Event: Bran Black interview with Matthew Pantelis, Five AA, Mornings with Matthew Pantelis

Speakers: Business Council of Australia Chief Executive Bran Black, FiveAA Host Matthew Pantelis

Date: 16 August 2024

Topics: South Australia, economy, AUKUS, planning, payroll tax, reform, infrastructure

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Matthew Pantelis Host FiveAA: I'm joined now in the studio by the new chief executive of the Business Council of Australia, Bran Black, who is in Adelaide for a function today. Bran, good morning. Welcome to FiveAA. You're new to the role. What's your background?

Bran Black Chief Executive, Business Council of Australia: Look, I've worked in corporate law, I've worked in the university sector, and I've worked in government as well. The role that I had before coming into this was as Chief of Staff to the New South Wales Premier, Dominic Perrottet, as I say, in New South Wales. And now I've been in this role for coming up to 12 months in September.

Matthew Pantelis Host FiveAA : Okay, what do you see as the big challenges facing Australia?

Bran Black Chief Executive, Business Council of Australia: Look the biggest challenge that we've got, in terms of a national perspective, is our competitiveness. So when you look at other jurisdictions, like the United States, Canada, our competitors, they are very actively looking to try and make their investment destination as attractive as possible for capital. In Australia, we've always enjoyed numerous advantages. We've got, you know, a stable democratic system. We've got the rule of law, secure property rights, a great financial system. All of those things set us in good stead. But incrementally, we're seeing that settings around workplace, around planning settings, taxation settings, cost of energy and so forth, those types of things set us back. And the message that I get, particularly from the CEOs that are in my membership, is that when they're thinking about is this the right place to do business, it's harder and harder to justify that decision. And sometimes the feedback that I get from CEOs here that have boards overseas, to which they report is that when those boards are considering investment proposals from multiple different countries, increasingly those other countries are doing better than we are.

Matthew Pantelis Host FiveAA: Okay. You talk to business people as well. And I had John Seeley on recently from Seeley air conditioning, long based South Australian company moving back from Victoria because of their gas policy. Saying to me, for instance, the casualisation laws that the federal government has introduced no one's asked for them, no one's needed them. Just makes doing business harder in terms of employing people. Is that the sort of thing you're talking about?

Bran Black Chief Executive, Business Council of Australia: Yeah, it is. A great example of that is the recent right to disconnect laws. Nobody, nobody argues with the idea that people should have the right to turn off when they get home from work. I mean, I know I enjoy it. I'm sure you do as well. But the idea that we'd need the federal government to impose a blanket rule is just a different issue entirely, and it's interesting when you think about the way in which that law has come about. It was a French proposal. I think it was legislated back in 2017. But importantly, that was pre-covid, so the world's changed a lot since then. We're embracing the idea of working from home. There's more flexibility associated with how we work, and because of that, our idea has always been, well, if you're going to have these types of discussions about rights to disconnect, do it at the employer level, so that you can account for the particular needs of businesses at the business level.

Matthew Pantelis Host FiveAA: Let's talk about South Australia and the fact you're here and today, the state government has put out a release, a media release from the Treasurer saying that your presence today links in with the fact that our payroll tax system, they say, is competitive. The state's key role in AUKUS investment, in the prosperity project of South Australia makes it the best place in the nation to do business. That's according to the Business Council of Australia.

Bran Black Chief Executive, Business Council of Australia: Yeah That's absolutely correct, yes. Let me say at the outset, payroll tax is a bad tax. It's quite literally a tax on companies for employing people, and we should never support that type of thing, but every state in Australia has a payroll tax. Every state and territory has a payroll tax system, and in South Australia, the payroll tax rate is the lowest, and the threshold at which it kicks in is the second highest, which, on our view, makes it the best system for doing business.

Matthew Pantelis Host FiveAA: That's got a problem, though, hasn't it? Because we have seen here in South Australia, a lot of businesses are clustering just under that, they won't employ more people because it will push them over that threshold.

Bran Black Chief Executive, Business Council of Australia: Yeah well, that goes directly to the point that I was making in terms of payroll tax being a bad tax. Ideally we'd like to see it dispensed with altogether. We'd love to see it harmonised as a first step across different jurisdictions, so that companies don't have the problems of dealing with so many different systems. But if we can't do that, or if we, if we could go a step further I should say, we'd love to see dispensed with but to do that, we'd really need federal government assistance.

Matthew Pantelis Host FiveAA: Okay, so AUKUS, let's look at that. And there are a lot of doubters about aukus. And Alexander Downer, very experienced as our longest serving Foreign Affairs Minister, for instance, saying, look, the timeline is so great on AUKUS, unlikely to ever see a sub built here by the time the dates roll around, we'd be better off going overseas and buying one off the shelf from the UK or the US. What's your response to that?

Bran Black Chief Executive, Business Council of Australia: Look, I can understand that there are certainly perceptions of risk in terms of AUKUS. Indeed, of course. There are going to be risks, but we're dealing with sovereign nations here that have been our strongest allies for so very long, decades and decades and decades. And what's very clear is that each of these strong allies has made it plain that they intend to go through with this commitment. And my view is that in light of that, we should really do everything that we can to make the most of the opportunity.

Matthew Pantelis Host FiveAA: Are you gonna be South Australia's biggest advocate for businesses setting up here, because your comments about, okay, the payroll tax and what you've said about that, but you're, you're suggesting that SA is one of the best places in the country to set up a business and operate it.

Bran Black Chief Executive, Business Council of Australia: That's absolutely correct. So we do a study once a year, which we call regulation rumble. And in that we rank the states and territories based on a number of different settings, and we do it from two key areas, planning and regulatory settings more broadly. And our last report came out in 2023 and South Australia won on both settings, on regulation and on planning. So we would say, of course, there are going to be challenges for businesses. There are challenges that we're experiencing right now, right across the country. And as I said before, we've got issues in terms of our competitiveness, but if you're looking to set up a business, you're going to be hard pressed to find somewhere better than South Australia.

Matthew Pantelis Host FiveAA: How about that, now skills is one of those challenges, and that would be right across the nation. What particular have you looked at, particular issues we're facing here?

Bran Black Chief Executive, Business Council of Australia: South Australia, of course, has always had a problem with, I guess, what's called the Brain Drain, as you'd be familiar with and our perspective on that is that there are really two ways to try and address it. The first is, of course, to make sure you've got an opportunity, so that people aren't thinking to themselves, well, if I wish to progress in my career, I've got to go somewhere else to do it. And the second is making sure you've got the right amenities, so you know, the right schools, the right hospitals, the right infrastructure to make people think this is a good place for me to live and to raise a family. And on both those measures, we are seeing that South Australia is dramatically improving. So certainly, in terms of being a great place to have opportunity and progress in your career, there's more scope in terms of AUKUS, there's more scope with businesses that are setting up shop here. I was touring Lot 14 yesterday and seeing some of what that looks like. And then in terms of the amenity as well, you know, important connections like the North South corridor, and even things like the port dock rail link as well, that makes a big difference to people's quality of life.

Matthew Pantelis Host FiveAA: Is there anything we're not doing well then that you think we should be improving on?

Bran Black Chief Executive, Business Council of Australia: Well, I think there's always, always scope for improvement. And I mean, I do stress that whilst we say that, for example, payroll tax is in a nation leading position, that doesn't mean you should rest on your laurels. Ideally, you should take further steps with respect to the rate, further steps with respect to the threshold, as you pointed out, stamp duty as well. Whilst you've gone already to the step of ensuring that it's not going to be applied to commercial and industrial we would say, go that step further and make sure that there's a transition towards a broader based land tax that's the best way of helping people into their first home

Matthew Pantelis Host FiveAA: Interest rates at the moment, and more nationally than South Australia. Obviously, the Reserve Bank and the federal government seem to be sparring quietly with each other as to who's right and economic policy and the levers involved there, I mean spending more money to create opportunities, on one hand, seems like a good idea, but not when you're trying to bring interest rates down.

Bran Black Chief Executive, Business Council of Australia: Look, we have seen more funding and more cash injected into the economy come through the latest federal budget, but also through state budgets right around the country. I think the federal budget saw an additional 20 billion over the next two years, 24 over four, and that's additional spend into the economy. But the key thing, the key thing that we point to is the fact that our productivity is effectively flatlining because the Reserve Bank's made it clear that what they want to see is increased productivity. That's the best way of ensuring real wage increases, by way of example, what we're seeing right now is that people are having a wage increase, but that wage increase isn't backed by productivity, and what that means is it becomes, by definition, inflationary. So, we need to move towards an environment which goes back to that point that I was making about being competitive, getting the fundamentals right around tax and regulation settings and so forth, so that businesses invest. When they invest, they deliver the productivity gains that we need to make sure that ultimately, we're improving our real wage position for people right around the country, and that, in turn, means that our quality of life improves.

Matthew Pantelis Host FiveAA: The spending though of governments around the nation and here in South Australia, we are predicting over four years of forward estimates $44 billion in debt, which works out for every South Australian, something like 25 grand. It's what we would all individually owe if we were to pay it back. If that was the way it worked, then its kind of is, because it is our taxes. So that's a lot of debt. And all states and federally, we're carrying that as well. That doesn't seem to be a great position to be. Yes, you need to spend to build things and create jobs, but long term, someone's got to pay that back.

Bran Black Chief Executive, Business Council of Australia: That's absolutely true. I mean, the good thing is, South Australia is projecting surpluses as well over the course of the next few years, but we do need at right across the country, not just in South Australia, but in every jurisdiction really, to make sure that we try and get our spending under control so that we can...

Matthew Pantelis Host FiveAA: Budget surplus is different to a state debt, though.

Bran Black Chief Executive, Business Council of Australia: That's right, yeah, that's right, that's right. But more, the most fundamental thing that we need to do, of course, is remember that at the end of the day, as you say, somebody needs to pay this off, and we want to ensure that we are leaving the best possible environment for our kids and their kids.

Matthew Pantelis Host FiveAA: Where does the BCA sit on nuclear and the whole energy debate, renewables versus base load? And it seems to me, and I'll tell you, where I sit, we need a base load now. Ultimately, I'm not fussed if it's coal, gas or nuclear, but we need something to shore up renewables.

Bran Black Chief Executive, Business Council of Australia: Well, I back in that point that you've just made. We're not fussed either. We take a technologically agnostic approach to the energy transition. But what we do want to see more than anything else is a plan like a genuine long-term plan. You know, I was at an event last night with the Committee for Adelaide, and what came through from people that were sitting around the table that are engaged working in the energy space, is that what they need more than anything else is certainty as to what that plan might look like, so that they've got the confidence to invest. Now there's a lot that states can do in this respect, and I note that the government here has its state prosperity plan, which goes a long way towards delivering certainty here. But there are also federal settings that are so important in the context of the energy transition, and what came through in this discussion last night was we need to see a federal position that they have confidence in in the long term.

Matthew Pantelis Host FiveAA: Okay, so no confidence in what has been proposed currently by the federal government, now in renewable rollouts.

Bran Black Chief Executive, Business Council of Australia: Their point was that they want to see certainty in terms of what that plan looks like. So, you know, that means having a plan for a start, as to, you know, not just the next year or the next two years or the next electoral cycle, it's what the long term, the 10 years plus, looks like. Now, I know that the government's going through the process now of looking at sectoral plans as part of its process of trying to set a target for 2035 but my point is more that beyond that, we need to go to what are the technology levers that can be pulled, and also what are the policy levers that need to be pulled so that industry can see what they look like, look like over multiple years and say, right, well, this is the place for me to invest, not just industry here in Australia, but international investors, because that's the best way of ensuring we can deliver on the transition.

Matthew Pantelis Host FiveAA: So if Peter Dutton is elected, would you be calling on state governments with their nuclear policies per state to get out of the way?

Bran Black Chief Executive, Business Council of Australia: Their Look our position, as I say, is that we are technologically agnostic as to nuclear. Now we're doing our own work right now in terms of the 2035 targets, and looking at what we think those challenges and opportunities might be. So, I'll have more to say about that in due course, once we've completed the work, but as a starting proposition, we've always been and will always continue to be technologically agnostic.

Matthew Pantelis Host FiveAA: All right. Look forward to having a chat when you do that. Thank you for your time today.

Bran Black Chief Executive, Business Council of Australia: Thanks so much for having me.