Event: Interview with Beattie & Newman, Sky News
Date: 28 August 2017
Topics: Wage growth, energy policy, regulation, tax
Peter Beattie, co-host: We're going to talk to Jennifer Westacott, who's the Chief Executive of the Business Council of Australia. Because, as we said last week, we're going to talk business about how we argue for the important things that Australia needs to do. So, Jennifer, can we welcome you to Beattie and Newman tonight.
Jennifer Westacott, Business Council chief executive: Thanks very much.
Beattie: Tonight, can I get to the heart of this. Obviously, there are some people like Michael Kroger and others, who say the Business Council needs to put a strong case because there's so much static around reform in Australia. As Chief Executive of the Business Council of Australia, what do you want to see government do to stimulate the economy, grow jobs, and see business grow as well?
Westacott: Yeah, it's a good question. I think the first things is, we've really got to tackle this issue of low wage growth. And, of course, keeping jobs being created. But you know, I think the fact that people's wages aren't going up is the source of so much community anxiety and that's really going to be about how we drive business investment, which I think ... people are always shocked when I tell them that business investment is now the lowest it's been since 1994, when we were in recession. And that's about being more competitive, that's about trying to get business to kind of do more, and that's why the tax stuff is so important. It's really about how we're going to get investment, which is going to drive higher wages and more job creation. So we want to see the enterprise tax plan passed in full and, obviously, we'd like to see the Labor party return to its traditional position of supporting company tax cuts.
Energy is hugely important. We've got to get this debate centred on how we make things more affordable, more secure, and more reliable, and of course, meet our sustainability targets. And that's really about, again, driving more investment, where we've seen capacity kind of withdrawn from the system.
And I think the third issue, and I know you've talked about this on your show, is how we start to give people confidence about the jobs of the future. I think a lot of Australians are very anxious. Will I have my job? Will my job be taken out by robotics, artificial intelligence, and so on…
Westacott: I think there's a good story to tell there. It should not be a bad story, but we're going to have to try and create the jobs of the future, which is one of the industries that Australia can succeed in, can succeed at a global level. How do we become more competitive? And, of course, how do we fix up our skills and training system, particularly our really, really neglected apprenticeship system, and our VET system. So they're the big issues and, you know, I think we have been very strong advocates for these issues for a very long time. But this is about making it real for people. This is about ... is someone going to get a job? Is someone going to keep their job? And are we going to be able to pay them more?
Beattie: Jennifer, one of the problems ... and I think we all realise this, is getting your message through.
Beattie: I mean, obviously, as I said at the beginning, there's so much static around. Does the Business Council need, for example, spend more money on advertising? Do you need to have a stronger social media campaign? What sort of things are you looking at to improve ...
Beattie: ... the breakthrough, if you like, or the penetration of your message?
Westacott: Yeah, well look, I think clearly social media. And we wouldn't be the only organisation kind of thinking about how do we get more reach on social media. And we've spent a tremendous amount of resources kind of lifting our performance in social media, sharpening that message, targeting different audiences. You know, obviously, pay TV advertising is something we consider. You've got to be very targeted about that and we're certainly open to paying for advertising, and you've got to be able to get into conversation at the right time. And the business community is open for that, and the BCA's open for that. Certainly on social media. You know, we have really, really lifted our game there. And, of course, you've got to get into more traditional media outlets with a stronger message.
The problem we've got and the challenge I think is, that the people on the other side of this debate, the anti-business lobby, if you will, you know prefers a kind of convenient lie to the more complicated truth. And I'm not going to go there. I'm not going to pedal mistruths to people. You know, what I want to say to people is, we need a strong business community if we want people to have a good job and a decent job, and a decent paying job. And sometimes that is a message that is hard to cut through, but boy oh boy, we're going to keep trying.
Beattie: Jennifer, just in moving to the other levels of government, because I think personally, I they can have a huge impact ...
Beattie: ... on the viability of businesses. What particularly do you think state government, and indeed local government who are controlled by the states, should be doing in this area to really get things going in the economy and create those jobs?
Westacott: Well, I think regulation is the obvious one. If I pick two examples and both of you, when you were premiers made a really good crack at these. The first is planning approval. So I mean, we cannot be the country that takes 5, 6, 7, 8 years to get a major project approved with 12,000 conditions and thousands of agencies involved, because companies ... you know, they'll just go and do that somewhere else. They'll do it where it's easier to do business. So planning approvals is one where I think we have just got to get the states to control this system, to really lift their game here, and make it easier to get these big projects approved, particularly things like energy.
The other one is retail trading hours. I tell you what, you know Amazon won't be restricted by different state governments having different trading hours. They'll have one trading out 24 hours a day, seven days a week. And, you know, that's who we’re up against. We're up against these big global digital companies, and we're still hamstringing Bunnings for selling certain things on a particular day of the week. So we've just got to get into the modern world on regulation, and that's really a matter for state governments.
The other thing state governments have to do is, they run the VET system and the apprenticeship system on the ground. And, you know, I've been banging on a bit about this for ages. I just feel that we are letting the apprenticeship system, which is halved in terms of the number of new apprentices entering the system. We're just letting it fall away, and we're letting our VET system just fall away. And, actually, in terms of this kind of future world of work, it's going to be the VET system that we need almost more than the university system. Or, we can't keep treating it like a second class citizen, and the states have got very confused policies here.
The final thing the states should do is stop setting additional renewable energy targets. We've got, you know, one carbon reduction target for the Commonwealth. What we do not need is state government setting, you know, different renewable energy targets, different carbon reduction targets, different schemes. All of this just adds to cost that just finds its way into someone's energy bill.
Beattie: Well, Jennifer, on energy bills ... I think actually this is one of the big issues that politicians indeed across the aisle by federal and state law, don't really get.
Beattie: What's actually going on out there lobbying-wise at a really intensive level to demonstrate to these pollies, that you know, the cost of individual businesses their operations have gone through the roof, and benchmarking that against say ... competitors inside the US.
Beattie: For example, if you're producing you know, some salad vegetables or fruits in Queensland, some Ag area, you're actually maybe competing against produce from the central valley in California. Can you tell us what's been going on about that?
Westacott: Yeah, well we've been trying to make this point for a long time. And one point we have always made and I'll just say it just because I think it's important is ... we're in this mess because of bad policy. So we're not in this mess because of some accident. We're in this mess because we had bad policies and bad policies have got us there. So good policy's got to get us out of it. But you're absolutely right, and we've been making the point about what is happening to energy costs compared to our competitor countries. And, of course, all of these things are one thing on top of the other. It's not just energy costs, it's high taxes, it's high regulation. But, you know, if you talk to a small business person or a large business, they'll tell you their energy costs are now increasing at a rate they were not expecting, that this is really hampering their ability to be competitive.
So, we've got to keep the debate focused on, instead of all these acronyms CET, EIS, all these things that people talk about, what is the problem we've got to fix for here, which is we need more investment. And we need a more certain environment for companies to put their money at risk and invest, to bring forward some of these big projects. And, of course, we need these moratoriums lifted on gas exploration in the states. So we are certainly, you know, pushing as hard as we can to say we've got to find a bipartisan and a practical way through this. Because even if one side of politics does agree to something and the other side takes a different view, if you're sitting around a board table and you're going to put two billion dollars of your shareholder's money at risk and you don't know let's say what the carbon price, or what the carbon pricing arrangements are going to be in 10 years, you're putting a lot of money at risk.
So we've got to boil this down. What are we trying to do? We want affordable, secure, reliable energy. We've got to make a carbon reduction target become more as government has set. What is the best way of doing that? Now Finkel’s review sorted out a lot of the security issues, but the big challenge now is how are we going to get new investment into the system?
Beattie: Jennifer, let's move on and talk a little bit about free trade, because if ever there's a country in the world that should be a strong supporter of free trade it's us, because we export a large majority of what we produce, whether it's sugar, or beef, or minerals. We obviously need the supporter. There is a growing, if you like, Trumpism against free trade. And we have it here in Australia. One nation, they don't hide it. They're very proud of the fact that they oppose free trade. How do we convince Australians that free trade is where job growth is, where our future is. And a lot of things that you were talking about, that is growing a bigger pie, bigger economy, depends on free trade.
Westacott: Absolutely right. I think, one of the things we have to do and it's going to speak to we've got to grow the pie, cause there is a pretty unhelpful debate at the moment about the task is to distribute what's there, whereas we would argue the task is to grow what's there.
Westacott: You know, I think you're absolutely right. We are a small country. So people comparing us to the US ... they can afford for a little while to turn their backs on the rest of the world. This country can't. We rely on foreign capital in mining, in agriculture, in manufacturing. We rely on those foreign companies who've got choices about where they put their money, to come to Australia and put their money at risk. So if we're not competitive, or if our rules are so unpredictable and we change them all the time ... You know, if you're sitting in those boardrooms around the big global companies, you start to say, "Is Australia too hard to do business? Are we not welcome there?"
I do think we have to work harder, and we have to this in the Business Council to explain to the community the benefits of foreign investment, and obviously make sure the safeguards are there about foreign labour and things like that. But it is a very, very ill-informed debate, this foreign investment debate, because people say, "Well, the Americans are doing this." Well, they can afford it for a little while. But I can assure you, over time the Americans will not be the beneficiaries of shutting down their trade, that's for sure.
Beattie: Jennifer, can we then just go to something we alluded to earlier on, but to give you an opportunity to really make the case this evening, would you like to talk to our viewers about the corporate tax rate issue, why should it be lower? What are the international benchmarks? And perhaps refer to this issue about choices about whether it will deploy capital, what are the implications of this?
Westacott: Sure. Sure. I think when ... what is the tax debate about? It's about investment, which is actually about how we're going to get people to have higher wages, which I talked about earlier. I mean, there's only one way you can get people's wages to go up, other than in terms of trade boom, and that is if you get greater productivity. That is more efficiency in the way we do things, better equipment, better access to new markets. That requires business investment. And business investment is about the return on capital, and the tax is fundamental to that. So projects that were not viable with a 5% reduction in the company tax rate, become viable and companies start bringing forward those big projects.
If you think about mining, agriculture and manufacturing ... they are all industries that require big licks of capital so that we can get the new projects going, so we can invest in the new equipment, and so on. That's really what this is all about. How do we get higher wages, more jobs?
Now we are woefully uncompetitive. The average in Asia ... 22%. We're 30. UK 17, we're 30. The French even, are talking about lowering their rate. The Americans talking about going to 15. You know, we are going to be left behind in the race for capital, and as you've said quite rightly, we need that foreign investment and we need Australian companies to put their next dollar in this country. And they will look at that tax rate and they'll say, "You know something? We won't do that. We'll do that somewhere else." If you're a foreign company saying, "We're not going to Australia. It's too expensive. We can get a better return." And, if you're a shareholder of those companies, you want them to do that. You want them to try and get the best return.
And so, you know, this is an absolutely fundamental policy that we can control. We can control our tax rate and we are so far behind. We used to be in the middle of the pack. Now we are falling behind and we will see capital go to those countries where it's easier to get a better return. The UK, they had a couple of years ago, after they started kind of lowering their rate, a record year of inbound investment, 85,000 new jobs.
Beattie: Jennifer, let's continue on the theme about tax. The Labor party has announced their policy to crack down in their terms on family trusts. What implications will that have for business, particularly small business? And I know that you've announced an alliance with the Small Business Council to work together on a number of issues, including growth and tax, and so on. So what will that mean? Will that have much effect, a lot of effect? What difference will it make?
Westacott: Well, I think we've got to see kind of the detail of what's being proposed. I guess my concern about these things is that we start with something that is allegedly about perceived tax avoidance by rich people. And then we end up sweeping in small business and farmers, who are using tax trusts for legitimate purposes. That's my anxiety. But we always kind of start these things and we end up with unintended consequences.
So I guess I want to sit down with the Labor party, what is it you really want to do here? And let's make sure, if there is evasion, if there's misuse of trust funds, let's fix it. But, if we're going to have this wholesale attack on trusts, and we suddenly accidentally sweep in small business and farmers, who are using them for legitimate purposes, that would be a very, very bad outcome. And I think, again, it's you know one micro part of the tax system. This is not big tax reform to deal with the trust issue. We need to do so much more in the tax system. But, you know, if there's misuse, let's deal with it. But I'm really concerned that we're going to have a lot of unintended consequences here. And that's one of the reasons we've joined forces with the Council of Small Business, so that we make sure that we don't get unintended policy consequences for either big or small businesses.
Campbell Newman, co-host: Jennifer, I've just ...
Beattie: Yes, unfortunately we're ... Sorry, you go on Cam.
Newman: Yeah, Jennifer, just ... if I can have one last shot Pete.
Beattie: Yeah, okay.
Newman: You talked about the Labor party, just to go to the coalition for a sec. They often complain, you know, that the business isn't sort of backing the government. I probably see it a bit differently. My perspective on this is that you know there probably needs to be a relentless campaign, not just by your good self and the BCA and your people, but the actual CEOs, and the boards of these enterprises, need to be making the case. Do you want to comment on the coalition's view and perhaps what I've just said?
Westacott: Well, it's kind of what you've just said because I absolutely agree with you. And I think, businesses have to constantly get out there and remind people that it's business that creates ten million of the twelve million jobs that employ Australians and the revenue that funds government services comes from the private sector. So I think we've all got a job to do. And companies have got to that. You know, they've got a big employer base that I think that we could be more effectively communicating with. And, of course, we want CEOs, and directors of boards out there prosecuting the case for business. And, again, if I go to the arrangement we've done with COSBOA, you know to try and work together to make sure the community understands that business is actually the kind of job creator, the employer, the community beneficiary that puts back into communities. That's why we've done this arrangement with COSBOA.
On the coalition, look what we're about is good policy and we won't always agree with the coalition. We're not a cheer squad for a particular side of government. And, you know, we will advocate for policies that we think are in the national interest, the policies that are going to drive prosperity, create jobs, create higher wages, make the country more competitive. Sometimes we'll agree with the government. Sometimes we'll agree with the Labor party. Sometimes we won't, and I think it's important for us not to be a cheer squad for one side of politics but to advocate for those policies that are actually going to benefit Australians.
Beattie: Jennifer, unfortunately, we're out of time. Can I thank you for yours ...
Westacott: Your welcome.
Beattie: ... and say that Cam and I are keen to talk about business and growth, because at the end of the day, as you pointed out, if business grows, jobs increase.
Beattie: And that's good for all Australians.
Beattie: So, good luck Jennifer and thank you Jennifer.
Newman: Thank you Jennifer.
Westacott: Thanks a lot.
Media contact: Rheuben Freelander, 0417 814 904