Event: BCA Chief Executive Bran Black interview with Ross Greenwood, Business Now, Sky News
Speakers: Business Now, Sky News Host Ross Greenwood; Business Council of Australia Chief Executive Bran Black
Date: 25 November 2024
Topics: Productivity, company tax, National Productivity Fund

E&OE

Ross Greenwood Host, Business Now, Sky News: Well now a group of business leaders have again called on the government to set a vision for the future. Among them, the Chief Executive of the Business Council of Australia, Bran Black. Bran always good to chat to you. A lot of people look at you here and say, of course you'd say that you're going to back the Liberals, you're going to do all this sort of stuff. This is way more than this. This is about the future of Australia and what it looks like and the place that this government has got in designing that future.

Bran Black Chief Executive, Business Council: Well, look thanks so much for having me on the show. It’s about what any government can do. And the critical point that we've been making in our advocacy, particularly over the last few months, is that the challenges that we’re experiencing now, particularly with respect to productivity, are challenges that have been on the books, so to speak, for the last couple of decades.

But what we’re saying is that the platform is burning now. We know from last year’s Intergenerational Report that unless we take steps to address our competitiveness and productivity challenges, we will be leaving a future for our kids worse off than what we’ve been fortunate enough to experience.

Ross: And you can already see that. And we've already highlighted that on today's program with what's coming out of Victoria. You can see what happens when your state GDP effectively collapses, when your income per household falls, and where the government takes on massive debts and therefore basically has to put itself in hock and has to start raising taxes, productivity again drops.

So this is symptomatic of what could happen across the whole country unless the right policy settings are put in place.

Bran: That's right. It's all about being competitive, about having the most competitive business settings. Because with competitive settings you attract investment, with investment you drive productivity, and productivity is the best determinate for real wages growth, certainly over the last six decades.

So what we've been saying is, if we want to see real wages growth, and that's got to be the overarching ambition that we should all push towards, then let's start at the other end of the scale which is about getting the right competitive settings. And to your point, what I hear from CEOs right across my membership, but also when I’m out and about talking to people around the country, they are saying to me increasingly that the settings that we have in Australia aren't sufficiently competitive to continue to justify further investment in Australia.

And that’s a critical point. We don’t have enough investment now. We have to do more than what we’re on a trajectory to achieve in order to deliver that high quality of life that we want our kids to enjoy.

Ross: Okay, so this is about investment into Australia and if the settings aren’t right, then investment doesn't come into Australia. So to grow business, to grow infrastructure, to grow a range of different things.

And then there's a second aspect, and that is that capital leaves the country, and that is that multinational companies here and big investment funds send more of their money overseas to where they earn a higher return on their capital. And that's happening right now.

Bran: Well, yes, it is, and we're concerned that with other countries increasing looking to make their settings more competitive, unless we really start to move the dial a bit in Australia, we'll see a continued exit of capital from our country.

Just to put this into a little bit of perspective, in 2017 when the United States last reduced its company tax rate from then a headline rate of 35 per cent to its existing rate of 21 per cent, we became a net exporter of capital to the United States for five consecutive years. Now, the last time we'd been a net exporter of capital for five consecutive years was 1912.

We are looking now at the prospect of the United States again reducing its company tax rate. So that begs the question, are we going to see more capital leave the country. What this means more broadly is that it's just another incentive for us to be thinking, how can we be more competitive. What is it that we need to do to be as competitive as possible as against all of those peers that are striving for capital.

Ross: Because, you know, last week, we were talking BlueScope Steel, which is putting more capital into America, where it will be protected potentially by Donald Trump's tariffs, where its energy prices are between a half and a third as cheaper than what they are here in Australia, where its wages bill is less, its return on investment is higher, and its market is bigger. So they're all the dynamics that go about. But that's one company, there are a lot more companies that could take a similar view to that.

Bran: That's absolutely right. And as I said before, it's a story we’re hearing increasingly from across our membership. I wish I could say there is a big, single productivity lever that we could pull to fix the problem, but it’s not quite so simple. There as so many different settings that you need to look at be it, workplace relations or your planning settings.

Ross: Which you could argue the government's gone backwards on workplace relations because they've made workplaces less flexible, not more flexible, which is what business would like.

Bran: That's unquestionably correct. With respect to workplace relations, we have gone backwards and that goes back to the point that I was making before. It is not sufficient for us simply to continue along our existing trajectory, because what the Intergenerational Report told us is that if we do that then we are facing into a future where there will be a greater burden on a proportionally smaller tax-paying base. We need to be doing better and that means we need to get our settings right.

Ross: Okay, so we're sort of laying it out for the government here, but there's got to be a plan for the future. What is Australia? And this is not necessarily the government saying, okay, we're going to build more solar panels in Australia, or we'll build a quantum computer in Australia. That's a government picking winners. That is maybe a good thing to do, but the reality is that is not the economic settings that Australia is looking for to drive the nation and its productivity forward.

Bran: Look, there is certainly a place for initiatives like a Future Made in Australia, with the setting is correctly established, but we’ve always said that the best thing the government can do is get the fundamentals right.

So that goes through the workplace, the taxation, the regulatory, the planning, the energy costs and those settings. Those are things that we talk about when we say get the fundamentals right. If you get them right, then you raise the tide to float all boats rather than just picking winners here and there. That’s what we think that we need to work towards, and we call on all parties ahead of the election and post the election to invest in that critical work to drive a genuine economic growth plan.

Ross: So just quickly, is there anything the government's doing that you can see right now that is on the right path?

Bran: Well, the one thing that I really would point out is that the announcement, I think, two weeks ago now, of the National Productivity Fund is an excellent step in the right direction. The idea behind that is that the Federal Government incentivises states and territories to undertake some difficult reforms in areas where they would otherwise find it a little bit challenging.

This is exactly the kind of thing that we’ve been calling on for a long time. It’s modelled off the competition payments of the 1990s. We know that works.

Ross: And so, we know about all of the companies that may go overseas. The one thing we, of course, also have to consider is that a lot of companies are based here and cannot go overseas, like some of those multinationals. Bran Black, always good to chat to you. Many thanks for your time today.

Bran: Thanks for having me.