Angus Taylor wants to slash spending. Here's the uncomfortable truth

There is a lot of discussion about government spending right now with calls from some political leaders and commentators for significant cuts to be made. There is much less discussion about where those cuts should come from.

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Senator Katy Gallagher in her office at Parliament house. Picture by Karleen Minney

The Albanese Labor government has undertaken the most significant savings effort of any government in recent times, delivering about $178 billion in savings and reprioritisations since it was elected. This includes $37.8 billion in savings from the NDIS in the last budget, alongside structural reforms to aged care last term and $14.8 billion in reduced spending on government administration.

Some of the savings measures require legislation and therefore parliamentary support. After a delay that cost several hundred million dollars, the government was able to get the NDIS reforms through the Parliament. We have also put forward sensible reforms to the Private Health Insurance Rebate to provide one consistent rebate, rather than one that varies on age, to allow us to re-invest every dollar that we save from PHI rebate directly into additional aged care beds and services. However, even this modest reform is finding a parliamentary path through the Senate impossible.

And while our political opponents call for savings, they themselves are opposing the sensible savings measures the government is putting forward. At the same time, they have promised to spend almost $600 billion more over the next decade with no way to pay for it.

But calls for spending cuts need to confront the reality of what the Commonwealth budget now funds. Over the past 20 years, spending on essential services like disability, aged care and healthcare, national security and defence has increased. These areas are not discretionary and are the very services that Australians expect government to deliver.

More than 80 per cent of the Commonwealth budget goes to social security and welfare payments, payments to the states and territories, healthcare and Medicare, education and defence. Many of these program areas are demand driven and increases (or decreases) occur without a decision of government.

Since 2006-07, spending on assistance to people with disabilities as a share of the economy has increased by two percentage points as the NDIS has rolled out. Spending on aged care and pensions has increased by just under one percentage point as the population has aged, and health spending by a similar amount.

In fact, if you excluded disability assistance from the calculation of spending as a share of GDP, government spending in the current financial year would be lower than it was under prime ministers Howard, Abbott and Morrison.

Spending on national security and natural disasters is also placing increasing demand on the budget. The fastest-growing payment in 2025-26 was spending on natural disasters - growing at 280 per cent. And in a changing geostrategic environment, the government is rightly investing significantly in national security and our nation's defence, having provided a historic $117 billion in additional funding for defence over the next decade.

While Australia's national debt remains relatively low by international standards, the cost of servicing that debt is also growing. Major global conflicts are affecting economic growth, fueling inflation, and pushing up borrowing costs around the world. Despite these challenges, Australia remains one of only nine countries with a AAA credit rating from all three major agencies, with each reaffirming our rating since the budget.

Senator Katy Gallagher in her office at Parliament House. Picture by Karleen Minney

When you look at the main areas where we have chosen to invest, our priorities are clear. We have provided Energy Bill Relief, established new Medicare Urgent Care Clinics around the country and invested in increasing bulk-billing rates. We are investing in building more houses, making childcare cheaper and giving parents more choices including by extending paid parental leave to a full six months. We have also taken a decision, that the former government did not prioritise, to address the undervalued nature of women's work by ensuring fair wages are paid for aged care workers and early childcare educators.

Australians rightly expect governments to manage public money carefully. They also expect, and deserve, properly funded public services. Responsible budget management means delivering both, and that's what the Albanese Labor government is doing.

• Senator Katy Gallagher is the Finance Minister and represents the ACT.

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