Jennifer Westacott interview with Kieran Gilbert, Afternoon Agenda

Event: Business Council chief executive Jennifer Westacott interview with Kieran Gilbert, Afternoon Agenda
Speaker: Kieran Gilbert and Jennifer Westacott
Date: 31 March 2020
Topics: JobKeeper payment, COVID 19 response

E&OE

Kieran Gilbert, chief news anchor Sky News: As of 2pm today, there were 233,989 unique ABN registrations for the JobKeeper payment. So nearly 234,000 and we know our viewers who watched yesterday would have seen that announcement just after four o'clock. So that was yesterday. In 22 hours we've seen 234,000 businesses register. For more on that, I spoke to the Business Council of Australia chief Jennifer Westacott. Business Council CEO Jennifer Westacott thanks so much for your time. First, there's been this massive amount interest for the JobKeeper payment. I guess the demand from business really says it all doesn't it?

Jennifer Westacott, chief executive Business Council of Australia: Oh absolutely, 65,000 people have contacted the site. I think the package announced yesterday is one these nation saving days. You know, you've got six million people getting assistance. Six million people getting a standard of living that's good. Capacity to keep people connected to their employer, a capacity for employees and employers to work together to save businesses so that they can come back. To me, yesterday was just the massive injection of hope that the country really needs so that we can say to people, ‘we've got your back, we're going to look after you, we're going to get out of this and we can get out of this’. I think it was a huge injection of the hope most Australians were looking for.

Kieran: We've seen the share market surge off that hope. How important is sentiment in all of this in getting through this?

Jennifer: Absolutely, great point Kieran. I mean business is overwhelmingly about confidence and the share market of course is the ultimate expression of confidence. So to see the share market rocket yesterday off the back of that announcement tells you that this is what businesses are saying, 'this is going to keep us going, this is going to give us the capacity to come back.' And also I think you've got to take it down to an individual business or an individual person's level. A lot of this is just about people feeling a bit of despair, if you've just lost your job or if you're a business and you can't keep your workers on, you feel hopeless. Giving that injection of hope yesterday is about building confidence as well as building capacity in the economy to come back. And so to me the share market signal yesterday was a hugely important signal that we've got to build that confidence and when you do those things the confidence gets built.

Kieran: And down to that, as you said, an individual business, an anecdote that I had from this morning Jennifer with a carpenter friend of mine, three young apprentices. He'd already stood down one yesterday and it was the shortest stand down he said in history because he phoned him last night and said, 'you're back on.' This young 18-year-old was back at work this morning in the hope...I saw them this morning, the hope in that young man's eyes was there and it was, I guess a very tangible thing for me to see that. And I guess, we're seen that across tens of thousands of businesses around the nation.

Jennifer: Absolutely, the great design feature of what was announced yesterday is that capacity that people who have been stood down can come back onto the wage subsidy and keep that relationship and start working in a business. And of course we've got to remember it's not in people's interest to let their employees go who they've trained and supported, particularly apprentices. And it's really important that design element that people can come back if they've been stood down and then they can work together to say, ‘well how do we restructure? How do we get back on track?' That's a very important aspect of what was done yesterday.

Kieran: And the $130 billion spend, it's huge if you compare it to say the future submarines project at $80 billion, it's a massive initiative over six months. Is the question do you think, will it work? Will it be enough to get the business community, our economy through to the other side of this?

Jennifer: I think you've got to take it in two chunks here. First of all it's part of a broader package and I think we had $189 billion announced last week with the JobSkeer's assistance, the doubling of Newstart. We had the assistance to small businesses or small or medium businesses, the $100,000, up to $100,000 withholding tax payment. You've had all the way along assistance to try and keep people in business. Look, the government I think has shown a willingness that if more needs to be done more will be done. I do think we're reaching the point where we are going to have to provide some cash flow relief for the larger companies, so they don't get into distress. And that could be done by the sorts of things that Queensland and New South Wales have done by deferring payroll tax or by moving the monthly company tax payments to quarterly which would free up a lot of cash. So, look I think the government has been willing to say look at each step along the way as the situation gets more serious they are willing to do more to keep the economy going, to keep people connected to their employers, to give us that capacity to bounce back.

Kieran: How pivotal are the banks in all of this? During the GFC they really had to be propped up, now they're so important in propping up the rest of the economy if not the nation?

Jennifer: Oh look the banks are central, they have been magnificent and you know we should be very, very, very pleased that we have profitable banks in this country because they are now holding us up and they plus the mining sector, which has still got a lot of demand and still strong. They will be the anchor that will allow us to get back. But they've also, I think, reacted magnificently, deferring loans, keeping their branches open, renegotiating things with people, supporting small business. It's been a real act of cooperation but a real act of leadership by the banks. But you know we should never question again Kieran in this country the value of having profitable banks.

Kieran: Yeah it's a fair point and they have stepped up. Is there room though for them to go further? I know Anna Bligh has been talking about the deferral of loans. Should they also defer the interest that would be accrued for business in that?

Jennifer: Well I think that's a matter for them, I think they're doing everything they can. I mean you've got to remember that you're practically in a zero-interest rate environment anyway. So I think the way they've done it is to give people that headroom to defer those loan repayments. And look, as some of the CEOs have said, it's not in their interest not to have a viable, kind of, set of customers. Be they business customers or mortgage customers as we come through this. So, they're doing everything they can to hold up the economy but most importantly they are doing everything they can to hold up households and to hold up businesses. And I think we should be really proud of them.

Kieran: And when it comes to the airlines, we've spoken about those elements of the economy that are doing okay in terms of resources and banking. The airlines not so much. Virgin want a $1.4 billion government loan if it's not repaid, potential government equity in two to three years. What's your view on that and how important is it that we have two viable domestic airlines?

Jennifer: Look it's not just airlines but it is important we have two airlines. It's very important that we have those viable companies. I mean they have been just hit so quickly and so dramatically. We have to make sure they are functioning, and they can continue to function. But I think you'll find across the economy there will be sectors that are hard hit that will need longer levels and deeper levels of government assistance. That's going to be entirely appropriate so that we can make sure that we've got the central elements of an economy to come back to.

Kieran: And so the government should be open to that sort of request in your view?

Jennifer: Well I think they have to be open to making sure that we come out of this with a competitive economy with an economy that is stronger; that we take the right action to keep these huge employers and huge parts of the way we live; huge parts of the structural strength of the economy to keep them going. How that looks over time, I mean I'm on the record as saying I think we've got to be very careful about making sure we come out of this a modern market economy, a competitive economy not a 1950s economy. And I think that's very important but there are going to be sectors of the economy that need will deeper, longer support. Just as there are sectors of the economy that we have to be very careful about turning off. And so far the government has acted, both the states and federal government, have acted very responsibly to make sure that the medical advice is driving, I guess, some of the so-called shutdowns. But we have to keep functioning as a society. We've got to keep our telecommunications going. We've got to keep our key retailers going. We've got to keep our power suppliers going. We've got to keep our manufacturing going. We've got to keep our mining and resources going because if we don't we will not be able to come back from that. But they're also absolutely central to people being able to live. It's interesting in manufacturing, you've got breweries producing hand sanitiser. You've got Resmed and GE converting machines to ventilators. So we have to keep that ballast in the economy but of course, the most important thing is to preserve health, to contain this virus, to look after the most vulnerable people in our society.

Kieran: Yeah indeed it is and finally before I let you go, the one thing I want to get your thoughts on because the nation's psyche when it comes so many things including budget management has changed so dramatically in the space of three or four weeks but what's your view on the debt situation in this country? Because even I guess after this unprecedented spend, we are still as a nation comparably in a strong position compared to other developed nations.

Jennifer: Absolutely right, we started in a stronger position, we had a growing economy, we were getting our budget back to the black, we had a strong financial system and we had strong institutions. And I think that's a position that many other countries just haven't been in. I mean clearly we are going to have a longer period of quite substantial budget deficits. I think the strongest way out of it though and this is why what the government has done is so important, the strongest way out of it is to start to get the economy back on track as soon as we can see that we've got the health situation under control. Because its companies paying taxes by making profits, its individuals working and paying taxes that will be the best way that we can pay this back over time. But the alternative not to do these things, of course, means you don't get that economic growth which of course is the engine of being able to have strong budgets.

Kieran: And as you said the interest rates right now are next to nothing as well for government borrowing so it's a decent position with which they can at least start that process Jennifer Westacott?

Jennifer: Absolutely, I think Australians need to feel very confident that we started this in a much better position. Very few economies were growing at the rate we had. We hadn't had a recession. We still had strong demand, particularly in our mining and resources industries. We had, you know, a strong budget position. We've got a strong financial system. So that is a much better position than many of the countries we hear about. We need to give Australians that sense of confidence that the measures that governments across Australia have taken have been thoughtful, they've been calibrated, they've all been designed to keep people working, to keep people with money in their pockets so that we can come back from this in a stronger position. We need to give people that sense of hope, that sense of confidence, that sense of that we're going to get through this and we're going to get through this together.