Policy Priorities for 2008: An Interview with Greig Gailey

15 January 2008

Transcript of a Sky News Business Channel interview with BCA President Greig Gailey in which he outlines the policies and outcomes the BCA will be seeking from government in 2008.

Comperes: Well the Business Council of Australia enters 2008 with a raft of new policies and high hopes it will be able to influence change with our new government. From infrastructure, to education the BCA which represents corporate Australia says the Rudd Government needs to take a long-term view if it’s going to fix problems such as the skills shortage.

Compere: Well Greg Gailey, the former boss of Zinifex took over as chairman of the BCA from Michael Chaney at the end of last year, in October in fact, and he joins us now in the studio. Thank you so much for joining us this afternoon.

Greig Gailey: Pleasure.

Compere: Now if I can just start by asking you with – obviously the Rudd Government’s come to government at a difficult time economically. The Budget is going to be a very important test for it, which is going to happen in May and you’ve been quoted as saying the government perhaps shouldn’t deliver on some of its election promises in a bid to shore up the economy. Now why is that and what kind of promises do you think it should hold back on?

Greig Gailey: Nina, the current budget we see is extremely important for two reasons. One, it is the first budget in a three-year term for the government and quite honestly if you’re going to take tough decisions, it’s the year to take them. And secondly the economy isn’t looking quite as rosy as it may have 12 months ago, so what the government chooses to do in its budget will be very important in terms of setting the scene for the next couple of years.

Compere: Mr Gailey, which promises do you think that the BCA are not prudent use to taxpayers funds?

Greig Gailey: Well I think what we’ve said is as the election process continued, both parties made a number of promises and many of those promises were quite costly. So what we would hope is two things. One that as the budget progresses, or as the framing of the budget progresses, that a) they will be very cognisant of the shape of the economy, and that they will ensure that they are reactive to that economy. And, in particular, they will look at government expenditures. We actually think there’s quite a lot of efficiencies that could be organised, or could be built in to the budget process, which would help to offset some of the – some of those promises that were made during the election campaign.

Compere: Going back on promises though Mr Gailey, politically, that can be very, very unwise and open yourself up to a lot of criticism from the electorate can’t it?

Greig Gailey: Well I think that’s absolutely true that there’s no doubt that it’s very hard not to deliver on promises that have been made. But equally the government, we believe, has to take a long-term perspective and has to ensure that what it does is actually in the interest of the electorate and the economy.

Compere: Mr Gailey in Victoria, VECCI there is calling on the Brumby Government to cut business taxes in the upcoming election. Will the BCA be calling for a similar move in the federal Budget?

Greig Gailey: What we’ve said actually in terms of taxes, is what we’d like to see is a more holistic approach to the tax issue. A lot of what’s been done in taxes in the last three or four years is almost reactive. It’s been kind of fiddling around the edges with various components like the thresholds and the tax rates. We think it’s time for government to stand back, and possibly through the Productivity Commission, take a very broad, holistic view of the tax situation and determine whether or not the way in which taxes are currently collected is the optimal way.

Compere: Can I just ask you about IR. The Business Council of Australia was a big supporter of WorkChoices. Do you think you can work successfully with the new Rudd Government, given its policies?

Greig Gailey: Absolutely, in terms of the answer to your last question Nina. We had a view on WorkChoices and it wasn’t a political view, it wasn’t supporting one party or the other. What we were supporting in essence was the nature of the relationship between an employer and employee and we would like that nature to be as cooperative and as productive as possible. The electorate has decided in terms of WorkChoices and quite frankly we will work with the government in trying to frame what we believe will be the most productive outcome for the economy.

Compere: If we can move on to federalism? We saw on Monday the government and the states reach an agreement on hospital funding. Given that the BCA’s pushed to toughen up Australia’s federalism policy through COAG, do you see that agreement as positive?

Greig Gailey: I think the whole issue of federalism is a really interesting one Richard, because you quite frankly can do almost nothing in this country given the nature of our political system unless you can get a higher level of cooperation between states and Commonwealth. No matter whether you go down the road of education, health, tax, business regulation. Everything takes you to the same place, how do the states and the Commonwealth interact. And, therefore, any initiate that improves the cooperation between states and Commonwealth we would absolutely applaud. And it gives me enormous confidence that we have a Prime Minister who has stood up and said this isn’t working, and I want to fix it. And all the initiatives that the Commonwealth Government intend, this is one of – by far one of the most important.

Compere: Okay. We’re going to give you a task and that’s to write the agenda for COAG in 2008. And if so, what items would you put at the top of the list and why?

Greig Gailey: Well absolute top of the list, and it’s a discipline that you get very used to in business, but – and I understand why it isn’t always quite as easy to achieve in government – is measuring what you do. So not only saying this is what we’re going to do, but revisiting it 12 months later and saying how did we perform? And if there was one message we would like to give COAG is, it’s about you have to be more proactive in terms of actually ensuring that what you intend to introduce, you do introduce.

Compere: On to infrastructure now, which is another key issue. Labor’s introducing a new national authority called Infrastructure Australia. Last year BCA had its own infrastructure policy. Has the BCA been invited to work with Labor on its new policy?

Greig Gailey: Well we’ve had an invitation from the government on a number of fronts to contribute and that’s exactly what we want to do. And if we can have a seat at the table, then I think we will have gone a long way to achieving our objectives.
Compere: In what kind of a way were you asked to contribute?

Greig Gailey: Well we’ve been asked – we’re working with government on a whole series of levels in terms of initiatives on industrial relations. We’re involved in looking at the way in which that legislation will come forward and be introduced. On infrastructure, we’ve made a number of contributions and I would expect as Infrastructure Australia evolves and comes into being, that the Business Council will be involved in that process.

Compere: This afternoon we’re talking to Greg Gailey who was elected as the new Business Council of Australia President last October, and he certainly comes in interesting times. Now before the break we were talking about infrastructure and the national authority that Labor has set up called Infrastructure Australia. Again if you have a chance to itemise the agenda what would you like to see as the main issues at the top of the list?

Greig Gailey: I think the main issues at the top of the list in terms of infrastructure is really the process issue, i.e. how actually do you determine what infrastructure investments have to be made and how do you then make them. So you can look at a whole raft of things such as electricity, water, ports, you almost name it in terms of the item that you’re interested in. But what’s more important to get right I think is how do you actually go about determining this? And if you take something like electricity which is clearly vital to all of us, and you have a situation where Victoria is privatised, New South Wales is about to be privatised but with some very quirky sort of characteristics. Queensland isn’t really, the government remains a generator, and you then say we want to have a national market. Well it becomes very difficult in that context. So what we would say is you have to think about the actual process that you’re going to put in place before you can begin to seriously tackle any one of the particular infrastructure requirements.

Compere: Now governments can often I guess have a short-term view to many things to gain popularity or that sort of a thing, and one of the issues, and the biggest issue in Australia is infrastructure. What’s your plan or what’s the BCA’s plan to turn this short-term view into a long-term view?

Greig Gailey: Well I think all we can do, Richard is put our case. The cold hard reality of life is that politicians face three or four-year terms, they face re-election. We have to be realistic in recognising that, but what I think we can do is as best we can put the arguments for why a long-term view is very important.

Compere: What about private–public partnerships? Now governments like them, what does your organisation think about them?

Greig Gailey: Well private–public partnerships are one mechanism, and I think they’re an appropriate mechanism in some cases. What we would say is that when you come to infrastructure you almost need to divide those things which fall into the category of a natural monopoly from those things where you can have effective market competition. And those things which are a natural monopoly then I think there’s a reasonable argument to say that either government should own them or they should be regulated in a certain way. But when you have things which are contestable, i.e. you can have competition in that segment of the market then I think there’s a much stronger argument for private enterprise to be involved in that part of the market segment. And we see that in electricity in some states where the infrastructure is run by a single entity and governments have a strong role in determining the transmission system, but when it comes to generation it’s competitive, it’s a contestable part of the segment and that’s perfectly well managed by private enterprise.

Compere: And only recently the BCA kind of diversified and started talking about non-specific business related issues, and one of them I guess is education. What would you like to see from the Rudd Government’s education revolution?