Event Interview with Laura Jayes and Peter Stefanovic, Sky News, First Edition
Speaker Jennifer Westacott
Date 15 August 2019
Topics wages growth, workplace relations, productivity, investment allowance, surplus
Laura Jayes, host Sky News: Australia's wages growth continues to flat line at an annual pace of 2.3 per cent, propped up by a surprise lift in public sector pay. Joining us now is Business Council of Australia chief executive Jennifer Westacott. I do want to get to wages growth in a moment because we've got the unemployment figures out today. But immediately we saw Wall Street plunge overnight off the back of recession fears. Are you that pessimistic?
Jennifer Westacott, chief executive Business Council of Australia: Certainly not for the Australian economy and if we have a recession it will be the one we don't have to have. I mean, our economy is still pretty strong. Our unemployment is at historic lows, our economy continues to grow, our budget is in good position, we've got record low interest rates. I think the challenge for Australia is that mid-term agenda around productivity and that's going to lead to higher wages growth. It's that business investment that's missing in the equation. So, we've really got to get our business investment flowing which is as low as it's been in 25 years. It's as low as it was just after the recession in the 90s and that's going to drive productivity, that's going to drive higher wages, that's going to drive job creation. So, that's the missing link in our economic story at the moment. That's what's going to drive some productivity. And of course, it's productivity that drives higher wages. This week we've released a pretty simple to do list but it does have at the top of that, let's get business investment flowing. If we’re not going to do company tax cuts, then at least get an investment allowance happening.
Peter Stefanovic, host Sky News: Standing on the sidelines over here Jennifer, do you believe that the US would slip into recession by the end of next year?
Jennifer: It's hard to say because you look at their economic figures and they're still pretty good. Their economy is still growing very strongly, they've got low unemployment, so I think these stock market corrections are obviously concerning. We still live in a very volatile world. Back here, you have to say well, ‘what do we do in a world that sometimes there are things we just cannot control for’. We make our economy more resilient. We make our economy stronger. We drive those things that are going to drive that mid-term economic strength and growth by driving that productivity agenda and that's what we have been advocating for this week.
Laura: The Coalition government promised business a corporate tax cut, that didn't happen and you understand the politics of that and why it didn't happen and the realities of the parliament. Have you given up on tax cuts, corporate tax cuts for the top end of town? And are you asking for IR reform in replace of that?
Jennifer: No, we are still advocating for tax cuts. Not just for the top end of town, we are advocating for ... I mean, don't forget that this kind of stopped at businesses at $50 million, it's a lot of the economy that is over $50 million in turnover that really needs a tax break.
Laura: The top end of town have become a bit pejorative.
Jennifer: I think so and certainly when I get out in the regions, you know, people who are struggling in their businesses, they do not regard themselves as the top end of town. So, I think, you know, it would be good if we could put that term to one side because it doesn’t help people understand what's actually happening in the economy. But, look, we haven't given up on that. But the government said it's not going to do it in this term of parliament. So, what we're saying is 'well okay, if you're not going to do that because the senate doesn't sort of have the wherewithal to kind of act in the national interest, then let's look at things like an investment allowance'. Where you can deduct a proportion of your investment on top of depreciation. Donald Trump did that in the US, on top of the tax cuts.
Laura: Labor’s policy?
Jennifer: That was Labor's policy and we supported that. So, if you're not going to do the corporate tax reduction then do some kind of investment allowance. On the IR stuff, what we're wanting to see is the enterprise agreement system strengthened by removing some of the things that are causing it to drop away. And it's the enterprise agreement system that has delivered higher wages. People on enterprise agreements, non-managerial workers get $13 an hour more than people not on EBAs. Now, if this system is falling apart, and our study we released last week shows that we’ve got the lowest number in 20 years of active EBAs, surely, labour, business, the unions, need to get to together and say, ‘how do we keep this system going’ because it has delivered higher wages.
Peter: The wage figures that came out yesterday showed marginal increases, better in the public sector than the private sector. The question I want to ask is, is why would a business pay higher wages, if they don’t have to?
Jennifer: Well, they pay higher wages because their business is more successful, they pay higher wages because the agreement they’ve reached with their union-
Peter: But wouldn’t they want to keep that for themselves, isn’t that an assumption that they would do that?
Jennifer: But why would you make that assumption because, you know, who is business? And this is the kind of big debate that everyone has to have, business is the people who they employ. Business is the shareholders that own shares in the company, business is workers at Bunnings, the workers at Coles and Woolworths, it’s not some nebulous group of people who sit around the board table. People pay their workers more because they sit down with an enterprise agreement and they work out, we can make our enterprise stronger, we can make our enterprise more productive by investing in new equipment, by expanding our markets, in return we’re going to pay you more. And people on EBAs get paid more. It’s not in the interests of companies to have workers dissatisfied because we have a very competitive labour market. So, if just leave the sort of goodwill out of it, there is a technical kind of reason, we’ve got a competitive labour market, people want to attract the best labour they can.
Laura: Just quickly, you’re saying don’t touch EBAs but perhaps unfair dismissal?
Jennifer: Well, I think that’s something that small business has been arguing for. Look, I’ve been around the country with our Sky News Strong Australia, everywhere I go, everywhere I go, small businesses, medium businesses tell me this, ‘the industrial relations system in its current form is making it too hard to employ people, too hard to grow their businesses, too hard to put young people on, too hard to expand’. Now, surely as a country, we don’t want that, surely as a country we need a mature conversation that says, ‘how do we get our productivity back on track, how do we get our industrial relations system working for workers, for enterprises, and particularly for small business.
Laura: Jennifer Westacott, thanks so much for your time this morning.
Jennifer: You’re welcome, thank you.