Bran Black interview with Scott Haywood, Money News, Nine Radio Network

09 April 2024

Event: Bran Black interview with Scott Haywood, Money News, Nine Radio Network
Speakers: Scott Haywood, host, Money News; Bran Black, Chief Executive, Business Council of Australia
Topics: Defence of business; productivity; competition; corporate tax; budget; superannuation; dividends; employment


Scott Haywood, host, Money News: So we’ve just spoken about company upgrades and downgrades in the market wrap but hotly debated in recent times has been just how much a company should be allowed to make in profits. The argument is that the consumer is being worked over by big businesses where the race for profit is short-changing those who use the goods and services provided. But we are forgetting the other side of the equation. Because whenever companies make profits, they can also employ workers and bump up superannuation accounts. It's a point that's been made clear by Business Council, CEO Bran Black writing in The Australian newspaper today, and he joins me this evening on Money News. Bran, welcome to the show.

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

Scott: Bran, big business has been under attack in recent times. But are they really the boogeyman they're being made out to be?

Bran: Well, I think it's such a good question. The short answer to that is no. We need big business to be doing well in our economy. We need all businesses in our economies to be doing well. I spoke last week when I was at the COSBOA conference about the interplay between large business and small business. You know, that's worth $700 billion a year to our economy. So, in our economy that's $2.6 trillion a year, so that's almost a third of that. That's quite extraordinary. So, my point there is that we need big business, small business, medium sized businesses, everybody needs to be doing well. And we know that when they do well, ultimately, that supports jobs. It supports taxation, it supports dividend payments, which of course go to people that own shares, but also our superannuation accounts, and there are 16 million Australians that have superannuation accounts. And ultimately, it also supports investment, and it’s investment that drives our economy forward.

Scott: I'm glad you touched on shares, because what makes you think big businesses are on the backfoot as it’s certainly not reflected with our share market still circling record highs?

Bran: Well, I think the unfortunate thing is that people have done it tough. We know people are doing it tough right now, and it's incredibly saddening to see. And we unfortunately see a lot of it. And it's certainly the case, I think, at times like this, that people try and understand the causes of the hardship that they're experiencing. What we've seen, which is unfortunate, in terms of a messaging perspective, is that the unions and the Greens particularly, have been very clear in their own advocacy, that it's big business and profit that is underpinning the hardship that people are feeling. And that's just not the case. To the contrary, we need big business to be doing well in order to drive our economy forward so that people can start doing better.

Scott: Consumers are angry while their costs remain high in elevated inflationary environment. Do you get that it's hard to see big profits when there's been a squeeze to household budgets right now?

Bran: Look, I can entirely understand why people think along those lines. But at the end of the day, as I say, we've got to make sure that our businesses do well. You know, some of the statistics really tell quite a powerful and important story in this regard. If you look at taxation, by way of example, in MYEFO in 2024, that's projecting $137.9 billion in corporate taxes, that's slightly down from 22-23, when it was $150 billion, that's a quarter of all Commonwealth tax revenue, and the top 100 companies in Australia contribute about $62 billion dollars to the Commonwealth coffers every year. That's critical cash that goes towards funding schools, it funds hospitals, it funds our social services, our law enforcement and military, it funds our way of life. And then when you look at employment outcomes as well, the large businesses, businesses that have more than 200 employees, employ collectively more than 4 million Australians, that's out of a total workforce of 13 million Australians and a private workforce of about 11 million Australians. So, these statistics don't lie. We need business to be successful because it genuinely does underpin our way of life.

Scott: Bran, talk to me about wages, because from the people I speak to, they say they are not growing at the level that matches the cost of living pressures. Is that the challenge for big businesses?

Bran: Well, I think that there are a couple of things that I'd certainly want to say with respect to some of the challenges that people are experiencing. There is obviously scope I think in the budget coming up for the Government to lend its support by providing, for example, energy subsidies in the budget to those that need it. But we also need to make sure with wages that the increases are matched with productivity gains, because otherwise, by definition, they're inflationary. If we're seeing wages that aren't matched with productivity, then that prompts the Reserve Bank to be thinking about does it need to raise interest rates or perhaps more pertinently at the moment, keep them at their existing rate for longer and the best thing that we can do, in order to try and put downward pressure on cost of living is ultimately start to see interest rates reduced because we know that each 25 basis point increase or each 25 basis point period is worth about $600 a year to the average Australian household with a mortgage.

Scott: You have already touched on this, but let's talk about the benefits of the Government. Now, you've already said that if businesses are creating jobs, that means larger workforce that contributes to increased tax revenues, and lower unemployment benefits being paid out. Now, that has to be a win, doesn't it?

Bran: Oh, absolutely. Absolutely. As I say, we see that there are some quite extraordinary contributions that corporate Australia is making in terms of taxation. You know, one of our BCA members, by way of example, paid eight per cent of Australia's corporate tax in 23-24. And as I say, it's that taxation that goes towards funding schools, hospitals, infrastructure, right around the country, that same member incidentally paid $17.5 billion in dividends. So that's money that goes directly to mum and dads that have shares in Australian companies. But also, it goes importantly to the 16 million Australians with a superannuation account.

Scott: Bran, where are we at in the economic cycle? Because the 13 interest rate rising inflation challenges have changed spending and saving habits for almost every Australian, so isn't the worst behind us?

Bran: I'd like to think so. And we've certainly seen some promising signs, as the Treasurer has noted in terms of recent productivity growth, that two last quarters have been positive. But and this is an important point to make, we're still not where we need to be in terms of our economy's capacity to provide for the future that we want moving forward. And that's because we've just not been competitive enough, as yet. And so I've been really pleased to see that the Treasurer has spoken about the importance of having an investment strategy and his working in that regard, leading up to the budget. But the point that we've been making, for some time is that we need the country to increase its economic growth. To do that, we need to drive productivity, in order to get productive, we need investment. And in order to get investment, we need to have competitive settings. And unfortunately, you can't just pull one big lever to make the country more competitive. It's the sum total of a whole series of different policy interventions that you can make. So, it's around, of course, what you can do with respect to investment policy, planning settings, the type of regulation that you impose, what you do with respect to jobs and skills and how you try and drive our economy forward in that space, our taxation settings, and so forth. So, there's a whole body of work that we need to undertake in order to make sure that our economy is providing what we need to moving forward. And that's so important, because we saw in last year's Intergenerational Report, that if we don't start taking those steps now, in 40 years from now, we're going to be $140 billion a year worse off in terms of that revenue to expense gap. I know that seems like a long way off. But I think that in the context of my own kids, that's not the kind of debt that I want to be leaving them. That's not the kind of lack of opportunity that I want them to experience.

Scott: No. Bran Black, Business Council of Australia CEO, thank you so much for joining me this evening on Money News.

Bran: It’s a pleasure, anytime.



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