Event: Jennifer Westacott interview with Deborah Knight, 2GB
Speakers: Deborah Knight, Jennifer Westacott
Topic: Response to the Treasurer's Economic and Fiscal Update
Deborah Knight, host 2GB: Jennifer Westacott is CEO of the Business Council of Australia. She's on the line for us now. Dire numbers Jennifer.
Jennifer Westacott, chief executive Business Council of Australia: Yeah they are pretty dire but there are some optimistic things. But let me go to the dire bits as you just said. Look a very big budget deficit. Unemployment of course very high and our economic activity really down. And that is very grim news. But the optimistic bit I always try and be optimistic as you know.
Deborah: Glass half full as I know, yes.
Jennifer: Is that we started in a better place. We have, notwithstanding what's happening in Victoria, we have managed this better than most other countries in the world. We actually had a strong budget, to your point, and that means we’ve had the capacity for government to throw everything it could at keeping people in work. And so we've got to remember that we started in a much better place than many other countries on the planet. But what this tells me, Deb, is that we have to do a couple of things. We have to get this health situation under control. Obviously to protect people but also to build the community's confidence and then we have to do everything we can to get activity going in the economy. So we can create those jobs, get people back working, get businesses back up and running, and get business investing again.
Deborah: We've had people calling in and emailing in saying 'look we shouldn't be spending the money we are.' We've got this massive debt, we're racking up this huge debt, the government should reign in the spending. Explain to us why it is so important to have these emergency spending measures?
Jennifer: Well because the reason you get into surplus is not just for the sake of it. It is so that you've got the capacity to respond to these crises. I mean none of us have seen anything like this in our lifetime. We've not seen anything like this since the Great Depression and what government had to do is basically keep people afloat. I mean they've had to keep businesses afloat through JobKeeper. They've had to keep people afloat through JobSeeker. They've had to try and put a floor under the economy, and I can assure you things would be a lot worse if they hadn't done what they've done. 700,000 people would be unemployed if they hadn't done what they've done. And I'm pretty confident that every dollar they've spent has been to keep someone in a job or create a job. And going forward that's what we have to focus on. Every dollar, Deb, has to be you're keeping someone in a job, you're creating a new job or you're getting the economy ready for the future. That's the check we all have to put in place. But there's no point in having a balanced budget if you've got another 700,000 people out of work.
Deborah: And we know JobKeeper has been an absolute lifeline for so many workers, so many businesses.
Jennifer: It's been a nation saving decision and obviously the announcement the government made this week to gradually taper it off is very sensible.
Deborah: Is it concerning though Jennifer? Because obviously the Treasurer is saying the unemployment rate is expected to peak around 9.25 per cent and without that support, which will taper off, that would have been 5 per cent higher is what the Treasurer said today.
Jennifer: That's exactly right.
Deborah: Once it starts tapering off though, I mean should it be tapering off as quickly as it is? Obviously, everything is changing, it could well change again.
Jennifer: Yeah I think it has to. Because you've got to think about, to your earlier point, this is costing plus $10 billion a month. And so we have to now focus on getting things back up and running. And that means we've got to get the health stuff under control so we can stay the course on opening up the economy. We've got to get businesses investing again. I mean the numbers that people probably won't talk about today in the figures the Treasurer has released is the basic freefall in business investment. We've got to get businesses investing. Whether it's putting on new equipment, expanding what they're doing, buying that extra truck or a big business bringing forward some of its activities. That will create jobs. We've got to get the skills system working so people can upskill to get those jobs. That's got to be the focus because people don't want to be on welfare. They want to be working. They want the dignity of work. They want the sense of a job that gives them a bit of a sense that they can get ahead. And we've got to act on two fronts if you like. You've got to get that health situation under control, manage those local outbreaks, get a national protocol so we know how we're going to do this but at the same time, we've got to start focusing on getting the economic activity back so we can create these jobs so that people can get back into work.
Deborah: And how many businesses are being propped up here that might go under come March when we do see the scaling back and when we see the scaling back of the government assistance? How many of these so-called zombie businesses will go under?
Jennifer: I don't know the exact numbers; I don't think anyone's done that detailed analysis, but I think a lot of businesses won't get back up and running. I think there have been some businesses that were probably marginal to begin with. Once JobKeeper goes, they will not get back up and running and that's why we need to make sure that we create those new jobs. That we get things going in the economy again. That we encourage other businesses be they the biggest companies in the country or the smallest where they've got the capacity to invest, to get some new equipment. We've got to encourage them to do that. As you know we are calling for an investment allowance, a tax incentive for companies to invest. We've got to get that stuff going so we can pick up those people where those companies will not be able to get back up and running. But that is a very tragic reality of the situation we find ourselves in.
Deborah: And the topic of taxes too, should we see income tax cuts coming? Because there have been calls for company tax cuts too? Is that something that you want to see?
Jennifer: Well certainly on the income tax side. I think there's a really legitimate case. If you say, 'what have we got to do? We've got get out activity going again so we create jobs.' One way of doing that is to put money in people's pockets. So why wouldn't you think about in the October budget, bringing forward those personal income tax cuts. So that people have got that money that they're spending and generating activity which generates jobs. On company tax, look you know my views on this, we've talked about it many times. I think it's very disappointing that we weren't able to do this last time. We've got a very uncompetitive system. One of the things I hope people realise today when they see those company tax profits dropping off in government revenue. It is really good to have profitable companies. It's not a bad thing. Those declines in profits go to government revenues but they go to straight to your superannuation. So we want companies to be profitable. And having a really uncompetitive tax system is not a way of getting business investment going and making companies successful. But in the short-term lets at least do some kind of tax incentive for investment so we can get the country going again.
Deborah: Should we delay the increase to the super guarantee?
Jennifer: Look I think that's something for the superannuation inquiry to really look at. Because I think everything, Deb, should be on the table. This habit we've got in Australia of just ruling stuff in and ruling stuff out. We've got to stop it. Because tinkering around at the edges now around economic reform is not going to be enough to get us back on track. But you've got to think about that we've got to create at least 1.5 maybe two million jobs in the next two years. It took us a decade to create two million jobs before COVID. Any sort of business as usual policy agenda is not going to work.
Deborah: And in terms of the whole notion of a snapback because that's what initially the Prime Minister was talking about. Building a bridge, we go over the bridge and we can snapback at the economy. I mean that notion is out the window at the moment surely.
Jennifer: Well I think it's certainly much harder and obviously the Victorian situation has made that much more difficult. And I think people talk about a U-shape reform rather than a V-shape reform. Look I think the bottom line is this, people can argue about was that the right thing or not? We are where we are. The numbers today are the reality. And we've got to use them as a base and we've got to say, 'okay how do we go forward from here as a country? How do we get that activity going?' Because that's what companies tell me all the time. 'Jennifer we have got to get activity back.' We have got to get what they call demand back in the economy.
Deborah: But how do you do that when you're in a lockdown? I mean...
Jennifer: But you've got to get this health stuff under control. Like we've got to focus on local lockdowns not moving to state-wide lockdowns. Getting the protocols right. Getting things like tracing and testing right. Getting quarantining right. If we're going to do border closures which I'm not a supporter of but if we have to do them, well then for goodness sake can we get the permitting right? Can we get the systems right, so people know what the rules are?
Deborah: The border closures though they're a tricky one because I'm like you Jennifer I was dead against them in Queensland. I was pushing hard for the border to reopen but now in hindsight about what we've seen, people in Queensland are sitting pretty.
Jennifer: Yeah look I understand that. But my question to you is how long can this go on for? If we have to live with this virus for let’s just say one to two years until we get a vaccine. And a vaccine has to be invented, tested and...
Deborah: And rolled out.
Jennifer: And rolled out on a scale that is enormous around the world. Then can we imagine for the next two years or one to two years we're not going to be able to go across in a border? That we're not going to have anybody coming to Australia? Let any Australian citizen return. But we're not going to have some skilled workers come into the country. I mean we've got to be realistic about what's achievable here and then make sure the community understands what's the plan here. What are we trying to do? We're trying to suppress this thing. We're trying to make sure that we contain it, that we manage these local outbreaks, that people know the rules, that our health system can cope, that we look after the most vulnerable people. We've got to remind people what the plan is, so people get that confidence. They think, 'yep I understand that.' And of course, constantly remind people that we've all got to take responsibility for this. We've got to do the stuff that governments are asking us to do. If it's wearing face masks in Victoria, if it's washing our hands, if it's keeping our distance, if it's having that app on. We've all got to take part in this and of course I'm really proud to represent Australian companies at the moment because boy have they pulled out all stops to keep their workers and their customers safe.
Deborah: And Australian companies, as you say, they have done tremendously well. But has this entire situation that we're in, has it changed the nature of work in Australia permanently?
Deborah: Because obviously working from home and so many office blocks are still empty in the cities all around Australia. Many of the workforce still doing it from their living room, from their studies at home. Is that going to be the way of the future?
Jennifer: I think it will be for some companies. Say in professional services and things like that. I think a lot of people will want to work like that. I think we've all got pretty used to it. And a lot of people like being at home.
Deborah: Well it makes the whole notion of travelling interstate for a one-hour meeting just ludicrous.
Jennifer: Look I think all of us have looked at our lives before COVID and said, 'what on earth were we doing?'
Jennifer: Is this actually the way I want to live my life going forward? I'm not sure that where we are now is where we're going to stay though. And I'm not sure we want to stay like that because empty cities are not very safe cities. And if you've wandered around the CBD of Sydney recently you don't feel that the city is really active. And of course all the people who've relied on those office blocks to run their coffee shop, to run their cafes.
Deborah: All of that infrastructure. All of that put in place.
Jennifer: All of that infrastructure. And also companies say to me, 'look you can do it but gee we miss the collaboration, the ideas generation that comes from people sitting in the same room.' I notice, you know I do a lot of Zoom meetings as I'm sure everyone is doing, that sometimes people don't finish something that if they were sitting together physically you'd finish that problem and you'd get to the bottom of it. And you wouldn't leave the room until you'd sorted it. So I reckon we're going to find a halfway point but I do think that if you're a coffee shop owner and you were relying on those big buildings in a CBD to be open you would not, you would be concerned that if that was going to be the new normal.
Deborah: Yeah absolutely. You're lucky if you're in work as it is at the moment let alone moving forward.
Deborah: Good to talk Jennifer thanks so much.
Jennifer: Okay see you later.
Deborah: Jennifer Westacott there from the Business Council of Australia.