Event: Jennifer Westacott interview with Andy Park, RN Drive, ABC Radio
Speakers: Andy Park, host, RN Drive, ABC Radio; Jennifer Westacott chief executive, Business Council of Australia
Date: 29 March 2022
Topics: federal budget 2022; wage growth; productivity; skills and training
Andy Park, host, RN Drive: Jennifer, welcome.
Jennifer Westacott chief executive, Business Council of Australia: Thanks Andy.
Andy: The Treasurer has just handed down the budget, what do you think this budget says about the economy?
Jennifer: It shows the economy is roaring back, I think the challenge is how you maintain momentum. I do think it strikes the right balance between dealing with those cost-of-living pressures and laying the foundation for stronger growth. And the cost-of-living stuff as you've just been talking with Patricia, you know, they're very well targeted, they're temporary, quite thoughtful. And then there is a lot in the budget that lays that foundation for a stronger, more sustained economic recovery. The skills package is huge. I mean, you've got a $7 billion skills package, you've got a migration boost with a targeting to 70% skill component, which is really important, we've been asking for that, you've got this very important piece on women's participation around the paper that you were just talking about. There's also a very important package there for small business, which is an investment allowance for them to upgrade their digital capabilities and to do training that gets them off life support and gets them into a growth model. And then you've got important things around infrastructure, obviously, huge spend, and then this continued cutting of red tape to improve our productive capacity. I think the issue for us going forward is that when you look at those outer years, you've got business investment falling away quite dramatically. When the expensing measures extinguish, then you've got growth with a two in front of it again and that's the worry because over the long term that’s not the way that you sustain higher wages, and that's what's got to be done after the election.
Andy: Jennifer households receiving a one off $420 payment, in your view, is that a fiscally responsible measure?
Jennifer: Look, I think it is, because I think you've got to always kind of strike that balance between, dealing with those cost-of-living pressures and then obviously the things I've just talked about - laying the groundwork for a stronger economy. The $420 package, is obviously on top of the tax offset. So, you know, a single family would be getting $1,500 and a couple would be getting $3000. I mean, that's pretty meaningful to people, and it's a good way of dealing with those cost-of-living pressures. Then you’ve got the $250 package for people on welfare. So, I think in terms of addressing the problem for low-income households, to tie that to the low-income tax offset, I think it's really sensible to make that $420. And then to do the fuel excise halving, I think all of that is actually responsible, governments have got no choice really but to deal with those cost-of-living pressures. But the key is to target it and the way that they have targeted it I think is really sensible.
Andy: Small businesses with aggregated annual turnover of less than $50 million will be able to deduct a bonus of 20% off the cost of business expenses and depreciating assets, to support digital uptake up to $100,000. I suppose that's going to mean a lot to particularly businesses that have to, sort of, make that digital transition during COVID. How fair and how important is this measure?
Jennifer: This is a really important measure, and we've been arguing for an investment allowance for some time, particularly to target these sorts of things. But we've got to get small business off this life support, they have been absolutely hammered in COVID, and this allows them to move to a growth model and allows them to deduct those expenses as they’ve incurred as move into a digital way of operating during COVID. But also, there's a tax deduction for training and skilling their people, so that allows them not only to hire more people, but to invest in the training and skilling of those people so that they stay working longer, they can go on to better jobs and get higher pay. You know, that's a very important measure in the budget
Andy: To the small business deduction for the cost of those external training courses, and small businesses employee what 7.8 million Australians, having access to that bonus 20% no doubt will go some way, and then the government hopes that will boost productivity, but is that the likely outcome in your view?
Jennifer: Oh, absolutely, absolutely. That's a big lever towards productivity, because productivity is obviously a creature of businesses doing more, which is the investment stuff I've talked about. But it's also a creature of people having higher skills, and, you know, many small businesses cannot pay for their workers to be trained, they just do not have the balance sheet, they don't have the bandwidth to pay for that, so this will go a long way. But don't forget on top of that, you've got a $3.7 billion increase to the skills agreement with the states, much of that money is targeted to people who work in small businesses, and then on top of that, you've got another $2.8 billion for apprentices, so the skills package is really important. And, and if I think about what is business saying to me all the time, it's they want more workers, they want skilled workers and for small business, they want some assistance in how they skill up their workers.
Andy: Jennifer, it sounds like the business lobby mostly got what you asked for, what didn't you get in this budget?
Jennifer: I think it's still those long-term issues Andy, on how do you make Australia, over the long term, an attractive place to do business. And that's got to be the kind of continued work on a competitive tax system, the continued work on deregulating the economy and the continued work, we cannot ever take the foot off the pedal on the skills agenda. And of course, you know, we can't take our foot off the pedal on the decarbonising our economy agenda and creating those new industries. And that's about making Australia a super attractive place in the world to invest, that's, you know, a long-term thing, but we've got to make sure that we keep our eye really focused on that.
Andy: Appreciate your time tonight. Jennifer, thank you.
Jennifer: You're very welcome. Thanks.