Event Interview with Gareth Parker, 6PR
Speaker Jennifer Westacott
Date Thursday, 28 February 2019
Topics Politics, economy, banking royal commission and remuneration
Gareth Parker, host: My next guest has had a pretty good go at the politicians, but it's come from an unusual source and I, with respect, wonder if there's an element of glass houses and rocks here? We won't prejudge it. We'll get into it. We'll ask her for her views. Jennifer Westacott is the chief executive of the Business Council of Australia. Jennifer, good morning.
Jennifer Westacott, chief executive, Business Council: Thanks very much.
Gareth: Pleasure to talk to you again. For people who haven't read the Financial Review this morning. What's your point here?
Jennifer: My point is I'm the first person to accept that business has got a lot to answer for, the Royal Commission was, you know, shocking in its revelations. But we have to make sure that we don't go into an election where politicians across all sides of politics decide to have a race to the bottom on who can be meaner to business because that will just end up hurting ordinary people, workers. It will just mean that businesses don't invest. It means it will slow the economy down, it will mean less jobs. And I just don't think that's the right way for the country to go. So, people can be justifiably angry with some of the conduct of business but the job now is to get on and fix that. And I think it's, it's pretty rich now for the politicians to say, ‘well, in every single public policy sphere, we're going to blame a company’, instead of getting to the bottom and fixing some of the things that actually, I'm sure most Australians want fixed.
Gareth: Has business not brought this on itself?
Jennifer: I don't think there's any doubt we bought some of it on ourselves. Look, this has been, this anti-business thing in Australia, has been going on for a long time. I just don't understand, particularly in Melbourne and Sydney. It's interesting when you get out into the regions, people don't have that view because they're desperate for the jobs, they are desperate for the investment. They want businesses to be there. And there's no doubt we bought some of this on ourselves. The challenge for people in public life is what do you do about these things? Do you just keep beating things up? Do you keep a blame game going or do you try and fix things? And that's my call, that we draw a line in the sand. Business has now got to get on and fix some of the things that have to be fixed. It's got to double down on treating its customers properly. It's got to double down on treating its suppliers properly. But politicians have got a job to make sure the country’s in better shape, and if you keep beating up on business, you make it harder to do business, you make it really hard for the banks to lend money – the only people who pay the price for that are working people or small businesses trying to get a loan.
Gareth: So, let's get down to what you think actually does need to be fixed. What are you talking about specifically? Where would you start?
Jennifer: Okay well, people's wages needs to go up. There's no doubt about that. But that is not just a magic pudding, you just can't say, ‘okay everyone's wages should go up’, you know, we've got to do the hard work on making sure we're more productive. By that I don't mean working harder for less. I mean, working smarter, getting our products into export markets, embracing new technology and a lot of that is about training. You and I have talked about this before, we have got to get VET and apprenticeships back on track in this country. They are falling apart. It's a disaster. So that's number one. Number two, we've got to get people's electricity bills down, particularly on the east coast because you know, that's hurting families, it's hurting small business. There's lots of things, governments have had inquiry after inquiry after inquiry about the ways we could get people's bills down. But the one thing we keep doing is intervening in the energy market and creating another set of problems and deterring companies from investing. You know, we've got a lot of power still caught up in coal fired power. Those power plants have got to be kept going and the companies have got to have the right incentives to keep them going. We need to make sure that we don't create a regulation minefield for every small business, every family. We love red tape in Australia. We're really good at it, but it actually ends up as a price to consumers. So, I could go on and on all day Gareth, but you know, there are a few things I think Australians want fixed. I think unless business and governments sit down and cooperate on this, it's not easy to fix them. None of these things are very simple. If they were simple, someone would fix them pretty easily. They're very complicated things, but it's not helped by the constant blame game. A blame game isn't going to put wages in people's pockets. It's not going to get their bills down in electricity. It's just going to be interesting sport for people to watch, but it's not actually going to advance the cause of most Australians. And I think Australians deserve better than that.
Gareth: What I was interested to hear your comments around a focus on customers. What's been evident for me for a long time now is that, and I will generalise. But I think it's a reasonable generalisation. I don't think it's an unreasonable generalisation. I think that corporate Australia has taken its customers for granted and I think it's done some things that are against the interests of its customers in the short-term. I think it has traded on their loyalty but also on their laziness and it has basically tried to extract the maximum value out of them, rather than treat them as partners and look after them in the longer-term interests of companies and of profits. Do you agree with me or am I on the wrong track here?
Jennifer: No, I think you're right as a general kind of principle. And I think it's more true in some sectors than in others. But I think it, you know, what I'm talking about with customers is exactly the point you're making. Don't take their loyalty for granted. They've now got a super computer in their hand, in the form of, you know, an iPhone. They are much more empowered and informed and they and they should be. And they will drive companies to act on their behalf. And that is a very different world for companies and they've got to now change, dramatically and quickly. And there's no doubt people have got to be honest about the use of things like data. They've got to be honest about the products that they're selling people. So, I think the royal commission is a wakeup call for corporate Australia to make sure that we double down on treating our customers with absolute respect, making sure they are totally informed about what we're selling them, make sure that they've got very clear complaints mechanisms, and making sure that we are true to your point, that we treat them as partners because without them businesses can't be successful. But I keep coming back to the fact that whatever people think of some of the stuff in business. It's interesting whenever I talk to people, particularly out in regional Australia, we've got to make sure that we don't, you know, kill the goose that laid the golden egg because it's still business that's creating jobs. It's still business that's putting wages in people's pockets. And if we take a set of actions for political reasons, not for the reasons of solving people's problems, we will see companies do less and less in this country and that is bad for ordinary people.
Gareth: If there's one issue that I think has annoyed people over 20 years and it seems to be getting, it seems to be a growing issue in the minds of the public. And you talked about the goose that laid the golden egg. Some people look at what is happening with remuneration for the very top of the largest companies. And they look at it and they ask, how can that be justified? How can someone be worth $15 to $20 million a year? And accepting everything that you've said about the importance of private enterprise and creating jobs that put roofs over people's heads, they look at the gains that accrue to the very top and they say, how can that be justified? Is business doing itself any favours with that?
Jennifer: I think it's a fair question and I think it's a really hard issue this because if I said this amount looks reasonable, someone would say, well, I don't agree with that. I think it should be this amount. And, you know, I think a couple points to make; The first is at the very least, boards should absolutely interrogate whether or not that pay is right for the company and right for the performance. And they should be very, very clear with their shareholders about how that has been structured. And they should be very, very clear about the sanctions and penalties that apply when companies don't do well, so the accountability bit. In terms of the quantum, the kind of how much, you know, I think that is just a, we shouldn't avoid it. I'm agreeing with you. I think it's a, fair point for people to talk about. I'm just not sure it's easily fixed by just saying everyone should be at this level because, you know, it's interesting, you don't hear many people complaining about Alan Joyce's salary because he's turned around as Australia's greatest company, well one of Australia's greatest companies, and so I think where people feel aggrieved is when they see a company not performing and someone’s pulling in a big payback again.
Gareth: Well, I just wonder about the consequences for social cohesion and I haven't got the statistics in front of me, but you would acknowledge that back in the 1950s and 60s, the average big four bank CEO earned certainly a large multiple of what the average person earns but that multiple has grown massively.
Jennifer: It’s a totally legitimate debate to have, we’re having it, you know all the time, and I think boards should really double down on the interrogation of this stuff. I just don't think there's a quick fix. I think at the very minimum though, we've got to improve the accountability and the clarity of how these pay structures have been worked out.
Gareth: Okay, it’s a big discussion. There's going to be more of it. I appreciate your time as always. Thank you, Jennifer.
Jennifer: You're welcome, thanks.
Gareth: Jennifer Westacott, the CEO of the Business Council of Australia.