Event: Jennifer Westacott interview with Nadine Blayney, Ausbiz
Speakers: Nadine Blayney, host Ausbiz; Jennifer Westacott chief executive, Business Council of Australia
Topics: Federal budget; productivity; women’s participation; industrial relations; multi-employer bargaining; business investment

E&OE

Nadine Blayney, host Ausbiz: Jennifer Westacott is joining us from the Business Council of Australia. Jennifer, thanks for joining us.

Jennifer Westacott, Business Council chief executive: You're welcome.

Nadine: I really appreciate your time. So, you have been really clear in pointing out that it is a cautious and careful budget. So, it's not UK mark two, it's not working against what the RBA is trying to achieve in terms of inflation, is that the best you can come up with about this budget?

Jennifer: I think, no one ever expected this budget to be a reforming budget. I think anyone who expected that the government was going to sort out tax reform or, massive economic reform, that's just naive, it wasn't going to happen. So, you've got to look at that in the context of what's doable and the environment we're in. So, I think the budget is responsible, I think it's cautious. I think it has put a reset on the fiscal strategy. There are good things in it, in terms of growth. There's the stuff that you were just talking about, the big skills package, the big childcare and women's participation package. Women at the centre of economic change, which is incredibly important, because it's a big economic boost. Record infrastructure, the Rebuilding Australia Project - around $15 billion to diversify industries, carefully targeted savings. But the big point we make is that the work has now got to happen in terms of reform. Because we've got some really troubling numbers there, really troubling numbers. A 60-year low in productivity, that's the principal handbrake to wages or a trillion dollars of debt. The interest bill over the decade is the fastest growing payment in the budget ahead of the NDIS and health and education. We've got unemployment ticking up, we've got a feeble economic growth figure of 1.5 per cent next year, and then only growing to 2.5 per cent in the forward estimates. That tells us and this is our message to government, that we have got to get on with the task of reform. We have got to get on with fixing our low investment. We've got to get on with fixing our skills system. We've got to get on with getting rid of the red tape in the economy. If we don't do that, those decisions that are going to have to be made in three or four- or five-years’ time, are going to be very tough decisions.

Nadine: Okay, so those tough decisions, how do you want them addressed? I mean, we've got IR reforms coming through. What needs to happen there to address productivity and to ensure that we've got, the economic might to really continue with the much needed reform that you're talking about?

Jennifer: Yeah, so let's take IR. What we have said all the time is that we want wages to grow, and we want them to stay growing. Not to have a short-term growth and then have at the expense of potentially higher unemployment. So that's the first thing. The second thing is we've got to get an IR system that drives productivity. That's not about working harder for less, it's about working smarter. It's about creating the environment where people use new technology, where they innovate, where they share ideas, where they open new markets, where they have more skilled people. It's about creating value by doing things differently. That requires a collaborative workplace at an enterprise level. We want to see the enterprise bargaining system revitalised. What we don't want to see is more complexity. What we don't want to see is industry wide bargaining, which we think will really hurt productivity, and in the long term, hurt wages growth. What we don't want to see is widespread industrial action. We hear a lot of the unions saying what we want out of this reform is the capacity for widespread industrial action. The community doesn't want that and our economy is too fragile, to really take rolling strikes like we had in 1983. So that's IR. Then we've really got to have a mature conversation about tax reform. We try to do this in this country, every time we do, someone shuts it down, and we never make any progress. The simple reality is we've got a spending and a revenue problem. The third thing we have to do, which is not a matter for business, but the matter for government, but it's hugely important, is control spending in those areas like NDIS. Control spending in health, not by cutting costs, but by getting better outcomes. That's going to require investment in technology, workforce, and so on. We've got to be willing to tackle red tape and the micro-economic reform that needs to be done, that gets rid of all the friction in the economy. We’ve got to stay on course for the migration targets that we welcome in the budget last night. So, there's a lot of stuff to do. To be honest, we can't wait for the May budget to get on with some of it but get on with it we have to. Because we're looking around the world and you've just been reporting on this. You've got the UK in a political and economic crisis. What does that mean? Well, it means tough times for people living in the UK. We don't want that for Australians.

Nadine: No. And when it comes to a few of those points, its business investment, right? We need an environment in which business are keen to invest. Innovation comes to mind. I don't know, Jennifer, I feel like we've talked about the same points budget after budget after budget. What do you think of the political will? What importantly, do you think the will is amongst the electorate to allow politicians to go ahead with some of these tough reforms? Because it's almost at a point where it becomes laughable when we talk about tax reform here.

Jennifer: I couldn't agree more. I mean, the first thing is to explain stuff to people properly, and to put the burning platform to people. We cannot go on like this. We do not have enough revenue to pay for the things that people need. The choice is that you do proper tax reform, or you do ill conceived, ill thought-through tax changes, like this stuff in the UK, and you end up having to stop and having then a political crisis. So, I think what was clear in COVID and I think there's a lot of lessons to learn in COVID, is that when politicians treat the community with respect, and bring them into the meeting room, if you will, and share with them as mature adults, this is the problem we face. These are the choices we have. Then I think people trust governments. We saw that when people like Gladys Berejiklian, the former New South Wales Premier, basically shared information with people, treated people as adults. Trust people and they'll trust you. I think that's the first message. The second is to lay out an incremental path, big bang theory is not going to wash with the community. The third is to make it really clear what's in it for people and make the right choices. It'll be really tempting for people to say, ‘oh, let's have a super profits tax.’ To your point, what's missing in our equation, what's missing in the budget is stuff on investment. Investment is as low as it's ever been since the 1990s, as a share of the economy, you can't go on like that. To your point, you can't drive innovation, and people don't invest. You can't drive new industry formation to diversify the economy if you can't get people investing in this country. So, we've got to be willing to talk about what's the problem we're trying to solve, a tax system that gets more revenue to government, a tax system that drives investment. If you try and just tax your way out of this without thinking about the kind of tax system that drives investment, you end up with a very long term and very serious problem on your hands.

Nadine: Jennifer, what's the sense amongst the business community, obviously you're very in tune with the impressions of this Federal Treasurer so far?

Jennifer: Very good, very good. I think the government has been very careful, I think they have worked very hard to improve their relationship with business. I think the Jobs and Skills Summit was a game changer in terms of resetting on migration, resetting on skills, resetting on industry policy, and they brought business into the room. I think the Prime Minister and the Treasurer are committed to working constructively with business. That doesn't mean we're all going to agree on everything. I think there'll be aspects of the industrial relations stuff where we have strong disagreement, but we've got to be able to work these things through. I think that we have in the Prime Minister and the Treasurer, are people who do want to work stuff through. I think business is very supportive of the Treasurer, I think there's a sense in which he's calling out that we've got troubled times ahead that he hasn't tried to paper over that. What we want though, is measured responses in collaboration with business. Because I think trying to, what we've seen across the world, do big, heavy handed intervention in markets, all it does to your earlier point, is just chill investment. That's the last thing we need at the moment.

Nadine: Jennifer, is it fair to say you've got your work cut out for you ahead of this May budget? Fair to say you can't wait for that budget to come?

Jennifer: Well, I think so. We have to lay out a plan too and we are in the process of doing that. One thing I think we have to stop around the world and here in particular: government can't solve everything, right? Government spending can't solve everything. So, business and unions have to continue the work of the Job Summit and start to help government think through, ‘well how do we solve our investment problem? How do we solve our skills problem.’ And keep that dialogue going. Government can't fix everything. So we've got to be up as the business community to say, ‘here's the groundwork that we need, or here's the kind of platform we need so that we can do more, invest more, take more risk,’ and then do it. And of course, continue as businesses to act ethically and responsibly and build that community trust with strong reputations. You know, this is a partnership. It's not about saying the government, here's our list, get on with it. No, we've got to play our part as well.

Nadine: Agreed. Jennifer Westacott from the Business Council of Australia, thank you for joining us today.

Jennifer: You're very welcome, thanks very much.