Event: BCA Chief Executive Bran Black interview with Deborah Knight, Money News, 2GB
Speakers: Money News, Host Deborah Knight; Business Council of Australia Chief Executive Bran Black
Date: 4 February 2025
Topics: Big Five Questions, tariffs, deregulation

E&OE

Deborah Knight, Money News Host: I'm joined now by Bran Black CEO of the Business Council from the Parliament House Studio in Canberra. Bran, good to speak to you again.

Bran Black, Business Council Chief Executive: Great to talk. Thanks for having me on.

Deborah: We'll get to the election wish list that the BCA has in just a moment. But I wanted to get your reaction first up to the global trade war that has been pulled back from the brink, for now at least. Canada and Mexico, of course, getting that tariff reprieve, but China is still said to get that 10 per cent tax on goods imported into the into the US. It's pretty edge of the seat stuff going on with tariffs at the moment, isn't it?

Bran: Yeah, it's certainly a point that requires a lot of close attention. We see that there are potential challenges for Australia in two key respects. The first is if, theoretically, a tariff were to be applied to Australia itself. And the second is, of course, what happens in terms of the application of tariffs to our trading partners, i.e. China, to your point.

If we talk about the first matter, I think that we are seeing that Australia and Australian officials, Minister for Foreign Affairs, Minister for Trade, they are actively engaging with US counterparts and making the case for why we shouldn't have Tariffs applied to Australia. And that's important, I don't think we can just assume that we won't have tariffs applied. We do need to show that we are actively engaged in that space, and that's certainly what we're seeing.

But to that second point, we are concerned that if tariffs are applied, indeed, as they have been to a trading partner such as China, and that reduces demand for Australian commodities. We're a trading nation at the end of the day. One in four jobs in Australia are trade dependent.

So if there is a reduction in demand for Australian commodities, it follows that there may be a reduction in demand for jobs in certain sectors in our economy. To our mind, what that all means is that we need to really focus very intently on controlling what we can control, and that is how competitive we are as a destination to secure investment. And that really goes to the point of our election platform document that we've released today.

Deborah: And you're in Canberra at the moment, Parliament is sitting, so you've no doubt got a lot of meetings galore ahead of whenever the federal election is called. Are pollies listening to the business community at the moment?

Bran: Well, they are but I should stress the key thing that we're looking to do with respect to this document is not just influence their thinking right now ahead of the election, it's to influence their thinking about what the country needs and what an economic agenda for Australia needs to be on the other side of the election as well.

Deborah: But aren't they focused on just winning. What do they care about long term planning, otherwise we'd have tax reform up the wazoo?

Bran: Well, I think, of course there is that key focus, but there always has to be, during an election period, an eye to the future. What happens on day one if we're elected in office? What are we going to do? What is our agenda going to look like? We think the most important thing that the country needs right now is a very genuine long-term economic plan, and we hope that the proposals and the suggestions that we're putting forward in our documentation goes some way towards delivering that.

Deborah: At the end of the day though, cost-of living is the key issue that voters will be thinking of individually as they head into the polls. A lot of people, even those who are running businesses, who you represent are being impacted by cost-of-living pressures. Surely, that's what the politicians are going to try to alleviate? That's what we're seeing through their spending promises that they've delivered already.

Bran: We are seeing, of course, that cost of-living is the number one focus. I think our point, however, is that if we're intent upon delivering genuine, long-term relief for cost-of-living challenges, then we have to look at two key things. We need to, of course, look at government spending but we also need to look at productivity.

The reason we need to look at those two things is because that they go to the extent to which we're able to appropriately manage inflation. So to us, the critical thing Australia's got to invest in is, how do we boost our productivity. That's going to be the number one point.

And the reason why we say that is that productivity is ultimately the best determinant for real wages growth. And real wages is what you have at the end of the week, after you've paid for your petrol or your mortgage or your school fees. It's that sense that you are, in fact, getting ahead. And unfortunately, right now, the data shows that since December of 2022 we've actually gone backwards in terms of real wages.

So if we're intent on improving that position or getting ahead, we've got to boost productivity. And that ultimately means if we want to help people with cost-of-living, we've got to focus on those economic fundamentals.

Deborah: There's been some unease about the move by the US President to lift the guardrails on a lot of sectors. Removing some of the rules and regulations in a move to try to free things up and get businesses moving and the economy in the US booming again, as he would put it. Do you think that that's a concern in Australia, though, we need rules, we need regulations don't we, just to ensure that everything functions effectively?

Bran: I’d say a couple of things. Firstly, I think we need to look to what other countries are doing, not just the US, but other countries that are interested in a deregulation agenda. The reason for that is that if you are deregulating, then you are reducing costs for business, and you are making your jurisdiction more attractive as a destination for investment. We need to be attractive as a destination for investment if we're to deliver for our kids the quality of life that we're so fortunate to enjoy.

So that's the first point that I’d make, but in terms of regulation itself and how we should go about undertaking a process of deregulation, we would never say that we need to dispense with regulation entirely. What we do say is that we need to be looking very actively at where there is scope to deregulate, where we can reduce the impact of laws and regulations on the way in which businesses operate.

If we can do that and if we can save cost, then that's another basis for them to invest and in turn, to drive productivity, and as I mentioned before, to increase real wages as a consequence of that.

Deborah: And is cutting company taxes one of the key issues that you want, whoever gets into government, or retains government to push forward, as we are seeing out of the US from President Trump?

Bran: I’d say a couple of things again on that point as well. Firstly, we've always said that we should be considering company tax in a broader context, looking at our tax system generally, and where we can find scope to make it more impactful, both in terms of reducing the burden on individuals, but also making our tax system more attractive, again, as a basis for companies overseas and indeed in Australia, to undertake investment on our shores. So that's a key point.

But what I would say is that we do need to have regard to what we are seeing overseas. And if you take the United States as an example, in 2017 when President Trump was last in office, he reduced the headline company tax rate in the US from 35 per cent to 21 per cent and at that point in time, Australia became a net exporter in capital to the US, and we remained in that position for five consecutive years. And we hadn't had five consecutive years of being an exporter of capital to the US before that, since 1912.

So these types of settings make a difference in terms of where investment lands, and if we want investment to land in Australia, we need to be looking at all of our settings, including our company tax setting.

Now at the moment, our headline company tax rate is 30 per cent, that is the third least competitive company tax rate in the OECD. All of the other countries have seen what it is that we need to see, and that is that they can secure a competitive edge by looking at their company tax settings.

Deborah: So at the end of the day, who is the Business Council wanting to win. Are you cheering on the Coalition as your traditional ally?

Bran: What we're aiming for is good policy on the other side -

Deborah: Come on, don't sit on the fence. You're in Canberra. You're pushing your wish list. Who do you want to win?

Bran: No, that's what we do. We advocate for good policy, and at the end of the day, we work with the government that is in government, and we try and deliver the best possible policy outcomes that secure prosperity, not just now, but into the future as well.

That's why what we're doing with the advocacy that we're doing in Canberra right now is about trying to influence as many different people throughout the Government, the Opposition, and also in the Independents to be looking at their policies pre-election and thinking about what they want to do post-election, and hopefully they take on board some of our ideas.

Deborah: Let's see how much they're listening. Bran Black, no doubt we'll speak to you some more as that election date looms closer. Thanks, as always.

Bran: It’s my pleasure, thanks so much for having me on the show.