Event: Jennifer Westacott interview with Sri Jegarajah and Martin Soong, Squawk Box Asia, CNBC
Speakers: Sri Jegarajah, host, Martin Soong, host Squawk Box Asia; Jennifer Westacott, chief executive, Business Council of Australia
Topics: 2022 federal budget; cost of living measures; skills; economic recovery; economic growth
Martin Soong, host, Squawk Box Asia: Jennifer Westacott is the CEO of the Business Council of Australia. She joins us live from the capital Canberra now. Jennifer, great to see you. Good to have you on the show and hope you are keeping safe.
Jennifer Westacott, chief executive, Business Council of Australia: Good to see you.
Martin: From a business perspective, what do you make of this budget? Is it enough and is enough going to the right places?
Jennifer: Look, it is a pretty good budget. I think it certainly shows the economy is just roaring back in Australia. The challenge is maintaining momentum of course. But we think the budget strikes the right balance between dealing with cost-of-living pressures and starting to lay the foundations for how you get stronger economic growth over the long term. The one-off measures, the cost-of-living measures overwhelmingly are well-targeted and well thought through. There will be lots of debates about are they too much or are they too little. But overwhelmingly governments have to respond to those near-term issues. They have done that pretty responsibly. Then they have laid quite a few important foundations for a stronger recovery. The first is around skills. Getting migration back up to normal levels, targeting that migration to the skilled area, getting more women to participate by opening up the paid parental leave scheme in a more flexible way. Then a very big skills package, a $7 billion skills package and that is about apprentices but it is also about kind of renegotiation of this kind of skills agreement that runs in Australia to make sure that we kind of changed the way we do skills. So that is a really important thing. Then, as you say, assistance to small business. And the good part about that assistance is it is moving from life support to growth. So, tax deductions for training tax deductions for digital and then there is all those foundations that you would expect to see laying the foundation for the economy. So a very big infrastructure spend, big spending around regional Australia and a pretty solid effort to reduce red tape. The worry we have got is that when you look at the outer years of the budget, when these expensing measures for business go away, business investment falls again, pretty dramatically. Then you have got GDP growth slowing down with a two in front of it again. We're worried about that, and we think post the election more work has to be done to drive that investment into the country.
Martin: So, let's talk about that. So, what you're saying basically off the bat is for the labour force and for workers, good stuff they're doing a lot in terms of these apprenticeship programs and digital spending and training etcetera. But what you want to see is hard dollars, more investment dollars, more hard cash in investments, what would you like to see what do you think the government needs to do to encourage more of that?
Jennifer: Yes, look there is a couple of choices governments have got. The first is, we've got one of the most uncompetitive corporate tax rates in the world, 30 per cent. So, we're competing with global capital in Asia, on average around 22 per cent, as low as 16. America, in the 20s, Europe in the 20s. So that competition for capital is really severe, and that will only get more pronounced post obviously the pandemic and as we come out hopefully of this war that we find ourselves in in Europe. So we will be in this big competition for capital. So there is two choices for government, either you lower the corporate rate, and we're asking for it to be competitive to be at 25 per cent. Not to be the lowest rate in the world but a competitive rate. Or you do on a bigger scale, the kind of investment allowance they're targeting for small business, and you do that across the economy, you give a tax deduction of around 20 per cent for people making investments. We think one of those two things has to occur for us to be an attractive destination for both domestic and foreign capital. The other things as you would appreciate, it is not just the kind of tax equation but it's things like red tape. It is getting the right skills. Most companies say to me, ‘I want to come to Australia, but I want to be sure I've got the skilled labour here that I can tap into, and I want to make sure that I can bring people from my own company from Asia from the US, from Europe, who can then transfer those skills.’ Of course, it is about making sure that you know, the time it takes to get things done in Australia, that that time, whether it's major projects or planning approvals, or just getting regulatory approvals, that time has got to compress because we are in a race for this.
Sri Jegarajah, host, Squawk Box Asia: Can I pick up on that latter point, Jennifer please of acute shortage of workers and a critical skills deficit. As you pointed out, did the federal budget then go far enough in addressing those shortcomings?
Jennifer: Yes, look, it went a long way. We would have preferred to see a catch up in migration. We asked for a temporary catch up because we've lost a lot of workers about 300,000 from the workforce. The problem is we've got a lot of people not being able to get back up on their feet, not being able to get going again, not being able to commence those big projects. They say to me, ‘I haven't got the labour to do it.’ So, we would’ve preferred a catch up. Our governments returned to normal levels of migration and the good thing is they've weighted it to the skills area, which is good. On the skills front. Look, I think they are moving as fast as you can with these big systems that have run across the Federation. I think they have poured a lot of money into this and it's on top of money they've already poured in. So, I think everyone knows what to do. We have got to find a way of re-skilling and retraining people. We have got to get people who've got poor skills, up to those new skills for a new economy, digital and so on. So, I think on the skills front, pretty good on the migration front, good, but we would preferred a bit of a catch up.
Sri: Jennifer, we are going to have to leave it there, I am afraid. Thank you very much indeed for joining us.
Jennifer: You’re welcome.