Nick McKim (Tasmania, Australian Greens) Share this | Link to this | Hansard source

My question is to the Minister representing the Treasurer, Senator Gallagher. Minister, you and other members of your government consistently say that it is the financial position you inherited which is the reason you can't provide more support for Australians getting smashed by the cost-of-living crisis, yet last week your government delighted US and British weapons manufacturers by signing up to a $368 billion deal for nuclear powered submarines. Minister, how are you ever going to look Australians in the eye again and tell them that you can't afford to put dental and mental health into Medicare, that you can't afford to raise the rate of income support and that you can't afford to wipe student debt when you are prepared to splash $368 billion on the AUKUS subs?

Katy Gallagher (ACT, Australian Labor Party, Minister for the Public Service) Share this | Link to this | Hansard source

I thank Senator McKim for the question. As senators will know, the main job of a federal government is to keep our citizens safe. This investment in our national security is important on its own, but it also has significant economic benefits across the country. The question goes to the impact on the budget. As people will be aware, we've forecast that over the forward estimates the impact will be in the order of $9 billion, of which $6 billion sits in the forward estimates as provision for the Attack class. The additional costs over the forward estimates will be met from within Defence's existing funding arrangements.

Over the medium term, we are looking at costs in the order of $50 billion to $58 billion. Beyond that, we are looking at around 0.15 per cent of GDP into the next 20 to 30 years. This investment is also just under 10 per cent of the overall investment that we make into defence. It is an important agreement, but that doesn't mean that those other areas of priority within the budget don't get the attention of the government as well. As you would know, we've made investments into key social policy areas like child care, like making medicines cheaper and like investing in fee-free TAFE. The budget will also have a significant investment in the cost of living around energy bills. We've also got the work that's coming our way from the Economic Inclusion Advisory Committee that will also inform the government in its decision-making. It's not an either/or; we have to do all of these things.

Sue Lines (President) Share this | Link to this | Hansard source

Senator McKim, first supplementary?

Nick McKim (Tasmania, Australian Greens) Share this | Link to this | Hansard source

Labor's stage 3 tax cuts will cost even more than Labor's nuclear submarines. Three-quarters of the benefit of the stage 3 tax cuts will go to the top 20 per cent of income earners, while women in their 60s are having to sleep on their friends' couches. Is this what the Prime Minister meant when he said that Labor would leave no-one behind?

Katy Gallagher (ACT, Australian Labor Party, Minister for the Public Service) Share this | Link to this | Hansard source

I thank Senator McKim for his ongoing interest in stage 3 tax cuts. As the senator will know, our policy on these tax cuts hasn't changed, and our focus on tax reform is in the area of ensuring multinationals pay their fair share of tax and around some of the changes that we've recently announced around high-balance superannuation accounts. We have important policies that go to that point. I'm not dismissing the point that Senator McKim raised about other areas of pressing pressure and need in the budget, including for women and women's housing. That is a real priority, and that's why we'd really like to see this Senate pass the Housing Australia Future Fund in this fortnight so that we can make sure that some of the allocations for that go absolutely and specifically to that demographic group.

Sue Lines (President) Share this | Link to this | Hansard source

Senator McKim, a second supplementary question.

Nick McKim (Tasmania, Australian Greens) Share this | Link to this | Hansard source

Minister, we hear a lot from the Treasurer about relief, repair and restraint, but the stage 3 tax cuts and the submarines are none of those things. Given your cash splash on weapons and the wealthy, and your avoidance of serious tax reform, what excuse will you use when you hand down your austerity budget in May?

Katy Gallagher (ACT, Australian Labor Party, Minister for the Public Service) Share this | Link to this | Hansard source

I thank Senator McKim for his question. Senator McKim can describe a budget that hasn't been handed down or finalised in the terms which he chooses, but this budget is an important budget in terms of the relief that we need to offer for the cost of living.

I've gone through the forward estimates impact of the defence arrangements of AUKUS, to make sure that it isn't an additional cost that's being met from within the forward estimates. In this high-inflation environment there is also a responsibility not to be adding to or fuelling inflation. That means the decisions we take have to be very careful. They have to be about investing in the productive side of our economy—not making the inflation challenge harder but making sure that we are providing sensible and affordable cost-of-living relief where we can. We think we will get those. There are still a lot of decisions to be made, but the budget will be determined in that light.