This opinion article by Business Council Chief Executive Bran Black was published in The Australian on 8 April 2024

Corporate Australia has become the national punching bag, but successful large businesses underpin our way of life

Australian business doesn’t always get it right. Like anyone, businesses can make mistakes, and when they do they need to make things right.

But business cannot permanently live on the backfoot because there are so many fundamentally positive ways in which it contributes to our society.

Large businesses employ more than 4 million Australians—almost one in three workers. Those jobs matter. When you squeeze an employer, it is harder for them to operate, and at the end of the day jobs aren’t as safe.

In an analysis from the RBA last year, it was shown that businesses with profit margins under 5 per cent had significantly worse employment outcomes.[1] What that tells us should be common sense—you need decent, dependable profit to create and maintain secure jobs.

Behind those jobs are people, who get paid and put food on the table. We should value profitable businesses because of those pay checks, and the additional hiring and innovation that comes with growth and success.

Let’s imagine the opposite; a country where businesses aren’t profitable, are closing down, or cutting back. It means losing jobs and opportunities.

On the other hand, businesses that are humming along hire people, they promote people, they pay higher salaries. They also pay taxes—more on that later.

Behind every successful big business there are also strong partnerships with local smaller businesses, and small business depends on a growing national economy. Trade between big and small business is valued at almost $700 billion a year. Extraordinarily, that’s around 30 per cent of GDP.

And we’re all better off as a consequence.

Australia has some world-class businesses, big and small. We should be proud of them, and how they stack up against the best the world has to offer.

Some nations celebrate their successful businesses. Because they see what successful businesses mean for the nation, and the national prosperity they can create.

In contrast, here in Australia we are allowing business to become the permanent punching bag—we need a shift.

We are dangerously close to making it taboo to run a business well and turn a profit.

Our major supermarkets are currently being investigated for price gouging when they are making less than three cents in every one dollar spent at the checkout.

There is a cost to run a business, and that cost gets factored into the price of whatever that business sells. This is true the world over, in every country and in every sector.

It’s an oversimplification to ask, for example, what a company pays for a kilo of beef, and demand any changes to that cost be reflected immediately at the checkout.

What about escalating and inflation-driven power costs, transport costs, insurance costs, wages, and other forms of inflation we are all feeling?

What a business pays to keep the lights on affects what they charge. There shouldn’t be anything controversial about that.

Are we willing to give up the benefits we see when businesses thrive? And do we want a situation where bureaucrats are setting profit margins for businesses or price controls for products?

Thankfully the Prime Minister and Dr Craig Emerson have pointed out this didn’t work for Soviet Russia.

It certainly won’t work here.

Last year the ATO noted that our top 2,700 companies paid a record $84 billion in income tax, which is around 12 per cent of our Federal Budget.[2] Company tax is a percentage of profit, so when companies earn a lot, they pay a lot more.

Our miners are currently fuelling record tax collections which put the budget into unexpected surplus.

Company profits translate to taxes which are building hospitals, roads and schools, and keeping our budget afloat.

They also benefit more than seven million mum and dad shareholders who directly own shares in Australian companies. Not to mention contributing to the approximately 16 million superannuation accounts held by Australians.

Big business is a large contributor to the money and opportunities that flow into our economy—so what happens if we tighten that pipe?

The stakes are nothing less than our quality of life.