Jennifer Westacott - Interview with Elysse Morgan

Event: Interview with Elysse Morgan, ABC
Speaker: Jennifer Westacott
Date: 5 March 2018
Topics: trade, tariffs, company tax, tax reform, economy

Elysse Morgan, host: For the trade issue and more on tax, Business Council chief Jennifer Westacott joined me from a Business Council trip in Far North Queensland. Jennifer Westacott. You were in the US just last month with a heavy hitting business delegation meeting with President Trump. All signs were that it was a great meeting that, we were getting traction. Was it all lip service from the US?

Jennifer Westacott, chief executive Business Council of Australia: This is a very, very disappointing move from the United States today. And obviously the government will work its way through it, but you know, we're yet to see the detail, but it's of great concern. I think the thing, Elysse, that is really important now is that we don't have people calling for a tit for tat, I mean, Australia cannot win a trade war. We are an exposed, open economy. We cannot beat the US in a trade war. So if we do tit for tat, that will be a disaster for Australia. I think the crucial thing now is that we get TPP-11 signed next week because that allows us to kind of have that regional trade. And secondly, this really shows that we have got to pull out all stops to make the Australian economy more competitive and that we have to get ourselves out of this complacency, that we've had these 26 years of uninterrupted economic growth and we’re somehow immune from global shocks. We are not immune from them. We have to make sure that our policy settings give businesses the best chance they can get.

Elysse: So do we, I mean, just to focus on the US at the moment, do we have to not be so naïve as to think that the US administration considers us an important trade partner that would be worthy of exemptions?

Jennifer: Well, the clearly they've said they're not going to give anyone exemptions and you know, look, the government will work this through, but I think the most important thing is for Australian is not to think they're immune from anything that happens globally. I mean 90%, 98% of economic activity happens outside of Australia and we're very naïve to think that we're not vulnerable to global shocks and we're not vulnerable to decisions.

Elysse: So, when you mention tit for tat, what should we do? How should Australia respond if there is a whole bunch of steel and aluminium, that was destined for the US that may actually be finding its way to Australia?

Jennifer: Well, obviously that's a matter for government, but we've got to make sure that we don't, you know, the worse thing that could happen is for someone to say, "well, let's put a tariff on this. Let's put another tariff on something else." That's what I'm talking about, where we don't need tit for tat. Look, the government has to now look at the details, sit down with relevant businesses and workout an appropriate response. Some of which of course from an Australian point of view is going to be finding new markets for our goods and services.

Elysse: Minister Ciobo raised the issue that this could be what sets off recessions in different parts of the economy. Do you think that is a fair assessment?

Jennifer: I think it's a, it's a very fair call because, you know, we are very trade dependent in those two sectors. This is bad news for those sectors. It's bad news for, I guess, trade around the world. We have to be very cautious about how we respond.

Elysse: And, even though Australia's exports all of steel and aluminium are relatively small in the grand scheme of things?

Jennifer: That's absolutely right there. They're small, but you've got to remember that all of these things can come down to people working in a factory somewhere. And you know, we want to make sure those people have access to global markets and that they've got jobs and so yes, these aren't big parts of our, of our trading regime, but they are very important parts of our economy and they're extremely important to some regions. So, this is not a good thing at all, but my advice and my call for people is calm, considered thoughtful response, but you know, we have to be more competitive as a country.

Elysse: Speaking of competitive, I mean your key point on competitiveness is corporate tax cuts tax. And on tax, we had Elizabeth Proust from the Australian Institute of Company Directors on the program last week. She said that she spoke to you and you agreed to disagree on her view that business should be campaigning for a whole of tax review. So that the whole economy is more competitive and able to withstand shocks rather than just argue for corporate tax cuts. Why do you disagree with her?

Jennifer: Well, let's just get the facts on the table. The Business Council in 2016 put out a very comprehensive plan for tax reform in Australia. It went to state taxes, it went to income taxes, it went to a rethink of the tax regime, and that is not what governments are willing to do. We do not have that plan on the table. We would all like to see comprehensive tax reform, but that is not the plan that governments are willing to take on. It’s the worst of the taxes.

Elysse: Well why not, if you have businesses taking leadership saying "this is what government should be looking at." You have, your members as some of the biggest employers is and biggest taxpayers in the country. Surely if you united together you would have some response?

Jennifer: We haven't given up. We haven't given up on comprehensive tax reform, but that's not what is before the parliament at the moment. What is before the parliament is a plan to reduce the worst of the taxes in terms of its impact on the economy, that's the plan that's before the parliament. And of course, comprehensive tax reform can be done in stages too. So why not start with the tax that actually does the most damage to the economy in terms of our economic growth? So it's simply not true to argue that we haven't supported comprehensive tax reform. The Business Council put big tax reform on the agenda. At the moment, it would require the states, the federal government, it would take quite a long time to do comprehensive tax reform. Meanwhile, we've got countries around the world lowering their corporate rate, making us less and less competitive, so it's very urgent that we take action on the tax that is going to hurt the economy against the decisions that are the other countries are making, sending the signal that we are an attractive place for investment. Now we can't wait three or four years of a major federation debate and discussion to actually take that first step towards fixing our tax system.

Elysse: Jennifer Westacott, thank you so much for joining the program.