Event: BCA Chief Executive Bran Black interview with Laura Jayes, AM Agenda, Sky News

Speakers: AM Agenda, Host Laura Jayes; Business Council of Australia Chief Executive Bran Black

Date: 19 November 2024

Topics: Productivity, company tax, international student caps

E&OE

Laura Jayes, AM Agenda Host: Joining me now is the Chief Executive of the Business Council of Australia, Bran Black. Bran thanks so much for your time.

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

Laura: What's new in this report and what are you actually asking Labor to do?

Bran: Well, what we're saying here is that there is a burning platform for us. We know from the Intergenerational Report that we're facing into a future in which there is going to be a challenge making sure that we're able to deliver the same standard of living for future generations that we're fortunate enough to enjoy. And what we're saying is that the answer to that is ultimately lifting productivity.

So how do we go about doing that. Well, we've got to make sure that we've got the right competitive settings to attract investment. Then once we've got that investment, it drives productivity, and that also has the consequence of increasing jobs, and it increases taxes coming into the Commonwealth as well.

So what we're saying here is that there are a whole series of different levers that we need to pull. Unfortunately, there is no single silver bullet. There are levers, lots of them that you need to pull. And be it talking about workplace relations or climate and making sure that we've got an orderly transition in that regard. As I say, lots of different things that we need to do and that's what we've articulated in our report.

Laura: Okay, can we get specific. You talk about slashing taxes and red tape. Can you give us a few examples, what's at the top of that list?

Bran: Well, if you were to look at something like, in the regulatory space, if you were to look at payroll tax across the Commonwealth or indeed, around various different jurisdictions, there are 36 different types of payments that are covered by payroll tax legislation in all of our different state and territory jurisdictions, but there are only 10 areas that overlap. So if you're sitting in the payroll department of a company that has operations across all of our states and territories, you can see that that is necessarily an inefficient way to go about doing business.

So trying to find ways to harmonise that, that's a key thing that can be done. Equally if we're looking at tax reform, one of the things that we've been advocating, of course, for some time, is a reduction in the headline company tax rate from the current rate of 30 per cent down to something that's more OECD competitive at about 25 per cent.

But there are other steps in that regard that you can take too, like, for example, an investment allowance, having say, a 20 per cent investment allowance that gives companies the opportunity to benefit from investments that they make. And as I say, it's investments that ultimately drive jobs and taxes into the Commonwealth.

Laura: Okay, an election just around the corner, though, and let's stick on company tax. You want this to be on the government's radar, a reduction in company taxes, something that's more competitive, 25 per cent, is that right?

Bran: We think it's important to be having that conversation, and that's particularly in the context of the policies that have been announced by incoming President Trump. You might recall that in 2017 when he was last elected, he reduced the headline US company tax rate from 35 per cent to 21 per cent. At that time, Australia became a net exporter of capital to the United States, and we remained at that position for about five years.

What we're saying is that if we were to see a reduction as proposed by the incoming administration, from 21 per cent to 15 per cent it's likely that we'd see further capital flow from Australia, and indeed other countries as well, into the United States. That's an example of why we need to get more competitive.

Laura: Well, it sounds like you want to have more than the conversation. It sounds like it's pretty critical for business to get back at 25 per cent. Who's going to take this up? The Coalition? The government's not talking about it.

Bran: We think it's important to continue to push these points. But as I say, there are a whole series of different levers that we can pull. So company tax is one of them, looking at investment allowance is another one. We've seen just last week that the Treasurer announced his National Productivity Fund. We think that that is a really useful initiative, and what we're hoping to see is that that's got scope to be extended and expanded in line with what we saw with the competition reforms of the late 90s and early 2000s.

That was a program that went over the course of a number of different years, and what that meant is that governments could progressively fund different types of reform, and they could progressively add funds to that overall envelope to incentivise states to undertake those hard reforms. And that means that states have a bit of ammunition to undertake reforms in areas like planning, stamp duty and, of course, payroll tax, like I mentioned before.

Laura: Okay, well, let's stay on tax for a moment then because we have a few things happening with the government and the opposition at the moment. First, the opposition seems to be walking away from their promise of the original stage three tax cuts.

Peter Dutton said to me yesterday, he's going to have to look at the books see what kind of state they're in. If he wins the election, then he'll look at more generous income tax for a higher end. Is that something you support? What would you say to Peter Dutton?

Bran: What we're saying more broadly with respect to tax is that we want to see a broad conversation with respect to our tax settings, and that includes personal taxes. It also includes company taxes, it includes consumption taxes, and it also includes those state and territory taxes like stamp duty.

Laura: So what's the most important out of all of that, then, is it company tax, or is it cuts to personal income tax? Is it payroll? What is it?

Bran: We think that you've got to look at this holistically, so we don't think that it works simply to say, well, let's pull one lever here.

Laura: When is the last time a government did that? I mean, reform hasn't been on the agenda for quite some time. So if you could get one of those, what would it be?

Bran: True, it hasn’t been. Well we think that in order to be competitive, we've got to prioritise investment allowances and company taxes, but that's in order to maintain our competitiveness. But we do think that it's important to have that broader conversation about our holistic tax mix, and what we're saying in terms of any conversation around tax is that we should look at in that context.

Laura: Okay, Labor's also talking about a levy on banks. They said it's not locked in, but it's certainly being considered to help regional branches stay open. The Coalition said that amounts to a tax and taxes ultimately get passed on. What's your position on that?

Bran: Well, look, we haven't seen the detail with respect to that. At the moment, as I understand it, it's a policy that's being speculated upon. It's the subject of Treasury correspondence to banks, and as I understand it, that's also correspondence to the subject of non-disclosure agreements.

Laura: Do you think it's a good idea, though?

Bran: Well, we wouldn't support additional impost on business at this time. We've seen, and to the point that I've been making right now, we do have a competitiveness challenge, so we think that it's a problem to be going about imposing additional charges and imposts on our successful banks.

We've got to remember that our banks played a critical role during the pandemic, and that was because they are in a strong financial position. So we don't want to see additional imposts imposed. But having said that, the most important thing with any proposal that's being put forward by government is to make sure that it's properly consulted upon.

Laura: Okay, one final question, because it's a live issue right now in Parliament, where you are, that is the migration caps. This has failed. Labor's proposal the Coalition what it would do. It promised that the caps would be even more stringent. Now, universities are nowhere in terms of what they can do with caps. So what's the BCA position on it?

Bran: Well, we've never supported caps. We think that our international student sector is incredibly important to our economy. Indeed, it's our fourth largest sector, and last year it was responsible for half of our economic growth. It supports 250,000 jobs. This is a sector that we see has enormous potential, and we talk about quite frequently what we need to do to grow new industries and to see them expand. The Future Made in Australia program is all about growing and identifying new industries that have potential, and yet here we've got a sector that is already doing so supremely well, and our position is that we should be supporting it at every step of the way.

The real issue, as we've been clear on for many, many months now, is housing and the lack of supply, and that's why we're very clear a couple of weeks ago when we launched our new housing report about key recommendations that we can make right around the Commonwealth to try and improve the overall delivery of supply, and ultimately it comes down to harmonising what we're already doing in different jurisdictions.

Laura: Okay Bran, great to talk to you. Thanks so much.

Bran: Thanks, Laura.