Event: BCA Chief Executive Bran Black interview with Steve Cannane, RN Breakfast, ABC Radio National

Speakers: RN Breakfast, Host Steve Cannane; Business Council of Australia Chief Executive Bran Black

Topics: Election of Donald Trump, company tax, net zero

E&OE

Steve Cannane, RN Breakfast Host: Bran Black is the Chief Executive of the Business Council of Australia and joins us now. Thanks for your time.

Bran Black, Business Council Chief Executive: Thank you very much for having me on the show.

Steve: No worries. How is big business feeling about the return of Donald Trump?

Bran: Well, look, we've very much been engaged over the course of the last few months in making sure that we've got the best policies in Australia ahead of our own election. So our focus has very much been on what those policies look like, how we can go about making sure that our country is as competitive as possible, irrespective of what the administration might be in the US or in any other country.

Steve: Donald Trump has said that tariff is his favourite word in the dictionary. He's floated tariffs of up to 20 per cent on imports and 60 per cent on Chinese goods. If that happens, how painful will that be for Australian business?

Bran: It's an interesting question, and there's obviously been a lot of commentary, political commentary, but also economic commentary over the course of the last few weeks, but particularly over the course of the last few days following the election.

What is clear is that if there were to be universally applied tariffs on goods coming into the United States, then that would, in the event that they applied also to Australia, affect demand for Australian made products, and that could, in turn, affect investment and jobs here at home. But what we did see back in 2017 is that when there were similar chances of tariffs being applied, that Australia was able to negotiate exemptions.

Steve: That certainly happened with steel, didn't it?

Bran: It did indeed. So we'd be hopeful that we'd see similar sorts of efforts made, and I'm sure there are already discussions underway in that respect right now in order to try and make sure that, in the event that such tariffs are applied to Australian goods, then we have the opportunity to secure exemptions.

Steve: Donald Trump is also promising to further cut the US corporate tax rate from 21 per cent to just 15 per cent. Does that have any influence on your members?

Bran: Look, it is a point of significant concern for us. You've got to remember that Australia has, right now, a corporate tax rate, or a company tax rate of at 30 per cent. That makes us the third least competitive jurisdiction from a company tax perspective, in the OECD, we're ahead only of Portugal and Colombia, and that's not because we know something that the others don't. It's because other jurisdictions recognize that having a more competitive company tax rate, the OECD average is about 25 per cent.

A more competitive tax rate gives you the chance to secure investment. With investment comes jobs, and that's ultimately what we think we should be shooting for.

What we saw in 2017 when President Trump was first in office, was that he reduced the company tax rate in the United States from 35 per cent to its current 21 per cent. What happened then was that there was an immediate outflow of capital from Australia and other jurisdictions to the United States.

Indeed, we became a net exporter of capital to the United States, and we remained in that position for five consecutive years, for the first time since 1912. We don't want to see that situation arise again. So we would advocate for a discussion with respect to company tax.

Steve: Okay, so that is interesting. So Trump's policy on tax could lead you to lobbying the government to reduce corporate tax rates.

Bran: We do believe that that's an important conversation to have. But one thing that I would stress, and this is a point that I've been making now for some time, we want to see that type of conversation in the context of a broader conversation around tax.

We think that's the only way that you can do that appropriately and properly if you are going to talk about company tax.

The reason why we need to have those types of conversations is that we know that we're facing into a future in which we will have proportionately fewer people working in the economy to pay for more people, again, proportionately, who are retired and in need of care and so forth.

What that leads to is a gap between revenue and expenditure, that's forecast to be about $140 billion by 2060 according to last year's intergenerational report.

We don't want to put that type of burden on young people. We don't want them to be burdened by more personal taxes. We can't impose higher company taxes without becoming less competitive internationally. So we need to be talking about our total taxes.

Steve: On Radio National Breakfast, it's 11 minutes past eight o'clock, and we're talking to Bran Black from the Business Council of Australia.

Let's talk more about climate policy. Donald Trump's election comes as global climate talks start in Azerbaijan this week, he said he wants to leave the Paris Climate Agreement again like he did last time. Will Australian businesses re-evaluate their climate commitments as a result of his victory?

Bran: Look, our focus is very much on achieving and delivering on our net zero targets and our net zero commitments, and we know that both sides of politics are committed to net zero.

We think as part of that, it's important to have interim targets, milestones, if you will, to give you a sense of how we're doing in terms of our achievement of those overarching goals. But the one thing that I would say is that we know that it's incredibly challenging, that that push to deliver net zero was always going to be challenging, but we're entering that phase where action does require an enormous amount of effort that doesn't make it worthwhile. To the contrary, it means that we need to really look very genuinely about how we go about delivering on our net zero commitments, and that's where we think our focus needs to be.

Steve: There are reports today that the Nationals are considering raising the issue of dialling back commitments to net zero within the Coalition. What do you think of that?

Bran: Well, we saw, that the Opposition energy spokesperson, Ted O'Brien, made the point that the Coalition remains committed to net zero.

We know the government's committed to net zero, and that's really important because if there is one thing that I couldn't stress enough in relation to the transition to net zero, it has to be industry led. And again, that's something that both sides of politics definitely support. And in order for it to be genuinely industry led, then there needs to be confidence that industry has in relation to the delivery of targets, and that means having a plan.

That means being clear in terms of policy settings, but also technological levers that can be pulled in order to be able to give us the greatest capacity to deliver net zero. That's what industry is looking for, and we know, as I say, that both sides of politics remain committed to that overarching objective.

Steve: But neither major party has released a 2035 climate target yet, Teal MPs are pushing the government to do so before the next election. Should Chris Bowen be doing that?

Bran: Well, ultimately, at the timing of that needs to be a matter for parties to consider. What we keep saying is that we want to deliver that certainty as quickly as possible, with a plan, with a target that industry can get behind and say, okay, well, we understand what you're trying to achieve, but let's look about how we're trying to do it.

I can't stress enough that it is a very difficult thing to do, but we need to be both ambitious in our approach, but also very practical in terms of how we go about and balancing our objective with the need to protect jobs and protect industry in our country as well.

Steve: You say industry needs to lead on this. Does that mean that Donald Trump's influence on a policy level may may not have as much impact on industry as we may think. Is it the case that industry is already heading down this pathway?

Bran: It's very much the case that our members have net zero targets and net zero plans, and they're no doubt going to be continuing to pursue them. What we would say is that irrespective of the administration in the United States, we need to be looking very closely at what Australia's next steps are in relation to its delivery of net zero, and we know that that's a process which is very much underway at the moment, through the difficult and the challenging, but also highly important process of setting a target for 2035 which, as I say, gives industry that confidence as to what it can expect from government moving forward.

Steve: Bran, we'll have to leave it there but thank you for your time this morning.

Bran: Thanks so much for having me on the show.

Steve: Thank you. Bran Black, Chief Executive of the Business Council of Australia.