Event Jennifer Westacott interview with Ingrid Willinge, Ausbiz TV
Speaker Ingrid Willinge, host; Jennifer Westacott, Business Council chief executive
Date 7 October 2020
Topics 2020 Federal Budget
Ingrid Willinge, host AusBiz TV: I'm pleased to say we are joined by Jennifer Westacott, chief executive of the Business Council of Australia who joins us live now via Skype. Jennifer pleasure to have you on the program. Thank you so much for joining us. ‘Right budget at the right time,’ that's what you've called it. Talk us through it.
Jennifer Westacott, chief executive Business Council of Australia: Absolutely. It's a really strong budget for a couple of reasons. First of all, it starts to turn the corner from spending money on support to spending money on getting the country going again. Getting people back to work, getting businesses back on track. And it does that through a number of really important measures. A huge injection into encouraging businesses to invest - $27 billion. That's going to create the work orders, create the pipeline of activity that's going to create jobs. Putting money into people's pockets, permanently into their pockets, which will get people spending and that of course creates jobs as they generate more demand. A huge skills package to make sure people can retrain and reskill. A big deregulation package to make it easier to do business. Wage subsidies for those higher-risk people who need extra support to get back into the labour market. So if you take it all together plus all of the things that have been announced over the last few weeks, this is a budget that starts to turn that corner from an economy in trouble to an economy that starts to thrive again.
Ingrid: And certainly this has been touted as a budget for business. So certainly from a business perspective, it is strong. The targeted spending that we've seen, do you see it all in the right places?
Jennifer: Absolutely. Look I think the challenge from a business perspective before COVID actually was to get business investment going again. Business investment before COVID was as low as it had been since the 1990s recession. So the task was to get business investment going again. And this capacity to instantly depreciate fully the cost of an asset is going to make the rate of return on investments much more attractive. So things that people were thinking, 'I might or might not do that investment,' they'll do them. They'll bring them forward, that creates a lot of activity. So I think they've targeted it really well. Obviously, you can't do everything in one budget. The May budget has got to be more of the reforming budget around our permanent problem with our uncompetitive business taxes. Obviously, childcare, women's participation, those are the kind of things for the May budget. But for this budget which was about those million Australians who are out of work I think they've hit the right note.
Ingrid: Can you avoid the freefall in business investment? We know that business has been sluggish to say the least, in terms of investment. It's a huge part of getting the economy up. Will this be quick enough, to inject the economy or inject business with confidence?
Jennifer: I think so. It certainly will inject enormous confidence into the business community. That plus many other things in the budget. So that's important. And that sense in which people have got the kind of, 'okay now I can make things stack up'. I do think it will have that effect of driving greater confidence in decision making to bring things forward. Because we sort of know where we're going now as a country. Notwithstanding the problems in Victoria, we've done really well on the health management. We've got a clear direction from the government. We've got a clear incentive for business to invest. I think, I feel really confident that businesses will now take that action. And look I travel around the country a lot talking to small, medium, and large businesses. Everybody has a project that they want to do. Everyone wants to bring forward whether it's their online system, whether it's their machinery. I haven't met a business that doesn't want to expand and grow. And this will give them those incentives to do that.
Ingrid: …right for businesses when you see the loss carry back initiative that's come in. That should have a pretty quick impact on cashflow?
Jennifer: Yep, absolutely. So being able to carry back your losses based on profits you've made in previous years. That just puts cashflow. And that's really for many businesses, that's what they need at the moment. They just need that cashflow. JobKeeper has been hugely important for them. But they need that cashflow to either keep people on, hire some more people, do some extra things. And then if you add that with the investment incentive then you start to see businesses starting to say, 'well okay I can see my way clear. I can see what the future looks like.' Obviously, we don't know how the pandemic will play out, but I think we know that certainly in states like New South Wales you can get local containment working really well. You'll see the global economy start to pick up and I think you'll start to see a lot of businesses now say, 'actually I'm pretty confident now, I can invest in upgrading my plant and equipment. Upgrading my tourist facility because I'm going to have a lot more Australian tourists coming here.' So I think this is a real installation of confidence this budget.
Ingrid: …that has been already criticised in this budget as not being dealt with. And I know you said childcare, perhaps that could be dealt with in the next budget. But women have been pretty much disproportionately impacted by COVID-19 in a lot of ways. Do you think it should have been more central to this budget? I mean, in terms of creating jobs, in terms of helping business. Surely you have to help women re-enter the workforce?
Jennifer: Yes look I think there are some important initiatives there though so let's not underestimate them. We know from states like New South Wales that when the economy starts opening up, well that 60 per cent of jobs come back. And many of those are held by women because they're in those traditional sectors - hospitality, retail and so on. So we know that they will see a lot of that job activity. We also know that things like the skills packages, particularly something we've been asking for a long time which is these short courses. A lot for that could be targeted to women to get their skills back. But there's no doubt we have to do more here. We have to do more on childcare to get women participating. We have to lock in the gains we've made from flexible working arrangements to make sure that they allow women to participate more actively in the labour market. And of course in states like Victoria, getting our schools open again, getting our economy opening again will be one of the biggest drivers for women re-entering and getting their jobs back, and participating in the labour market. This was a budget that had to solve a really important problem. There's a million people out of work and it had to focus on that.
Ingrid: You see this as an emergency budget so to speak. And sort of back to regular programming next year when we have to get the budget in May. I guess the question here is there enough positioning for the future? Do you see this budget, in particular, accelerating the recovery?
Jennifer: I do see it accelerating the recovery. I do think it positions in the future in these ways. I think you've got to think about the skills package. That's all about rebooting our skills system which has not been working well. Extra places in universities, 100,000 extra apprentices yesterday. That's future-proofing stuff. That's about future-proofing the country. The whole manufacturing initiative. The decision yesterday not to proceed with a cut to R&D tax incentives. To proceed with extra funding for the CSIRO to start commercialising the great ideas that Australian universities have. You've got to take those things together. The big deregulation agenda. That's a future-looking agenda. So I think there's enough there to get us started. Is it the finish? Absolutely not. We've got to do something about our uncompetitive business tax arrangements. We've got to do something about childcare. There's so much more to be done on skills so we've got a fit for purpose skills system in the future. But I do think that people are underestimating how much future-looking activities there are in this budget.
Ingrid: Well Jennifer we really appreciate your time this morning. Early no doubt after a late night last night. So we appreciate your time here on AusBiz. Thanks so much for joining us.
Jennifer: You’re very welcome. Thank you very much.