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

(): We'll now move to question time, and I shall call Senator Chandler.

I would like question time to start in silence, thank you, Senator Watt and Senator Cash. Let's just pretend we're starting on silent. Senator Chandler.

Claire Chandler (Tasmania, Liberal Party) Share this | Link to this | Hansard source

My question is to the Minister representing the Treasurer, Senator Gallagher. In the December quarter, public sector demand grew more than twice as fast as private sector demand. This is the second quarter in which the public sector has outgrown the private sector. That means that over the last six months, the period that the RBA has blamed for hiking interest rates, public sector demand grew faster than private sector demand. Minister, at a time when households and businesses are tightening their belts, why is your government pouring debt petrol on the inflation fire, forcing the Reserve Bank to consider keeping interest rates higher for longer?

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

I thank Senator Chandler for the question, and I congratulate her on her appointment into the shadow finance portfolio. I congratulate the opposition for getting around to asking a question about the economy on day 3 of this sitting week. The opposition have never seen a set of economic data that they didn't want to come in here and bag—and talk down the Australian economy. That is their setting. That is their standard setting, as opposed—

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

Senator Wong?

Penny Wong (SA, Australian Labor Party, Minister for Foreign Affairs) Share this | Link to this | Hansard source

I wonder if Senator Cash could perhaps just dial down the volume.

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

Is that a point of order?

Penny Wong (SA, Australian Labor Party, Minister for Foreign Affairs) Share this | Link to this | Hansard source

Sorry, I apologise. A point of order—I wonder if Senator Cash could do us the courtesy of dialling down the volume.

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

The minister is entitled to be heard in silence. Minister Gallagher, did you wish to continue?

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

I did want to continue, yes. Thank you very much. In this data today we have seen the strongest economic growth across the economy, broad based growth, as explained by the ABS, in three years.

I am surprised by Senator Chandler, who seems to be adopting the shadow Treasurer's hysterical language that he seems to want to use all the time. I am surprised that those opposite want to come in here and argue against defence spending, because that is essentially at the heart of the question that Senator Chandler has asked today—that those opposite, who supposedly want to spend more on defence, would come in here and criticise the public investment that we are making not only in defence infrastructure but also in consumption through the recruitment of additional staff to the Defence portfolio. It is clear—if you had read the national accounts—that defence and the state and territory governments' spending, primarily on health infrastructure, contributes to public demand in this national account. I am surprised, because I thought the opposition supported investment in defence— (Time expired)

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

Senator Chandler, first supplementary?

Claire Chandler (Tasmania, Liberal Party) Share this | Link to this | Hansard source

Under Labor, public sector demand is at its highest level in Australian history. When public sector demand surges ahead of private demand, it crowds out businesses, drives up costs, fuels inflation and makes the RBA's job just that much harder. Minister, when will you accept that it is your government's spending that is contributing to inflationary pressure and pushing up prices for Australians?

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

Well, we don't accept that. That's a political point that you're trying to make. This government doesn't apologise for investing in Medicare; we don't apologise for investing in defence; we don't apologise for investing in veterans and pensions—all of the things that Senator Chandler's party criticised and were going to cut if they were in government. This government—

Bridget McKenzie (Victoria, National Party, Shadow Minister for Infrastructure, Transport and Regional Development) Share this | Link to this | Hansard source

You can't just make up things.

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

Well, you can't criticise the spending and then say you're not going to cut. You cannot criticise the spending and then not accept that that means you are going to cut, Senator Henderson. That is the argument that you are putting.

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

Minister, please resume your seat. Honestly, Senators McKenzie, Henderson, and Nampijinpa Price: you are drowning out the minister. It is not appropriate. You are being disrespectful to me and to the Senate. Minister, please continue.

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

Thank you. Now, if you look in the national accounts you can see that the big story across the economy in 2025 is the recovery of the private sector, which is a very good thing, and the pace of annual growth in private demand continued to pick up in 2025. The national accounts— (Time expired)

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

Senator Chandler, second supplementary.

Claire Chandler (Tasmania, Liberal Party) Share this | Link to this | Hansard source

Minister, why are you happy for Australians to pay the price for Labor's reckless spending through higher prices, higher borrowing costs and weaker living standards?

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

Well, that's a political point that you choose to make. We do not accept that, and the national accounts do not reflect that. So let's be clear about that. The government has managed the budget responsibly and has made sensible investments where they are needed across the economy, in stark contrast to the way you managed the budget when you were in government—which is that you didn't fund things in an ongoing sense to try to make it look better, knowing that those costs were coming, so you couldn't believe the set of numbers that you released, and we saw that.

We're fixing the budget. We're making sensible investments. We're finding savings, when you found none. We're paying down debt. We're paying less interest on that debt, because debt is $176 billion lower than it was under your forecasts. And we're doing all of that at the same time that we are seeing the strongest economic growth in three years.