Event: Jennifer Westacott interview with David Speers, Sky News
Speaker: Jennifer Westacott
Date: 8 May 2018
Topics: Budget, company tax, income tax, R&D, infrastructure
David Speers, host: Coming up in the next 20 minutes or so, we're going to hear some business reaction, reaction from the union movement, the welfare sector as well. Let's start with Jennifer Westacott, head of the Business Council of Australia. Thanks for your time tonight.
Jennifer Westacott, chief executive Business Council of Australia: Thanks very much.
Speers: You've been at the government for a while to tackle debt - it's at record levels. Is it doing enough tonight?
Jennifer: Look, it's doing some things. I think what this budget shows is that when the economy is strong you can do more. It gives you more choices. And that economy is being made stronger by stronger business activity. I mean that's the real difference in this budget. It's that $15 billion in the forward estimates have increased company tax receipts.
Speers: So we should be thanking business for this?
Jennifer: We should be thanking business for this budget because it's business that's done the heavy lifting. And, it really is, kind of, a stark demonstration of the point we've been making and that is when business is thriving, the country can thrive. More can go back into giving tax relief to lower and moderate income earners, spending on infrastructure, spending on services but we've got to keep going because, you know, we are living in a very competitive world.
Speers: If business is doing so well though, why do we need a company tax cut?
Jennifer: Because we've got to bring this in. We've got to... there's a couple of really important points here. First of all, this is still very dependent on external factors like commodity prices. It's still very vulnerable to external shocks. We have to do everything we can now...
Speers: So this could all disappear?
Jennifer: Well, but the best way we can, kind of, protect ourselves for that is to have a very competitive economy, have a very strong business sector. And, of course, in the last 12 months we know that other countries have lowered their company tax rate, quite dramatically, and that's put competitive pressure on our companies.
Speers: Do you think it helps the government's ability to sell the rest of those company tax cuts now offering income cuts as well?
Jennifer: Well, I think when you offer income tax cuts, not to sell company tax cuts. You offer income tax because you want to give people tax relief. I mean, you know, the economy has been growing, it hasn't been growing fast enough, we've got to give income tax relief to low and moderate income earners.
Speers: I was asking the Treasurer about this earlier, which one actually helps the economy more? Company tax cuts or income tax cuts?
Jennifer: Well I think the economists, kind of, you know, can give you the modelling on that. I mean, from the company tax cut you get a one per cent permanent uplift in the economy. That's $18 billion in today's terms. And, if you look at, you know, those company tax receipts going out over the forward estimates, $100 billion will be paid by Australian companies in tax. That's factoring in the tax cut. So, you know, companies are going to make the difference whether we have strong budgets or weak budgets. You know, if the economy is thriving, we can do more, we can put more back. But, you know, I'm not going to deny, you know, Australians that tax relief. Particularly, that group of people who get that instant tax relief, but those people, now who will be avoiding going into bracket creep which has been an absolute, absolute problem in our tax system to try and take that pressure off people.
Speers: There's nothing for Newstart tonight. You've been among those saying this needs to be addressed.
Jennifer: Absolutely. I'm very disappointed in that. I think we've got to do something about the Newstart allowance. It's too low. But we've also got to make sure that we don't just tinker with the allowance, we've got to do really substantial things about giving people access to better literacy programs, making sure that that sort of effective marginal tax rates don't, kind of, impact on people really harshly. We've got to make sure that we get the jobs services networks working properly. But, of course, we've also got to make sure that there are good jobs for people to go. And that's why a strong economy with a thriving business sector is absolutely vital.
Speers: The R&D, research and development changes tonight, they follow a review, a report to the government about some rorting that was going on. What will these changes mean for business?
Jennifer: I think, what they're trying to do is to make sure that there's an intensity measure. That you get more if you are doing more R&D. And also....
Speers: So spending more of your turnover on R&D?
Jennifer: Well, being very clear that you're spending it on R&D, doing more intensive R&D. It kind of works on an intensity measure.
Speers: Because the concern has always been, you know, is this money that would have been spent anyway?
Jennifer: Correct. So there's a kind of attempt to, kind of, really measure additionality. And look, there's other, there's other measures in the budget to make sure that we're, kind of, continuing to crack down on multinational tax evasion, and we support those. You know, there's a measure in the budget which is, kind of, you know, on page whatever that says, you know, you will not be able to get government work if you haven't got a good tax record. We totally agree with that.
Speers: And tackling a black economy, a number of measures there.
Jennifer: Absolutely. I mean there's a huge amount of money here. I mean there's $5.3 billion in the budget estimates, I suspect there's a lot more than that. You know, these are the sorts of things that have got to go hand in hand with reducing people's personal tax burden, reducing the burden on our companies, we've also got to crack down on those... and make sure those anti-avoidance measures are really working.
Speers: There's a lot of infrastructure projects, as there often is in any budget, but $24.5 billion worth tonight. I always wonder, and I'm not sure if you have a view on this, how they match up with what we should be spending money on versus how much is political?
Jennifer: Yeah, it's a really good point this.
Speers: A lot of marginal seats I see in the map that they've produced. What do you think?
Jennifer: Look, it's great to be spending more money. You know my views, I've always been calling for an uncontested list to be produced by Infrastructure Australia that says here are the top whatever 15, 20 projects that we should be doing, that are going to lift our productivity....
Speers: Don't they do that? There's a priority list that they've put out.
Jennifer: Yeah, but what I want to do now is match up that list with obviously what's being committed. Look, it's absolutely important we spend money on infrastructure but we've got to make sure we're spending it on really competitive projects. The list I've looked at looked pretty good. Some of the big, you know, long standing issues that are around, like say Melbourne Airport. Anyone who's done the trip to Melbourne Airport recently knows what a productivity sapping journey that is. So, you know, that looks pretty good. Some of the, kind of, things in Queensland look good. Some of the, kind of, roads projects across the country, to fix the roads that are really in need, that's important. But, I do think we need to start saying, you know, for both political parties to actually get that uncontested list, stick to it, signal to the community they're going to do that and not have state governments chopping and changing like they're doing.
Speers: Jennifer Westacott from the Business Council, thank you.
Westacott: Thanks very much.