Jennifer Westacott interview with Laura Jayes, AM Agenda, Sky News

20 March 2023

Event: Jennifer Westacott interview with Laura Jayes, AM Agenda, Sky News
Speakers: Laura Jayes host, AM Agenda; Jennifer Westacott chief executive, Business Council of Australia
Topics: Australia's investment drought, productivity, wage growth, living standards, energy policy


Laura Jayes host, AM Agenda: Joining me live now is Business Council of Australia CEO, Jennifer Westacott. First of all, the drought that we're in at the moment, the business investment drought, as you put it Jennifer, how did we get here?

Jennifer Westacott, Business Council chief executive: Well, we've got here through a whole lot of things, uncompetitive taxes, high regulation, high cost of business. But what our report shows, Laura, is that we've got an investment drought, the lowest it's been in around 30 years, more money leaving the country than coming into the country. What that means is it's bad for wages, it's bad for living standards, it's bad for the revenues of government. What our report shows is that if you got investment going again, you drive productivity, which is the only way you can sustain wage increases, buy better equipment, better training, better expansion of businesses. And the dividend for the country from something as simple as, what we're calling for, a 20 per cent investment allowance, would be $8 billion extra a year in investment. The economy over a decade would be $17 billion stronger, that would mean about $3-5 billion extra in revenues for government. But more importantly, for every Australian worker, on average about $750 extra a year. Now if we don't do this, Laura, we're not going to get the clean energy future, we're not going to get the industries around AUKUS, we're not going to make the transitions we need to make, we're not going to get manufacturing going again, we can't compete. I was in India last week with the Prime Minister, time after time after time people kept saying it is not attractive to invest in Australia. Tax isn't the only thing. High regulation, policy uncertainty around things like energy, we have got to really take control of those levers. But the one lever we could control now in this upcoming budget, is to give a 20 per cent investment allowance. The other thing I heard last week is the Americans are just sucking money out of this country, out of countries around the world, through giving these huge tax breaks for clean energy investment in the United States. What we're hearing is companies just sending their money there, Australian superannuation bodies setting up offices there, we've got to turn this around Laura.

Laura: Okay, so you mentioned you were in India with the PM last week, if we could just delve a little deeper into what people were saying to you time and time again, that Australia is just not attractive to invest in. That's pretty shocking. We've also always heard time and time again, from both sides of government that we are an attractive destination. But you're saying that's not the reality?

Jennifer: Well, I think in some areas it is for things like critical minerals, and obviously people purchase our iron ore and things like that. But what we hear time and time again, is that it's hard to do business in Australia. That's not just from international companies, that's from Australian companies. When companies look at the way they allocate capital, they look at Australia and they see a very uncompetitive tax rate, they see a high cost of regulation. Then they look at something like the US at the moment and they see these huge incentives for clean energy projects. Now, if you're a company you've got to weigh those things up, so it becomes more attractive to invest in other destinations. People say to me far too often, ‘it's too hard to do business in Australia.’ We are a small country, we have to have bigger incentives for those multinational companies to come and partner on things like hydrogen, partner on things like critical minerals, we've got to actually unleash the potential of our country. But if investment is holding us back, we've got to unleash it.

Laura: Where is the balance, do you think, between Australia being a huge supplier of clean coal, cleaner coal to India, helping pull many out of poverty, get that cheaper electricity that they need, but also being you know, at the frontier, the new frontier of clean energy? Have we got that balance right? Is that easy to do?

Jennifer: It's not easy to do. But I think we've got the right policy settings that we can actually get there. We've got to do both. I think this idea that it is one or the other, we've got to make sure that we're part of the economic future of countries like India, and that was a big message that came up from Indian businesses last week. We've got to make sure that we're at the cutting edge of that clean energy future. We've got to be investing in hydrogen, in our green steel, we got to decarbonise our manufacturing sector.

Laura: Sorry to interrupt, we have got some Teals at the moment in our New South Wales election, for example, who are calling for a ban on all coal exports.

Jennifer: I mean, I just don't think it's realistic. I've not seen any modeling Laura, from the government or RepuTex, modeling we've done, that says that this clean energy transition can be done by removing coal exports or getting out of gas. Certainly, coal as a source of power domestically will fade out over time but gas is there for the long haul. I just think we've got to be realistic about this, this is about lowering emissions this isn't about taking out a particular industry and we've got to see ourselves as part of a global solution here. We've got to make sure we've got the policy settings right, that we decarbonise our economy, but we've got to keep our economy growing strongly. I do believe that we've got to strike that right balance, because if we don't, we're not going to be contributing to the wellbeing of other countries. But more likely, we're going to make stop-start decisions in Australia that are just going to actually slow down our decarbonisation.

Laura: That's right. Well, you've gone from India to Canberra and Canberra is talking about the safeguard mechanism this week, where is that up to? And what is your message to all involved here?

Jennifer: Well, obviously it is the subject of a lot of discussion with the crossbench, my message to all involved is let's pass this bill. This is a very simple piece of legislation before the parliament today creating a new class of assets that will allow the safeguard mechanism, the mechanism by which you incentivise companies to invest in more emissions efficient technologies and means of production. This is a very simple bill about creating a class of assets that make that easier. Once again, we sort of feel like we're in 2009, where people want a whole lot of stuff, which sure we should at some point as we get this going, start to do the things that Ian Chubb and others have talked about. But let's not hold this bill up, let's get some momentum. Because one of the other things that our report on investment shows today that one of the killers of business investment is lack of policy certainty. The government's got a very simple bill before the House, let's pass it, and let's start to work through the other more complex issues along the way. No one is saying those issues over time don't have to be sorted. But we keep doing this all the time Laura, we keep holding basic legislation hostage to really big agendas that are just not practical at this time.

Laura: That's the problem, isn't it? Even if the crossbench do pass this bill, the Coalition have dealt themselves out saying ‘no,’ just a blanket no. That means into the future the climate wars that have been going on for about 20 years continue.

Jennifer: Well, we're going to work constructively with the Coalition. I mean, they have to obviously talk about what their alternative policy is, but the fundamental message is this. The government's architecture is in our view the right architecture, the safeguard mechanism is actually Coalition policy. We thought it was the right mechanism, we think what the government's put out is difficult, but our companies tell us that they can do it. Let's stick with that framework let's get it done, let's get some momentum so that we can get this big investment change happening, and then at the same time, change the macroeconomic settings around tax and regulation, to drive that investment back into this country. Not into having all this clean energy technology and innovation done in the United States. That's the task before our country. But my message to all sides in politics is this, if we want this country to decarbonise, we need policy certainty.

Laura: One final question, the Productivity Commission report we saw on Friday, do you think that Productivity Commission report is at odds on IR with this government? The Productivity Commission report seemed to want to put more power in the hands of employers, whereas this government is going down the path, as you know, from the Jobs Summit, a very different path when it comes to IR?

Jennifer: I think they were particularly critical of the multi-employer bargaining, which we have been as well, because we don't believe that's a solution to higher wages. I think when you look at the very long Productivity Commission report there is a very simple message in this. We have the levers to make ourselves more productive. Investment, regulation, making sure that it's easy to employ people, easy to make sure that we get the most potential out of people, invest in people, invest in their skills. It's a big report, but a simple message is this. The sustained path to sustained wage increases is to lift our level of productivity, which is as low as it's been in 60 years. What does that mean? In the last decade, we've had the lowest rate of increasing living standards for the last 60 years. That is what it means for real Australians, that's really the nub of that report last week. There's a big to-do list there, we encourage the government to do as much of that to-do list as possible.

Laura: Jennifer Westacott, always good to talk to you. Thanks so much.

Jennifer: You're very welcome. Thank you.


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