Event: Jennifer Westacott interview with Stephen Cenatiempo, 2CC Canberra
Speakers: Stephen Cenatiempo, host, 2CC Canberra; Jennifer Westacott chief executive, Business Council of Australia
Topics: 2022 federal budget; cost-of-living; taxation; fuel excise
Stephen Cenatiempo, host, 2CC Canberra: Jennifer, good morning.
Jennifer Westacott chief executive, Business Council of Australia: Good morning.
Stephen: What's your take on this budget for business specifically?
Jennifer: I think it's pretty good. I think it shows the economy's roaring back, but the challenge is how you maintain all of that. I think it does strike a pretty good balance between short term cost-of -living pressures and then doing the work that allows the economy to recover, allows the private sector to do its job now, which is to take the baton from government if you will. I think the short-term measures are pretty well targeted. There will be different arguments about the fuel excise but I think if you're paying a lot for your petrol, you're traveling a couple of hours a day and you’re filling your tank up three times a week, you'd be pretty happy to receive that respite. Then there's some really good things in the budget that kind of go to your point about what's in it for business. The skills package is huge, when I talk to business, they say we haven’t got enough people and we haven’t got enough skilled people. So, you've got a return to sort of normal migration targeted towards skills, you've got a very big skills package and you’ve got this paid parental leave stuff, which encourages women to work. Then you've got a lot of good stuff for small businesses, which takes them off life support and gets them to grow. That includes, a tax deduction for going digital, tax deduction for training people. And then you've got all that really important stuff that you need around infrastructure, around regional development around getting red tape out of the economy. The big issue I've got is that as you look at the outer years of the budget, we've still got a business investment problem and with that we've got the economy going a bit slower, and that's not where we need to be. We're going to have to do the work after the election to get that sorted.
Stephen: The flipside of that skills shortage though is the record low unemployment rates, which is obviously going to exacerbate that problem a bit? The biggest criticism of this government has been slow wage growth. That should sort itself out. I mean, if the wage market is so tight, doesn't that lead to wage growth by definition? But then that's a double-edged sword for business as well, isn't it?
Jennifer: Absolutely. So, I think there's a big difference between wage growth and wage inflation. What we're seeing now is wage inflation and there's two problems with that. It's very patchy across the economy, so some people are getting it and some people are not, the second issue is that it actually causes a whole lot of problems. People say to me “I'm not opening my restaurant five days a week, I am only opening it three because I can't afford to open it five days a week”, or big companies say to me “I can't get people, I can't afford to pay them at the rate I have to pay them so I'm not going to do that project”. I think it becomes self-defeating, wage inflation. Wage growth, I agree with you here, we've got to do better on that, and I've been speaking about this for years - that's about the hard yards of skilling people, it's about the hard yards of getting businesses to be more productive by investing more, to the hard yards of increasing that business activity and to be honest, it's the hard yards and industrial relations. We've got to go back to the system, where employees and employers sat down together, talked about how the business could be more successful and then they shared the gains. We have lost the plot on that and that system is falling apart. We need to rescue it.
Stephen: How do we do that though? Because I mean, we're talking about a fairly antagonistic situation. How do you, you've got to repair the relationship before you can actually repair the process?
Jennifer: Well, it's a good point. But you know, last year, the ACTU and the Business Council did some fantastic work together and unfortunately, we just couldn't get it over the line but we still keep talking, we've still got very strong relationships. We've both worked very hard during COVID, and I'll give credit to the union movement in COVID. They came to the party, they came to the table and so did we. We’ve got to get that spirit that we found in the worst dark days of COVID, to say now how do we take the country forward?
Stephen: Jennifer, most taxpayers earning under $126,000 get that sugar hit at budget time, which the government would hope we all go and spend, which is great for business in that short term. But there is that public problem moving forward, given that there's going to be that, that hit in what you know, sort of immediately after tax time, but then what happens for the rest of the year?
Jennifer: Yeah, no, you're absolutely right. I think we've got to be willing to have a conversation in this country about tax reform. People say, no, I don't talk about it, and invariably ends up in a big barney about the GST, but it's got to be more sensible than that because to your point it can't just be when people kind of put in their tax returns. We need, if we want to actually give low income earners more “structural tax relief’, to quote the economist, then let's have that conversation. Let’s not just keep extending stuff and then, as you say, you get this temporary relief and then you get another problem. But as someone who's been banging on about this for years, it's really hard to get people to talk about tax reform without everything just entering into this yay or nay thing on the GST. It's a complex issue, but to be honest, we're going to have to sort this out because our tax system is not going to get the revenue we need to pay for things like NDIS, aged care and stuff like that.
Stephen: I had a chance meeting with the Deputy Commissioner of Taxation a few weeks ago and I was asked what do you think we should do? And my view was set fire to the tax act and start again, but I don't think any government is prepared to do that.
Jennifer: Well, I think there is a lot of people that would agree with you on that to be honest, I think it's a really good point you're making because if you think about it, the way we tax things, is based on a very old way that we ran an economy. We used to produce things end to end in one country, no one does that anymore. So, you do have to, I think, ask a really serious question about a modern tax system. That looks at how the economy actually works in a modern tax system, that looks at where the responsibilities actually lie in the Federation.
Stephen: Amen to that Jennifer, thanks for your time this morning.
Jennifer: You're very welcome. Thank you.