Finance Minister Katy Gallagher has revealed the government’s spending audit has clawed back billions of dollars in next week’s budget, warning the hunt will continue for savings on an ongoing basis to repair the nation’s finances.
The government has been forced to find more than $5 billion to fund programs it says were not properly funded under the previous government, on top of the $4.1 billion identified in last October’s budget.
In an interview with this masthead, Gallagher confirmed the total number of cuts and re-prioritisations in the May 9 budget would be less than the $22 billion it found in October.
But asked whether the savings would still be in the billions of dollars, Gallagher said: “Yes.”
“We will be finding savings and re-prioritising. We’ve looked across government. That will all be clear on budget night,” she said.
“This is going to be an ongoing piece of work where it’s the discipline we’re trying to build into the show.”
Gallagher said much of the $22 billion that was cut in the last budget was “low-hanging fruit” in the form of “buckets of money that had been put in the budget without a real purpose”, suggesting that the savings to be made in next week’s budget had been more difficult to find.
“I don’t think it’s a surprise that it would be less than that [$22 billion], but we’re definitely putting in place that rigour,” she said.
Gallagher said the budget had accommodated more than $5 billion worth of programs over four years that the former government “deliberately chose not to fund despite clear ongoing need”.
She said she thought Labor had in October largely dealt with the problem of programs facing a funding cliff, but it became more apparent in preparing for this budget.
“The concerning thing for me is that these have all come forward as urgent pressures in May because of the way they’ve been budgeted for,” she said.
“I think it was done for a particular purpose, which was to either make it someone else’s problem if they [the Coalition] were not going to be in government, or [to] make your bottom line look better than it actually was by taking away permanent pressures and making it look like they’re temporary.”
Opposition treasury spokesman Angus Taylor has previously defended terminating measures as a “fiscally responsible part of budget management”.
The latest monthly financial statements, published on Friday, show that the federal budget recorded a surplus of $1.6 billion for the 31 days of March. This has heightened expectations that the Albanese government could deliver the first surplus in 15 years on the back of surging tax revenue from resources and a record number of people in work.
Taylor said on Saturday that the latest accounts showed that a surplus was achievable, but the government needed to be prepared to make tough decisions and rein in spending.
“The budget is still benefitting from nine years of the Coalition’s strong economic management with windfall company and income tax receipts, and high commodities prices driving an enormous turnaround in the budget bottom line,” Taylor said.
But Gallagher said the budget was still in a structural deficit and the pressures on it – including defence, health, aged care, the National Disability Insurance Scheme and servicing the debt – were “increasing, not decreasing”.
She said there would be “an improvement in the short term because of some of the prices that we’re getting for things that we sell and for the strong employment market”, but “the underlying position is one of structural deficit”.
She said while some reform of the NDIS was happening now, putting it on a more sustainable footing was a “longer piece of work”.
This masthead revealed last week that Labor was preparing to roll back one of former prime minister Julia Gillard’s most controversial policies by allowing single parents to stay at home for up to four more years without being moved to JobSeeker.
Currently, single parents are kicked off parenting payments when their youngest child turns eight, but the government is expected to raise the age threshold in the budget.
Asked whether the age would be raised, Gallagher said:“It’s obviously a recommendation that’s come to us. It’s been considered through the budget process.”
She said the budget would have a “strong focus on women” but “we’re not going to solve gender inequality in one budget or one term”.
“We’re going to give it a good crack at making substantial progress after a decade of essentially no progress at all,” she said.
A survey conducted by Resolve Strategic for this masthead showed 61 per cent of respondents either support or strongly support an increase to incentives for women with children to return to work, through policies such as tax breaks or childcare subsidies.
“Making sure that parents can be supported in the choices they make, is really important to ensuring that women get a better crack at opportunities,” Gallagher said.
“It’s not just women who have children, it’s women as they work through their life … This budget is the next logical step in progressing equality for women in this country, that’s how I would frame it.”
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