Event: Interview with David Speers, Sky News, Speers on Sunday
Speaker: Jennifer Westacott
Date: 16 September 2018
Topics: Energy, company tax, aged care royal commission
David Speers, Host: Only a month ago, Malcolm Turnbull, of course, was still prime minister, the government was still advocating big business tax cuts and the National Energy Guarantee as the best way to deliver certainty, encourage investment and drive power prices down. Well, now the NEG is dead. The big business tax cuts too and Malcolm Turnbull is no longer in parliament. Where does that leave corporate Australia? Are we going to be less competitive internationally? Well, I'm joined now by Jennifer Westacott, the chief executive of the Business Council of Australia, for her first major interview since the political upheaval here in Canberra. Thank you very much for your time. Before we get to policy, can I start with your thoughts on the fact that the Coalition is now on to its third prime minister and third treasurer. I suspect many Australians are now, well, probably used to prime ministers being dispatched before elections, but what does it do to business confidence?
Jennifer Westacott, chief executive, Business Council of Australia: Look, I think it's what it does to the country's inability to get things done and that's the problem, David. This is not just a creature of the Coalition. We've had this for a decade and as a result, we’ve just not been able to get anything done in a substantial way, on our competitiveness, on our energy policy, we keep making false starts, then we pull back. So from business’ perspective, and I'm not going to lecture people in Canberra, businesses got to sort out its own reputational problems. But from business’ perspective, from consumer confidence, it does have that kind of feel of, look, should we start this? No, perhaps we shouldn't because that might change. That's a terrible situation I think to put big investments into. None of the problems that existed before the latest leadership change have gone away. Our energy policy has not been solved. We are not a competitive economy, we’ve got to fix those things, and we can talk about those. So, you know, I think that the real kind of challenge now is that I think a lot of Australians, to be honest, have just switched off. When I was in Busselton recently and the leadership challenge was happening, you know to be honest, a lot of people were just saying, you know something, who cares. Now that's a terrible situation because we want citizens to be engaged and you know, someone might start up the “why bother” movement, and I think that's a terrible kind of thing for the Australian democratic system. We need to be able to get stuff done and Australians are going to have to ask themselves this question: Do we want these dysfunctional parliaments? What kind of parliament do we want? Do we want these senates that don't let anything get done, which then create the opportunity for factional kind of big divisions, because we've had a decade of this.
David: Well, I'm fascinated with what you're saying there. Your fear is that we’re just into an era of stagnant reform and what corporate Australia won’t be sticking its neck out to champion any major change if this is going to be the result?
Jennifer: Well, how can they, I mean people are often critical that we don't speak out on things. My God, we spoke out on company tax and we got behind the NEG and then these things just disappear. But my biggest issue is that the issue hasn't been fixed. So, leaving aside the kind of policy stuff, if we take energy, we haven't fixed it and we've got to fix it. We've got three things we've got to fix, reliability, affordability, and the fact that we have an agreement to reduce our emissions, which we support. We got to fix that. We have not got a competitive economy. We've got a very high tax system, now that's been taken off the table. Fine. I don't agree with that. I think it's a terrible policy choice. I think it's a real let down by the Senate. I think they have turned their backs on the communities they purport to represent. But if that's the case, then we better find something else to make our economy more competitive. Deregulation, encouraging investment in resources, encouraging them in energy projects. Because, you know, you look at something like the United States and we, you know, in Australia, we get this kind of image of dysfunction junction over in the United States. But they’ve got stuff done haven’t they? I mean they lowered their tax rate. They massively deregulated the economy, they got depreciation system that's pulling investment in. Now, the trade stuff might mitigate against some of that, but you know, they're getting stuff done. You go to Europe, people are getting stuff done. For some reason we, this dysfunction that we have, has paralysed our ability to make our economy more resilient, to fix our energy policy and get things done on behalf of the Australian people.
David: Well, let's get into the energy policy that the NEG was meant to deliver certainty for investors, certainty around reliability and bring down power costs for everyone. Now, the NEG is dead, do you think this is going to mean more uncertainty? Will it mean higher costs?
Jennifer: Well, you know, we can’t just allow higher cost to happen just because we've got rid of that policy, so we still have to break it down into those three things; reliability, affordability, and emissions. Now a lot of those rely on investment and we've got to fix that problem that we're not getting the investment into baseload. So just to give you a couple of numbers here -
David: Well, there has been an investment strike, is that going to continue?
Jennifer: Well, how can people invest if there are two diametrically opposed policies about emissions? So if you're going to invest in baseload, so let's just get the figures
right here. So we've seen about 5,000 megawatts of baseload or dispatchable power withdrawn from the system. 7,000 megawatts of renewable come into the
system. The problem with that is the reliability factor. We need more investment in dispatchable and baseload. Now people say there's always investment uncertainty and, yes that’s true but we have two diametrically opposed policies about how emissions are going to be treated in this economy. We have to find a way through that. We just simply have to find a way through that. We have to continue with the elements of reliability and affordability.
David: But the government says it is going to do things like underwrite investment in dispatchable power but it's really carving off the emissions side of things, saying that no longer will be a requirement for the power sector. What do you say to that?
Jennifer: Well, you still have to solve the problem. That's the problem. So, fine if you're kind of going to deconstruct the scheme, you know, by all means do all this stuff on reliability, we've always put them in that order. By all means do whatever you can to act on the ACCC’s recommendations to act on many reviews we've had into the system that are going to put prices down. But you've got to get investment. You know, it's the old supply and demand equation. You've got to get investment in dispatchable and that does require an element of certainty and predictability on how you're going to treat emissions. So if you're not going to do it through the NEG, then we've got to do it through another mechanism or another, we've got to do something.
David: Well, just on that Jennifer Westacott, are you saying that some sort of emissions requirement needs to be in the energy sector?
Jennifer: Well, we've signed a target, we've signed an agreement. Now we support that but you know, the question is how do you achieve it? Now, you know, people say, well, it'll be easy to achieve. that's true in electricity. But you know, what are we going to do to actually achieve that target? And more importantly, more importantly, David and this is the point. If I wanted to upgrade my coal fired power station, if I wanted to do something new on gas, all of the dispatchable and baseload power and I do not know in 10 years’ time how emissions will be treated and I have two diametrically opposed policies, am I going to put my money into that? And that is the challenge for both sides of politics now to try and take the politics and ideology of this and work constructively with business about how do we get that investment certainty. And I hear people saying, there's nothing, nothing is ever certain. Well you've got two very different policies here. We need to find some middle ground on how we are going to meet that target, which I think the bulk of Australians do support. Certainly, business supports it. You know, the government is committed to the Paris Agreement again this week. We think that's a good idea, but we still got to find a way of doing it.
David: Well, we have the two sides of politics, arguably as far apart as they’ve ever been now. Labor is talking about reviving some sort of National Energy Guarantee. The government, we've heard Scott Morrison say, well we can go back to the Emissions Reduction Fund. The direct action approach. Is there one or the other that you would prefer?
Jennifer: Look, I think you've got to see the detail of all of these things. What we want is the outcome achieved. I mean the problem with, you know, we've had a decade of talking about schemes. We've had, you know, an acronym bonanza for a long time. You know, we've actually got to say, look what practically can we do? What is going to give business that certainty to invest particularly in the dispatchable baseload sector because that's where the reliability problems are going to exist and we have to make sure that we don't take short-term decisions that actually are going to give us some very medium and long-term problems. So you know, we are going to work constructively, David, with both sides of politics, we have to fix this, we just can't go on like this with a decade of really very dysfunctional public policy on this energy carbon stuff. We've got to find a way through and we've got to find a way through that's achievable, that doesn't impact on reliability and doesn't cripple our competitiveness as an economy. And we will work with governments and the opposition, we’ll work with anyone who wants to actually get this fixed.
David: On company tax cuts, the big business tax cuts, are now dead, why do you believe this campaign failed? You put a lot into arguing the case for this.
Jennifer: Well, it was always more popular than either of the two political parties. The last Newspoll poll, I saw of it, had it plus 60 per cent. So, I think there was a misreading of the community support for this when you and I have been out doing Strong Australia in the regions of Australia, you don't get any argument in Townsville, in Cairns in South Australia, in Adelaide, you know, parts of Australia that are crying out for big companies to invest in it. I think it just came down to a pure politics and the people who've turned their back on the regions that they purport to represent will have to answer for that at some point. But you know, it's very disappointing. I think it's irresponsible of the Senate but we now have to say, well, okay, the problems haven't gone away. If we're not going to do that, what are we going to do? How are we going to make our economy more competitive? How are we going to drive investment particularly into the resources sector, which is powered up so much of regional Australia. How are we going to make sure that we continue to drive that investment, which of course is fundamentally linked to productivity, which of course is linked to wages. How are we going to get our regulation burden down? I heard the Treasurer talking about that yesterday, that's great. Now let's get a plan to do it because we are a massively over-regulated economy. So, if we're not going to do company tax, what are we going to do? And we can't just do it all for small businesses, as biggest supporter of them as I am, because you know, if you speak to any small business, who is their biggest customer? That would be a big business. So we can't just kind of quarantine bits of the economy off and just say, we’re just going to do something for them. There was someone here this week from the US Job Creators Network, he was bewildered by this division between big and small business. He said what kind of joke is this? This is a system that works together, big and small need each other. So whatever we're going to do, by all means, do whatever we can for small business, but we have to make sure that the whole economy is more competitive.
David: But if that revenue is pumped into fast tracking the small business tax cuts, for example, small, medium tax cuts, would that help big business?
Jennifer: Well, it helps in as much as, you know, small business is a big customer of big business and so on. But the difficulty for small business, and this is why the Council of Small Business supported the tax cut, is that if big companies aren’t investing, particularly in regional communities, then you just don't get that flow through. It's that sort of, you know, as you and I had been talking as we go around the country, it’s that multiplier effect that when a big business comes into a regional community with a big investment, the small businesses that open up, the suppliers, you know, all of that kind of supply chain that supports a big investment. If the big investors don't happen, if they go and look elsewhere or they just slow down that activity, that's bad, bad, bad for the country. Now, if we're not going to do taxes, which I think is a bad decision by the Senate, then what else are we going to do? And let's not obstruct that for another two years.
David: A quick one, finally, Jennifer Westacott, on today's announcement from the Prime Minister of a royal commission into the aged care sector. I guess we've all been watching, jaws dropped, the royal commission into the banking sector. What do you think about having such an inquiry into aged care?
Jennifer: I think this is a spot on call by the government for a number of reasons. We've got to decide whether this sector is sustainable as our population ages. We have to decide whether the system is workable. Have we got the right mix of out-of-home, in-home, nursing home. And then we've got these quality and safety issues. Anybody who saw that footage this week of that old man being abused by a worker, it was just horrific. It was just horrific to watch that. So we've got these quality issues, we've got this overlap of responsibilities between the Commonwealth and the state. We've got a real confusion about palliative care in nursing homes. There are big systems issues. So I think this is a spot on call by the government. And I know that we and many other sectors of the economy are going to work very constructively on this because, you know, if we're going to have an aging population, we need to make sure that aged care system is fit for purpose.
David: Jennifer Westacott, chief executive of the Business Council of Australia, good to talk to you today. Thanks so much for that.
Jennifer: Thanks very much, David.
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