rounds of tax cuts. I think that signals our intention when it comes to bracket creep. We’ve got 3 consecutive tax cuts now in the system.
When it comes to spending, we’ve been trying to do our best to limit some of these big pressures that Katy just ran through. And so for all of those reasons I wouldn’t characterise things the way you have, Jacob.
Journalist:
Treasurer, the forecasts have revised up inflation from the last budget from 3 per cent to 3.75 per cent. That’s going to above the rise in wages, so a real wages cut for hundreds of thousands, millions of Australians. What do you say to them?
Chalmers:
Well, a couple of things about that. Obviously, the updated inflation forecasts reflect the recent data. So in the usual way, the Treasury has updated the forecasts not just for inflation but core inflation taking into consideration the most recent data. As the Reserve Bank has said and as we have said, it remains to be seen how much of that uptick in inflation is from temporary factors – the removal of electricity rebates, volatile costs like travel and fuel – and how much of it is ongoing. So there’s an element of uncertainty, as always, around the inflation forecast. But we acknowledge that the inflation forecasts have been revised up, and that’s because recent data has been a little bit higher than expected, and that explains the change in the forecasts.
We’ve had 8 consecutive quarters of real wages growth now. Remember, real wages were falling 3.5 per cent when we came to office. We’ve now had 2 years of continuous annual real wages growth, and that’s been helping to rebuild living standards after they were cratering in the period leading up to us taking office.
So we acknowledge, obviously, even with strong wages growth when the inflation forecast ticks up, as we have presented in these documents, then that has implications for real wages. But overwhelmingly the story of real wages under this government has been a story of real wages growth.
Journalist:
Treasurer, the forecasts for the tobacco exercise for this financial year was slashed by 22 per cent over the 4‑year budget estimates. That’s an $8.2 billion reduction in revenue. Just last week the IPEC commissioner said that more than 1 in 2 cigarettes sold in Australia is illicit. Do you concede that the current excise setting isn’t working?
Chalmers:
Well, I acknowledge that we have a very serious challenge when it comes to compliance and when it comes to illegal tobacco. I don’t believe that unwinding recent changes in excise would fix the longstanding challenge that we have with illegal tobacco. And I think I’ve indicated to all of you on a number of occasions, we take this challenge very seriously. We don’t believe a tobacco tax cut, as British American Tobacco and some others have proposed to us, will fix the problem. But we have dedicated $350 million in extra resources for compliance. We have actually had some very encouraging raids, very successful raids, in recent times, including one in my neighbourhood. And so those are good developments.
But we know we’ve got a challenge here. And the report that you cite goes to that challenge. It’s backward looking. The forecasts are obviously forward looking. The last thing I’d say is this. In taking this challenge very seriously, we understand that we will need to do more than the $350 million that we have provided the law enforcement agencies. We’ve been in discussions with Minister Burke and others about any future steps that we might consider. He will discuss those with the states as well and he’ll have more to say about that in due course.
Journalist:
Just back on inflation, a lot of Australians will look at those numbers that are in the MYEFO and be worried that they’re now looking at rate hikes next year. Can you say to them in your capacity as Treasurer that you’ve done enough to avoid that outcome?
Chalmers:
Well, no sensible Treasurer pre‑empts or predicts future movements in interest rates. I haven’t. My predecessors, to my knowledge, didn’t do that either. And there are good reasons for that. This year we’ve had 3 interest rate cuts, and our political opponents would like to say that interest rates are determined wholly and solely by the government’s budget position. Well, they need to explain those 3 rate cuts, including 2 since the March Budget.
What we know from the Reserve Bank’s statements throughout the year is that they don’t consider public spending to be a factor in the decisions that they’ve been taking. In anything, the private sector, in welcome and encouraging ways, have been doing the heavy lifting in our economy. And so I’ll leave the decisions on interest rates to the independent Reserve Bank, as I always do.
We’re focused on our part of this, and our job in all of this, which is to make sure that for the seventh consecutive time there are budget savings here. And for the first time in the history of the mid‑year budget update we’re better in every year, better on debt every year and net policy decisions are making a positive contribution to the budget. That’s our job, and that’s our focus.
Journalist:
Treasurer, looking ahead to next year’s Budget, this is a slimmer document than usual. You’ve outlined the big challenges on the government’s budget process. You’re adding universal childcare in the next couple of years. Are there improvements to the structural deficit, and how difficult will they be to achieve in May next year?
Chalmers:
Well, I think for all of the reasons that Katy ran through in her response to Phil’s question, we know that some of these pressures on the budget are intensifying rather than easing. We know with an ageing population, we know with increasing demands on services that come from that that it will require and it will receive our ongoing attention. People ask us from time to time, ‘will the next Budget be about budget responsibility and restraint and savings?’ And our answer to that throughout has been in every budget and every budget update on our watch has been about that.
And I think especially this one, because when you’re faced with $35 billion in spending pressures, largely unavoidable or largely coming from things like the indexation of payments, our responsibility – which we have embraced in this document – is to make room for that. We’ll continue to do that, and we’ll do that in the May Budget and we’ll do that subsequently as well because we know how important it is as the demand for services grows that we can afford to provide those services. That’s our approach.
Journalist:
This is for either of you as senior members of the government. The Prime Minister said this morning that he’s open to looking at things like hate speech laws if required. We’ve had former Treasurer Josh Frydenberg come out recently and call for things like hate preachers to be banned. He and other current members of the Coalition are talking about the Al Madina Dawah Centre and its need to – have lawful actions like its charity status or other things stripped to try and get it to close. What is the government’s thinking around these issues? Either of you, do you have a view that these might be under consideration?
Chalmers:
Well, the government takes the evil of antisemitism seriously, and we’ve taken some significant steps already. But we’ve all acknowledged that more steps need to be taken and more steps will be taken. We will consider any reasonable suggestions for those additional steps. We have been part of National Security Committee discussions Sunday, Monday, Tuesday and later today. And that is all about ensuring that we consider any reasonable and responsible steps, additional steps, to crack down on this evil in the aftermath of this horrifying act of antisemitism.
I say this also about Josh Frydenberg. We weren’t able to catch all of what he said before we came out here to spend time with you today, but we saw some of it. I have a lot of respect for Josh Frydenberg. I think those of you know that when we were in this parliament together, I have always taken a respectful approach to Josh’s views. I don’t doubt the intensity or the sincerity of his views, and we take them seriously. And he, like a lot of Australians, is mourning and is grieving, and we will take suggestions from him or from other members of the community very seriously.
Journalist:
The cost of APS workers compensation claims is forecast to be 43 per cent higher this financial year and some 77 per cent in ’28–29, so that’s $10 billion in ’28–29 alone. Can you sort of explain this cost and whether you think the APS headcount will need to be reduced over the forward years to sort of deal with some of this increased spending?
Gallagher:
So you’re right around workers comp. This is something that I have been spending a bit of time looking at and will continue to do so over the next little while and in the lead‑up to the Budget. You know, this is one of those pressures that the budget has to deal with. It’s not linked to ASL or any view around that. I mean, this is a cost of meeting employee expenses outside of that. It’s largely linked to increases in psychological disease frequency, and so we need to do more work on this. This is another one of those programs where you see it start to increase faster than we would like. We need to go back and have a look at what’s happening and how we moderate some of that, including, you know, what’s happening to staff to see these claims increase.
Journalist:
So just this financial year the net policy decisions don’t contribute positively to the bottom line. And also this financial year you don’t bank the majority of revenue upgrades. Given this year is the furthest out from the election, do you think your difficult decisions that you make on fiscal management are going to get more difficult, and if not, why?
Chalmers:
Well, there are difficult decisions in this update, and there’ll be more to come. And that is the reality of managing a budget like ours at a time of very substantial fiscal constraints and a lot of global and domestic uncertainty.
On the points made in the first part of your question, the budget bottom line is more than $5 billion stronger this year. The pressure on spending I think by our count, from memory, around 90 per cent of the spending this year is what any reasonable person would consider to be unavoidable. Over the 4 years we are making a positive contribution with our decisions. Over the 4 years we are banking a 100 per cent of the revenue upgrade. And that takes the total under the life of this government to 72 per cent.
The reason I mention that is because it is now a feature of this government that we bank most of the upward revisions to revenue – in this case, all of them – but over the life of this government most of the upward revisions to revenue. Our predecessors used to spend most of it. They only banked about 40 per cent. I think Howard and Costello banked about 30 per cent –
Journalist:
Sorry, what was the ‘all of them’?
Chalmers:
72 per cent.
Journalist:
But you just said all of them would be banked? All revenue upgrades?
Chalmers:
Over the forward estimates in this update.
Journalist:
But how is that possible when you’ve got $42 billion worth of revenue upgrades but your budget line improves only by $8 billion?
Chalmers:
Well, first of all, it’s not 42. I mean –
Journalist:
Well, 30, ex‑GST. So it’s 30 –
Chalmers:
It’s 39 with GST in it and 32 with GST out of, so the 40 number is not accurate.
Journalist:
But the bottom line only improves by 8 billion. So –
Chalmers:
Because our net policy decisions are positive and because there are variations on the spending side as well. I mean, from time to time some of you will mention the role of inflation on the revenue side but not the spending side. And our political opponents are guilty of that as well. From time to time they will point to gross spending in a way that insinuates that they don’t support the indexation of the aged pension, for example. And so there are upward revisions to payments. There are unavoidable pressures that any reasonable, responsible government would meet.
But the overwhelming story here is the story of a mid‑year budget update which for the first time ever in mid‑year budget updates makes a positive contribution over the 4 years, improves the bottom line every year and gets debt down every year. That’s not happened before in mid‑year budget updates. And so the overwhelming story of this budget update is one of responsibility.
Journalist:
Treasurer, do you regret that so many scientists had to lose their jobs because the CSIRO didn’t have enough funding, only for the government to announce $233 million in funding?
Chalmers:
A couple of things about that – and I’m very grateful that you’ve asked me about this because we’re very proud of the extra $233 million that we’ve found for the CSIRO. We said at the time when this was last in the news that this government is very enthusiastically supportive of the CSIRO, the science community more broadly. We fund the CSIRO around $1 billion a year. We found an extra $45 million in the last budget. We found an extra $233 million this budget.
Now, how the CSIRO manages their budget is a matter for them and for their board. They’ve made it clear that the pressures on their budget have not come from government cuts. On the contrary, we’ve been increasing funding for the CSIRO –
Journalist:
That’s not correct though. It did come down under Anthony Albanese, the budget for the CSIRO was cut.
Chalmers:
There have been no cuts to the CSIRO on our watch. The costs have escalated, which might be what you’re referring to, I think, Issy. The costs have escalated. And so the CSIRO has to make decisions about how they manage their resources. From the government’s point of view, we’ve been increasing their resourcing – $45 million extra last time, $233 million extra this time. That’s because we believe in the crucial role that science broadly and the CSIRO plays in the future of our economy.
Journalist:
Treasurer, thank you. You talked there about taking suggestions on a potential response to Bondi. I’m sure you, like many Australians, have thought about 10‑year‑old Matilda about the other victims. Surely, they deserve urgent and unprecedented action from the government. So when will the parliament be recalled? When will there be that action and new laws, or can all of that just wait until after Christmas? Surely something has to happen now?
Chalmers:
Well, first of all, in terms of mourning the victims, obviously every Australian grieves for these lives that have been needlessly and tragically cut short. And I think, like anyone, the idea that a 10‑year‑old’s life was lost spending time in one of those petting zoos that our kids all hang around. The fact that her name was deliberately a very Australian name, which reflects the contribution that that family is making and wanted to make to our country, having come here from, I believe, the Ukraine. These are extremely tragic, extremely harrowing, horrifying action of antisemitism. And the government takes them extremely seriously.
The Prime Minister has said, I have said, Penny Wong today, Richard Marles, Katy Gallagher, I’m sure, everyone has said – and we mean it – that we will take whatever steps are necessary. The government’s singular focus this week has been on the additional steps that need to be taken.
Now, I wanted to say something about what I think is a fallacy in today’s commentary, including from people who should know better, and this is this idea that we have to choose between either we do something about antisemitism or we do something about gun control. This is not an either/or. We don’t just have the capacity to deal with both evils at once, we’ve got a responsibility to deal with both evils at once, and that’s the approach we’re taking to it.
And I hear – you know, I respect Mr Howard – but he of all people should know how important it is that as we deal with the evils of antisemitism, we tighten our gun laws in this country as well. I mean, why do people have 6 serious weapons in a Sydney suburban home? What’s the rationale for that?
So, I don’t like it that people have been dismissing and diminishing what I think was an important act of national leadership when the Prime Minister took to National Cabinet – in addition to, not instead of – what we need to do on antisemitism, to do something about guns as well. We need to act on both fronts at once, and that’s what we’re doing.
Journalist:
Finance Minister, last month the Federal Police Association wrote to you and highlighted chronic, as they put it, shortages of counterterrorism officers. Have you taken into account some of those warnings, and is the government addressing what that association claims is a big problem in staffing?
Gallagher:
Well, since coming to government, I think if you go back and look at our budgets and our updates, there were no shortage of issues across defence, the work that DFAT does in this space, and some of the intelligence agencies. And we’ve worked really hard. We do a lot of work across government. We consider these matters at NSC, obviously, as you’d expect. And we have increased funding, that’s the reality. Where agencies have come and we’ve worked with them to understand what the pressures are, whether it be in Defence, whether it be in some of the work in Penny’s space or in ASIO and those other agencies, the AFP as well in counterterrorism funding, we have provided additional support.
Now, I’m not saying for any moment that’s it. We get more than most that the pressures in this space are increasing, not decreasing. That’s why, you know, when you look defence and national security, it is one of those big areas where we need to continue to work with agencies to invest appropriately, and we do. You know, it’s sort of my day‑to‑day job, really, through finance is to work with all of these agencies right across government to test some of what they’re saying. You know, obviously, across government there aren’t any situations where you don’t do that due diligence. We have to do that. And we’ll continue to do so. And we take the views of the AFPA seriously as well. We have reasonable engagement and we work with them and we will continue to do so.
Journalist:
Treasurer, thanks for update at the start about the spending on the Jewish community safety. Can I ask how quickly that $104 million can get out the door? And just given your comments just then about why on earth do people in Sydney suburban homes have 6 guns, gun control advocates think that laws need to go even further than what National Cabinet has proposed, including a ban on gun storage in suburban homes. Would you like to see something like that happen?
Chalmers:
I don’t want to front run the discussions that Prime Minister Albanese is having with the state and territory leaders. My personal view – my personal view – is that we need to take very, very substantial steps to crack down on the way that firearms are held. I thought some of the directions that the Prime Minister set for the other leaders at the meeting on Monday, I thought they made a lot of sense, whether we’re thinking about limits, whether we’re thinking about citizens versus non‑citizens, the fact that these licences shouldn’t be set and forget.
I thought that the Prime Minister, the leadership that he provided that meeting on gun control was really important. I acknowledge the efforts of the other premiers as well. But from my point of view this is a really important part of the story. It’s not the whole story. We shouldn’t do gun control instead of all of the other necessary steps. We need to do gun control in addition to all of the other necessary steps.
Journalist:
And, sorry, just the funding for the Jewish community safety?
Chalmers:
Right. Well as I understand, the funding that we had in place already is flowing and this is about supplementing that. And so making sure that the new $100 million or so is flowing before the money that we’d already provisioned ends. But when it comes to the crisis services, obviously ASAP, as soon as we can. There’s a couple of million dollars there for Jewish House Bondi providing these amazing crisis services, and we’re very big supporters of their work. And so as soon as possible. There is some funding already when it comes to security, and this is about supplementing that as soon as possible.
Journalist:
You often talk about these tax cuts that are due to come in next financial year and the year after. The share of income tax collections as total income tax, personal income tax, is now on track to reach 69 per cent from two‑thirds now. It is lifting quite substantially. Are the 2 tax cuts that you’ve got planned enough? Do you think there’s an economic ramification from asking working people to cover so much of the federal budget through personal income tax?
Chalmers:
Well, first of all, you’re right to begin your question with a simple fact and that is we’re cutting income taxes 3 times. And that is the best indication we can give you about how seriously we take the challenge of returning bracket creep, making sure that we keep average tax rates down lower than they would otherwise be, because we recognise that the best outcome here in our economy is more people working, earning more and keeping more of what they earn. That’s sort of one of the government’s reasons for being and so tax has a role to play in that.
Now, had we not changed the tax cuts last year and were we not cutting income taxes next year and the year after, all of these issues with bracket creep, the composition of the tax base, average tax rates, tax‑to‑GDP, all of those challenges would be worse. I understand from time‑to‑time people call for more tax cuts. I think we’ve shown a willingness and an ability to make room for that when we can because we understand that bracket creep is a genuine issue in our budget and in our economy, and that’s why it beggars belief, frankly, that our opponents took to the election a policy to increase income taxes when we were proposing to cut them.
Journalist:
Minister Gallagher, on the APS workforce, the MYEFO shows a 28 per cent higher cost of separations and redundancies this financial year compared to the March Budget. We are hearing that agencies are not filling roles as they’re dealing with the budget pressures. Can you rule out a reduction in ASL when those updates come in the Budget? And also, just on the Strategic Commissioning Framework, can we expect to see that that’s on track with those savings? Are you directing agencies to find it?
Gallagher:
I’ve said a number of times I think the APS is largely the right size. I think we’ve done the big uplift, but that’s not to say every agency remains the same.
Journalist:
Will the overall ASL be [indistinct]?
Gallagher:
Well, that’s our expectation. It will remain largely the same. There will be ons and offs in different areas. Like, as we have some of these areas like defence grow, national security, you will see increases, I presume, in those areas. And we have to manage those across the board, but I think largely the right size.
The Strategic Commissioning Framework, the targets set were delivered upon. There was big contributors from the ATO and Defence, actually, which probably had the most room to bring some of those services back in‑house. And I think, you know, agencies take it seriously. We’ve set a similar, slightly smaller target for next year. But I’m very confident that the agencies will meet that challenge.
Chalmers:
Thanks very much, everyone. Thank you.