Speech delivered by Business Council president Grant King at the 2017 Business Council of Australia Annual Dinner.
***CHECK AGAINST DELIVERY***
I want to begin by welcoming the Prime Minister who we appreciate making time in his very busy schedule to be here with us tonight. I would also like to welcome all your parliamentary colleagues, all our distinguished guests, and ladies and gentleman. The Prime Minister will be addressing us shortly.
I would also like to acknowledge a couple of colleagues this evening. Richard Goyder and Ian Narev will be completing their terms on the BCA Board at our AGM on Thursday. They have both been great contributors to the Board, the BCA and business generally.
I would like to thank them both and in Richard’s case note that he is one of the longest serving Directors of the BCA – a sign of his enormous belief in the importance of Business to the Australian community.
We will also be welcoming to the Board, members willing, Tim Reed, Joanne Farrell and Peter Coleman. They will join the continuing Directors, Cath Tanna, Alan Joyce and Alison Watkins and will all make an ongoing contribution to the work of the BCA and the Business Community generally.
I would also like to thank Jennifer Westacott for her tireless and may I say fearless efforts yet again this year on behalf of Business and the community we all serve.
The BCA tries to focus above all other things on the implementation of policies that allow business to prosper because we believe that if business is strong the country is a stronger and fairer place. As we said last year we support policies that help business and criticise those that don’t.
There have been notable achievements by the Government this year for which the Prime Minister and the Government should be congratulated.
These include significant continued reforms in industrial relations, the passage of savings measures through Parliament and the passing of the first phase of the Enterprise tax plan.
We thank the Prime Minister and Treasurer Scott Morrison, who is also a welcome guest tonight, for your continued advocacy for the implementation of the second phase of the plan.
We applaud the very strong comments you have made both here and overseas in support of open economies and free trade, a matter central to Australia’s National interest.
The cost and reliability of energy supply has been a critical issue for all businesses and the announcement of the National Energy Guarantee has the potential to be the breakthrough we have all been seeking on energy and environmental policy and is widely supported by business.
I also think that business overwhelmingly applauds the success of the postal ballot on Same Sex Marriage and wants fast passage of appropriate legislation through Parliament.
There’s also been areas where we have disagreed with Government and we have not hesitated to make our views known at those times.
Of course the citizenship issue cannot be ignored. This issue is obviously enormously distracting but is different from others in that it is not borne out of ideological differences or political advantage but rather the circumstances politicians find themselves in.
From a business perspective we urge all parties to act with goodwill and expediency to get this issue off the table.
We know that you are committed to getting on with the business of Government just as we are with getting on with business.
What I would like to do in the brief time remaining for me tonight is to have a go at explaining how we are responding to the issue which is most frequently raised with me. That is reference to continued attacks on business, and business reputation and the loss of trust in business and of course most other traditional institutions and what are we doing about it.
This issue is evidenced by acrimonious debate between key sectors in our society – businesses (large and small), civil society that represents amongst other things, not for profit organisations, unions and NGOs and of course the Government.
Hardly a day goes by without one of these sectors attacking or being attacked by another.
So what are we fighting about?
I think the answer lies in understanding the distinction between shared values and shared value.
I believe that business, civil society, government and the community at large share the same values. We all want to live in a country each year more capable of caring for its citizens.
A country which is secure, where people have a meaningful job, a decent income and an effective safety net for the genuinely disadvantaged. Hard to see what to fight about here.
We are fortunate to live in a country that has enjoyed 26 years of continuous growth and we have shared the benefit of that growth across the community.
However, following the end of the boom in commodity prices and the investment that came with it our growth has slowed. GDP growth over the past five years have averaged 2.5% a year, compared to 3.1% in the 20 years prior.
In particular over the past few years GDP per capita growth has been weak, business investment as a share of GDP is at its lowest level since 1994. There has been little wages growth.
The good news is that in the last year we have seen improvement. Capital investment is showing signs of growth, last year’s budget deficit was less than forecast and Business confidence is up on last year.
The job figures we saw last week were encouraging showing unemployment at an almost five year low and full time employment growing.
I don’t think we are fighting about whether we share the same values – I think we do. But we are feeling the pinch of a low growth economy and fighting over its consequences – less value to share.
And how are we fighting – by attacking the exception, not celebrating the rule. By creating villains then punishing them. By magnifying issues not explaining them.
Businesses do make mistakes. There are unquestionably times when business lets their stakeholders down. Individual businesses, when this occurs, are accountable to their customers, shareholders, employees and communities and often the price to fix these mistakes is high.
But when such mistakes occur they are the exception not the rule. Overwhelmingly, business is a force for good.
Business delivers extraordinary outcomes every day.
We can get fresh food in any season at almost any time of the day or night, withdraw cash from anywhere in the world 24/7, manage our money without ever going to the bank, be warm when it’s cold and cool when it’s hot, access the world’s knowledge with a keystroke and stay in touch with our families and friends whenever we want.
A truly remarkable world, a world made possible by business.
I was advised a long time ago that it was a mistake to try to look good by making someone else look bad, a mistake to seek to lift opinions of oneself by lowering opinions of others.
Yet this is the mistake we have all been making. Is it any surprise that the most important sector of all, that is the community we serve, hears these constant attacks, the constant fighting and has lost trust in the organisations and institutions in business, civil society and government.
We have brought this outcome upon ourselves.
So, how should we respond?
Clearly a better understanding between sectors would be a good start.
Business believes that creating value is the key to sharing value. Others believe that value can be shared before it is created.
Only the first is sustainable.
Businesses recognise that they have a greater responsibility to the community than the mere creation of profit but expects that those holding alternative views recognise that making profits drives value creation which can be shared by the community.
Businesses – large and small – employ ten million of the 12 million working Australians. The tax businesses and their employees pay provide about $235 billion, 60%, of the taxes that fund the security and services a fair society expects.
Business support their communities in times of distress and is a great contributor to cultural and philanthropic activities which are so important to our communities.
And of course the profits business makes support the retirement of millions of Australians.
We know from our discussions with the community that they understand the important role that business plays and contrary to what many say, I believe so do the two major political parties.
The difference is that in government rather than opposition, you have to act on this understanding.
We do not take that understanding for granted and nor does it translate to automatic support for everything that business does – or for the policies that will make business stronger.
So, business has to now, more than ever, make its own case to the community to build understanding of the central role it plays in creating value that the community can share.
Will a better understanding between sectors that changes the conversation, reduces conflict and begins to restore public trust happen quickly? I hope so, but realistically fear not.
So, in this environment the BCA response to improve support for the role of business in building a stronger, fairer country is to:
- Recognise and address the ‘lightning rod’ issues that can be so damaging to the legitimacy of large businesses in the eyes of the community,
- Redeploy resources to more effective communication with the community, and
- Advocate for policies that will increase growth.
Business is responsible for issues that affect its collective reputation and we are responding to them.
Firstly, we’ve tackled the concern that big businesses trade unfairly with small businesses, particularly in respect of supplier payments. The BCA has developed a supplier code that sets fair terms to pay small business suppliers within 30 days.
In just over five months since it was launched there have been 67 signatories to the code. This includes some of Australia’s largest companies and the combined turnover of all current signatories is over $400 billion. New signatories are being added regularly.
Off the back of this initiative we have joined with the Council of Small Business Organisations of Australia (COSBOA) – and I acknowledge Peter Strong and Mark McKenzie who are here tonight – to change the conversation from an adversarial one pitting small businesses against big business to one that recognises that the best policies are those that encourage the growth of existing businesses (big or small) and that help the creation of new businesses.
Secondly, in response to the deliberately misleading promotion of an idea that business does not pay its fair share of tax let me remind you company tax alone raised $71 billion for the federal government last financial year.
Australia’s company tax revenue as a share of GDP is the second highest in the OECD after Norway.
We are getting out there promoting the tax transparency code established by the Board of Taxation and an increasing number of members have committed to it.
Business does pay its fair share of tax, as evidenced by the tax commissioner Chris Jordan recently declaring that company tax compliance “is around global best practice and many countries aspire to this level of compliance”.
Thirdly, we know that executive remuneration remains a contentious issue for the community. The justification of remuneration is rightly a matter for the owners of a business, be they shareholders, the Government or private owners. Legislation has delivered appropriate power to owners to be heard on this matter and is being used by shareholders where they consider it necessary.
The fourth lightning rod issue that has emerged quickly over the past year is increasing community concern about what many call the future of work.
Individual businesses are obliged to take all the necessary steps to make sure their businesses remain viable and competitive. We rely on competition between businesses to provide the best products and services and ultimately the choice that consumers want.
The rapid pace of change in technology and business models is forcing change in businesses at a rate that is causing many in the community to worry about the role that big businesses will play in ensuring that there will be enough well-paying jobs for them and their children in the years ahead.
This is an emerging and complex issue and is already a major focus for work in the BCA and amongst our members.
Business understands we must take ownership of the transition underway in our workplaces by explaining the impact of new technologies and equipping employees with enduring skills for the years ahead.
We accept the responsibility we have to build understanding of the role of business in the community.
With the support of our members we have significantly stepped up our resources within the BCA. We understand we need to talk to people through the channels they use in the language they relate to and redeployed resources accordingly. Our message is now reaching almost 3 million people on social media and it’s increasing every day. We are increasingly contributing our thoughts to conversations on social media that previously we could not hear.
The third leg of our strategy is to continue to advocate for policies that encourage growth in existing businesses and for the creation and growth of new businesses.
We will advocate for policies that drive more growth, create more jobs and growing incomes by encouraging more investment through a competitive company tax rate not one of the highest tax rates in the developed world.
We know in business you can’t ignore the competition, but on tax that’s what we have done for 16 years. We now have the 5th highest company tax rate in the developed world. As other countries take action we could soon be stranded with the highest rate in the OECD.
Today we released a survey of our members that showed that if the company tax rate was lowered from 30 to 25%, four out of five CEOs said their companies would increase investment spending and 70% would hire more staff.
We will advocate for policies that deliver a better vocational education system that allows people to train and re-train throughout their lives so every Australian has the opportunity to have a meaningful job and enduring skills for the future. The greatest resource we have for growth is a skilled and innovative work force.
We will also continue to advocate for fit for purpose regulation to remove impediments to growth. Poor regulation is the enemy of innovation and growth.
Growth is important. If GDP had continued to grow at its average rate of the past 20 years of 3.1%, instead of 2.5% as it has over the past five years, the accumulated difference is in the order of $160 billion.
Of this, Australian workers would have received about $90 billion extra in total wages and tax receipts would have been about $40 billion higher over the period.
If we had achieved this growth we would not only share the same values, we would be having a much more constructive conversation about sharing the value we create.
Prime Minister, we know you understand that with the right policies, big businesses will thrive and so will small businesses. Businesses will create new and more, better paying jobs and support a fairer society. Only business can create this additional value on a sustainable basis.
Ladies and gentlemen, please welcome the Prime Minister, the Hon Malcolm Turnbull.