Event: BCA Chief Executive Bran Black interview with Rachel Meadley, AM, ABC

Speakers: AM, Host Rachel Mealey; Business Council of Australia Chief Executive Bran Black

Date: 21 March 2025

Topics: ACCC supermarkets inquiry, Federal Budget, competitiveness

E&OE

Rachel Mealey, AM Host: Bran Black is the Chief Executive of the Business Council of Australia. He joined me earlier. Bran Black, on supermarkets first, the competition regulator has found Woolworths and Coles are some of the most profitable supermarket retailers in the world. But basically, admits there's not much that can be done. Should anything be done?

Bran Black, Business Council Chief Executive: I would say that one thing seems to be pretty clear, and that's that there's been no finding in relation to the need for divestment powers. And we think that's a really good thing, because there have been previous reports that have been prepared over the course of many decades in Australia that have all come to the same conclusion, and that is that divestment is not a useful policy tool.

And what they've said specifically is that divestment can counterproductively lead to higher prices, less job security and even less competition. So that seems to be a good outcome from this report, but in terms of your point, in terms of profits, I would also note that we want our supermarkets, we want our businesses to be profitable businesses. The counterfactual, of course, to profitable businesses is unprofitable businesses, and that means that doors closed, jobs are lost and so on. When you have profitable businesses, you're seeing employment, you're seeing job creation opportunities, you're seeing investment in communities, and of course, there's the prospect of dividends being returned to help keep them very high.

Rachel: Without intervention though, won't their stranglehold only intensify?

Bran: Well, I think it's important to note that there is increased competition in the sector as a consequence of the entry of ALDI, by way of example, but also because there is a greater trend for people buying online. So, we are seeing increased competition throughout the sector. And I do make the point here that these are really significant employers between Coles and Woolworths, you're looking at over 300,000 employees.

Rachel: On to next week's budget, the Government thinks the economy is in pretty good shape. Do you agree?

Bran: What we've indicated in our budget submission is that what we really need to see as part of this budget, and I do stress that this is an election budget, so we're looking to signals from both the Government and the Opposition in its budget reply. What we think that is critically important is policy that ultimately drives the private sector to drive a growth agenda.

Now that is particularly important and this goes directly to your question in terms of where we're at economically right now, because our productivity is low. So, it is at a six decade low. It's sitting at negative 1.2 per cent and that's important, because productivity is ultimately the greatest driver of real wage increases. If you've got real wages growth, then people are better off at the end of the week.

Rachel: In that pre-budget submission, you told the Government that you want to see that private sector growth combined with fiscal discipline. What do you mean by fiscal discipline there?

Bran: First and foremost, we think that it's important to have fiscal guardrails in place. What we've spoken to is a tax to GDP ratio of 23.9 per cent, we've also called on government to introduce spending caps so increases to government expenditure being limited to about 2 per cent a year. We've indicated that we want to see more transparency in terms of the charter of budget honesty, particularly capturing the long term projections for projects, but also looking at how we might capture the expenditure that's proposed with respect to what's been described as off budget measures such as the NBN or the Clean Energy Finance Corporation and so forth.

So those are some key areas that we think are important in the context of fiscal discipline, but we've also got to look at opportunities for us to find savings, and we think that there are a few of those as well.

Rachel: Isn't what's required right now, as the Treasurer says, to focus on making the economy more resilient, to withstand some of the global turmoil that's likely to erupt from a trade war?

Bran: I entirely agree with that proposition. I think that it is incredibly important for us to look at the uncertainties and the challenges associated with the global operating environment through the prism of what we can control. The best thing that we can do in the face of all of the uncertainty around us at the moment is control the things that we can control.

A lot of that comes down to creating the most attractive investment environment that we can in Australia, so that we can shore up our own position, our own jobs, our own opportunities so that we can attract the investment that will ultimately set us up to be successful in the future.

One of the great challenges that we have in Australia right now is that demographically, we are an aging population, and what that means in practice is that proportionately, there are fewer people in the economy working to pay for again, proportionally a larger number of people who are retired, over the age of 65 and in need of longer term and more costly care needs. So how do we account for those needs moving forward, we grow the size of the pie, and that largely comes back to our capacity to drive investment onto our shores.

Rachel: Bran Black, thanks for your time on AM.

Bran: Thank you so much for having me.