Event: Jennifer Westacott interview with Nadine Blayney and Andrew Geoghegan, ausbiz
Speakers: Nadine Blayney host, ausbiz; Andrew Geoghegan host, ausbiz; Jennifer Westacott chief executive, Business Council of Australia
Topics: 2023-2024 budget; taxation; migration; productivity; skills; JobSeeker; business investment
Nadine Blayney host, ausbiz: We've got Jennifer Westacott, CEO of the Business Council of Australia joining us, Jennifer, nice to see you.
Jennifer Westacott chief executive, Business Council of Australia: Good to see you.
Nadine: Thank you for joining us. What about business, what did big business get in this budget?
Jennifer: Big business didn't get very much at all. I think the good thing about the budget from a business point of view is that it is back in surplus. That's off the back of company taxes being high, receipts being high, income tax being higher, obviously, because people are working. There's some good stuff in the budget around growth – the $40 billion on energy, that's very important for the large companies making that decarbonisation transition. There's some good stuff on skills – the $3.7 billion dollar skills package. Migration, business will be very happy about that higher migration number. Because everywhere you go, every person I talk to says they're desperate for labour and obviously the reset of the migration settings. I think the risk in the budget is this. We've built in this higher structural spending. Some of that package of assistance is very much needed by communities and individuals, off the back of the revenue that's often volatile and revenue that's temporary. I think most worrying – against the backdrop of a very, very feeble economic growth number at 1.5 per cent. Our message to government is, you've got to put the foot on the pedal on growth, you have got to lift productivity and investment.
Andrew Geoghegan host, ausbiz: You mentioned that word productivity there, Jennifer. In fact, no real reference to productivity in his speech last night. So, has the government missed an opportunity here, particularly as far as investment incentives are concerned?
Jennifer: Absolutely. That's our core message. All those things are good, but there was a real missed opportunity to do real changes to productivity. The skills stuff is a productivity measure, that's good. Infrastructure, we've got that $120 billion allowance now, obviously that's been reviewed. My message to government is make sure that it's about productivity. Make sure it's about competition. But we're not doing anything on the investment side. There's a bit for small business there, but it's pretty small. We're not changing the capital allocation decisions of companies at a time when the Americans have got that Inflation Reduction Act, huge tax incentives to invest in critical minerals, renewables, hydrogen. We are just not keeping pace with the rest of the world in terms of attracting investment.
Nadine: Okay, are we actually going backwards on that front? If you consider the changes that we've seen to the Petroleum Resource Rent Tax, or, as you know, we have been told, it could have been a lot worse and so big business is relieved?
Jennifer: Look, I think the government took a middle road there. I think we understand why they did and they did consult with industry. I think the point that people keep forgetting though, is that those companies who are subjected to the PRRT, they are paying $16 billion a year. If you add up all their taxation. This $2.4 billion over the four years is going to add to that $16 billion that they're already paying, whether it's royalties, excise, company tax, we've got to stop saying in this country that companies aren't paying their fair share. They're paying more than they would be paying in other competitive countries around the world. That's our message, you've got to change the investment equation in Australia. Some of that's about tax, some of it's about regulation, some of that's about skills. But a lot of it is about changing those investment incentives, because we're losing to other countries. To your point Nadine, I think it's got worse, more money is leaving the country than coming in.
Andrew: Further to that, Jennifer, just as far as that transition to renewables, for instance, has Australia been left behind here? Has enough been done? The government is committing to further investment in the clean energy future, but has it done enough?
Jennifer: No it's doing a lot. I mean, you’ve got to go kind of carefully here. There's a $2 billion hydrogen package, the sooner we see the detail on that, the better. There's a $40 billion energy package and $15 billion of that is the National Reconstruction Fund. There's a lot of stuff on energy efficiency. We've had the Safeguard Mechanism come through. A really important announcement that was made last week is the creation of the National Transition Authority, which we've been calling for, for ages. So, if we add all of that up, we've now got a plan to get a smooth transition. There's some money for the capacity market to get the firming of the system. So, you add it all up. It's good, but you look at what other countries are doing. It's about those macro settings that we're not doing. We're doing the targeted stuff on energy but we're not making those investment decisions easier. We're not making capital allocation decisions of global companies easier. And we are not competing with the US.
Nadine: I'm thinking of skills and I know that there's a lot of goodwill toward the government in terms of what they've done on the migration front. But what then happens to the skills base of our country? What happens? How do we best utilise those that are coming in as well? Is the government being proactive enough on that front?
Jennifer: Absolutely. The government has just done that Migration Review and they're making really sensible changes to migration settings. More people into permanent pathways. That's really crucial for the companies I represent. Because if you want people, particularly in that high skilled environment, to come to Australia, they’re not going to come for a 12-month visa or a two-year visa. They're going to come for permanent pathway. I think people are forgetting a lot of that big number – 400,000 in the budget last night, is students. That's obviously great for universities. But it's also filling those jobs in hospitality, in retail, where people are crying out for labour. But what the government is doing through the Migration Review is a kind of permanent reset. Going back to that 190,000 number, 70 per cent towards skills. Then fast tracking visas but moving more and more people to the permanent pathway. Then behind that, we've got to make sure we've got a skills system that's producing the skills and competencies of the industries of the future. The two things have got to work together.
Andrew: Jennifer, can I just pick up that point you made at the beginning there, as far as now is the time, you are saying, to put the pedal down to accelerate the growth in the private sector, what in particular, do you want to see there?
Jennifer: We would have liked to have seen an investment allowance, and we've been calling for this for years. Obviously, we would love to see the corporate tax rate get down to 25 per cent. We've got this bizarre, two-tiered tax system now for small and big business. We understand the politics of that is very difficult. But we've got to do something to change those capital allocation decisions. Because if we want to do manufacturing, if we want to do critical minerals, if we want to set up a semiconductor industry in Australia. If we really want to do the defence industries that could sit around AUKUS, you've got to kind of say to those global companies, it's worth investing in Australia. If you don't have something like an investment allowance, that changes the kind of rate of return, gives people kind of permanent tax bonus, then people sitting around those global boards just look at the numbers, and they go, we would be better off doing this in another country. Tax is not the only thing. Regulation is a big thing. Inflexible labour markets, or some of the industrial relations changes that were announced recently, they are not going to help. It's about bringing it all together to say we need companies here and abroad investing in this country to do more.
Nadine: Jennifer, when we spoke last time, which I believe was at the October budget release. You were impressed so far, with your engagement with the, at that time new federal government. You had rated what Jim Chalmers was doing fairly high. Has your view changed? What's your view now?
Jennifer: If I go to the Treasurer, I think he has worked really effectively with business. I think if you look at some of the really strong fiscal stuff in the budget last night, 82 per cent of the revenue improvement, but sent to the bottom line. There's some modest fiscal consolidation. I don't criticise the government at all for putting up JobSeeker. I've been calling for that for years. I don't think they had any choice but to do some cost-of-living stuff. So that's been good. The bit where we have been very disappointed is industrial relations. Because we feel that the government did not listen to some of the risks that are now being placed in the system in multiemployer bargaining. The complexity that was being added to the system, the investment deterrence that's going to come, and then the changes that have been forecast that are going to make the system much more complicated. That has not been a great process. We’ve made that really clear that we were very disappointed with that. We want to see a better process this time. The most important thing we want to see is real clarity about what is the problem we are trying to solve and let's work together to solve it. Rather than some kind of ideological crusade to get more unions into certain labour markets.
Andrew: Jennifer Westacott, thanks so much for joining us, from the Business Council of Australia.
Jennifer: You’re welcome, thanks very much.