Event Interview with Tickly Fullerton, Ticky, YourMoney
Speaker Jennifer Westacott
Date 18 December 2018
Topics Year in review, workplace relations and inequality
Ticky: The Business Council of Australia yesterday issued its official response to MYEFO. The BCA says it's concerned about the future of business investment in Australia with investment growth revised down to only 1 per cent this financial year. In a statement yesterday, the Business Council says that by not reducing the company tax rate, the government has turned its back on moves to keep the economy globally competitive. Now it must focus on getting the settings right to attract and secure large investors. For more on this and a look back at the key business policies of the last year, BCA CEO Jennifer Westacott joins me. You must have had, Jennifer, about the toughest job in business this year.
Jennifer: Yeah, it's not been an easy year, that's for sure.
Ticky: Well, you're still here, and there's plenty to do, of course. You've come back on MYEFO. Of course, business did not get their company tax through. I suppose that was one of the biggest pieces of news this year, wasn't it?
Jennifer: Yeah, it was a real blow, and I think I've said before, I think a terrible mistake by the parliament. To be fair to the government, they pushed it as hard as they can. Business investment is low, it's being revised down again. It's the thing that drives innovation. It's the thing that drives the capacity to keep people competitive. That's what drives higher wages. You just have to look around the world, Ticky, and say we're going have a two-tier tax rate, and we're competing in a world where there is a big competition for investment and money. We have to compete with Asia at 22 per cent, the Americans at 21, the British at 17 -
Ticky: And energy prices?
Jennifer: Energy prices and high regulations. You sort of say, in a country already struggling to get businesses to invest, which drives all these important things which of course are essential to wages growth, what are we going to do?
Ticky: Let me turn that back on you, because this is spilled milk now, really, of course, isn't it, the government tax cuts? So what are we going do?
Jennifer: If you're not going do that, then you have to double down on reducing the red tape burden to companies. Whenever I travel around the world people kind of go, "boy, it's hard to do business in Australia".
Ticky: And translating that, because people say, "red tape”?
Jennifer: Why does it take you sort of seven years to get a planning approval for a major project, be that an energy project or a major construction project?
Ticky: Do you think that's improving? Given we've got this construction boom?
Jennifer: A bit. A little bit. But it's got to be a lot faster, because companies can go and do things in other locations. We've still got, I think, a big amount of work to do on the skills front to make sure we've got skilled labour. We've got to make sure that if we're not going to do company tax, we do something else like a depreciation allowance, and make sure that that's broad across the economy.
Ticky: Do you think that's on the cards, though?
Jennifer: Labor have certainly proposed that as a part of its election platform. It's a very small scheme, but it's a good scheme and we were very positive about it. But ultimately, governments are going to have to confront this reality. A two-tier tax system which will penalise people going into that from 50 million plus.
Ticky: We've got that nine point something billion dollars in the war chest that MYEFO has sort of revealed. People say that's going to be tax cuts, probably income tax cuts.
Jennifer: That'll be income tax cuts, I'm sure. I understand the politics of that, but at some point, people have to remember that it is the business community that has got MYEFO into the position that it's in. I mean, $86 billion of extra company tax -
Ticky: Yeah, tax revenues and the jobs.
Jennifer: And the jobs. I don't want be unfair to the government, because I think they have exercised a lot of fiscal discipline. They've kept growth and spending at 1.9 per cent. That's been hugely important. They have not added to spending. But you can't deny that the success of Australian companies, the success of companies operating here, has really put a lot of money into that bottom line.
Ticky: I think the other thing that business has been, certainly, all the leaders, or so many of the leaders I speak to, is this constant fear that whatever sector they're in these days, there'll be some sort of intervention.
Jennifer: Yeah, and I think there is this kind of race to the bottom of who can be meaner to business. The problem with that is you're just being mean to workers, because the harder we make it to do business, to invest, to grow, to compete on the world stage (and that is the world we're in) we're not America. We can't turn our back on the global economy. We're not big enough. We make it really hard. I listen to people in India and parts of Asia. They're opening up their economies to investment from all around the world. We have to compete with those people. If we turn our back on investment, we're turning our back on being able to create more jobs, being able to pay people more. I think we've just got to kind of have a bit of a line in the sand and remember that it's business this year who is employing 11 million people, who created 400,000 jobs, has paid $86 billion in company tax.
Ticky: All right. We've still got this wages problem, which is a global problem, of lack of wages growth. Now, really interesting, I thought, in the ALP conference, and somewhat surprisingly, that we've had, we knew that there was going to be, in some low income sectors, the idea of bargaining within sectors would be put forward. Now it looks as though, looking at what Brendan O'Connor said, they're going to have some sort of industry wide bargaining if collective bargaining falls over. Now that's quite a development.
Jennifer: Absolutely. This is the sort of thing where business needs some certainty here. This is not something we just say, "we'll sort this out in government". Let me go back to why industry bargaining is such a big issue for us, because basically we're saying that a big union in one part of the country is going set not just the wages and conditions, but the way things are going be done, the rostering, the training, and that's going apply to a business in another part of the country who's in a different market, who's got a different profile. They might be in the broad industry, but they've got a different set of customers, a different set of problems. You're going to have to live with that industry. Now what companies tell me is, apart from the fact this won't work, it would just put a lot of people out of business. And I can't see how this can work.
Ticky: So you're going want to talk, obviously, to Labor Party policy makers?
Jennifer: Yeah, and what are we trying to fix here?
Ticky: There was also a push for more gender equity, say between somebody in steel manufacturing and somebody in childcare. They've both done three years of training. One lot gets way less than the other. And retooling the Fair Work Commission to make sure that doesn't happen.
Jennifer: I think there's a whole lot of inequities in some of these, so they have to kind of address that. The question is, how all this gets paid for?
Ticky: But no one is suggesting, sorry, Labor is suggesting that in childcare it's a bit of special case, isn't it? With women going off to have children, I suppose, that they'll pay for it.
Jennifer: Well, it would be the taxpayer who's paying for it. Look, I'm not going to begrudge childcare workers getting more pay. I think, to be fair, this has got to be part of a broader kind of review.
Ticky: Because we do have the equity, the inequity probelm. It's really interesting. Newstart, neither Labor, nor the Liberal Party want to directly do something about Newstart.
Jennifer: I'll come back to that, but I just want finish on the wages issue and on the industrial bargaining, industry based bargaining. We did some research recently which showed that the people whose jobs were at the highest risk of retrenchment were the people who had the least amount of change in their jobs. And so the more you make it difficult for people to sit down together in their workplace and work out how they do things more efficiently, how they adopt new technology, the more at risk those jobs will be. Now, if you've got a big union telling a small company or a mid sized or a large company in another part of the economy, "sorry guys. This is going to hurt. This is how it's going to be", irrespective of your circumstances, how on earth is that going work in a way that doesn't kind of actually put more jobs at risk? We've got a system that Labor created, an enterprise bargaining system that's worked very well, that's driven productivity, it's driven higher wages. We've got an independent umpire. What are we going to say? That an EBA is approved and someone doesn't like it, so now everyone's going to be on that. That's not going to work.
Ticky: We’ll be back at Chris Bowen.
Jennifer: Can I come back to Newstart?
Jennifer: This is the issue with this discussion about inequality. To me, if you kind of say, the Productivity Commission says all income groups have got better off, that doesn't make it better for people who are doing it tough, of course. But we've got this false class war, this abstract conversation about the technical measure of inequality, when what we should be doing is doubling down on the people who are really doing it tough.
Ticky: But we need to do something about Newstart.
Jennifer: Absolutely. 23,000 people on Newstart have been on it for 10 years.
Ticky: So what are the politicians doing?
Jennifer: Why aren't we fixing that? The allowance for single people is very low. It's inadequate. It doesn't need an inquiry. It needs fixing.
Ticky: All right. Briefly, we've got, I think, excellent knowledge now, both sides of both the Coalition and Labor. There are people who just hate business on both sides and want to intervene, and there are people who are open to talking to business. We used to think of it as the Wayne Swan class warfare, but equally now we've got "down, down" interventionists on both sides.
Jennifer: Absolutely, and I think this is a real danger signal because as I said, we want that $86 billion in tax. We want business to create those 400,000 jobs and another 400,000 and another 400,000. We want them to invest. But if we keep sending a signal, no matter who's in government, that Australia is too hard to do business in, there are lots of places where people can go.
Ticky: Finally, how does the big end of town see it? Is this a line in the sand now? Is this the low point? Are we going to have to wait for Hayne on February 1st, to just really regroup after that? When we think, we've got two AGMs or bank AGMs this week. We've got probably two strikes all up on the remuneration report. We've got to think about this, don't we?
Jennifer: Absolutely. I think there is a line in the sand now, because this is not about people sitting around board tables. This is about the 11 million people who work in a business. This is about the people whose superannuation depends on a business to succeed. This is about every Australians future. If we just want to get into a new national sport of business bashing, as I said earlier, have a race to the bottom of being mean to business, and who can be meaner to business-
Ticky: Boards are really focus on what’s acceptable to shareholders.
Jennifer: I agree with that. And they're going have to double down, laser focus on their customers, laser focus on their shareholders, laser focus on making sure their processes, their products, actually work for their customer.
Ticky: And how they get paid themselves?
Jennifer: And how they get paid themselves and when there's a problem, conspicuously fixing it and making sure that they have fixed it and fixed it properly.
Ticky: Jennifer Westacott, a very big job this year, and you've got another one next year.
Ticky: Thank you very much.
Jennifer: You're welcome.
Ticky: Happy Christmas.