Emma Alberici, host: Jennifer Westacott, welcome back to Lateline.

Jennifer Westacott, Business Council chief executive: Thanks very much.

Emma: This new index measuring female economic engagement suggests that if 10% more women were encouraged into full-time work, the flow-on effect for the economy would be something like an 8% boost or 147 billion dollars. Do those figures seem to stack up for you?

Jennifer: Well, I haven't looked at the report in detail, but every report I've ever since shows that if you could get participation out from under-representative groups - obviously women being the main one - you would actually lift GDP and economic growth quite significantly.

There's only two ways to grow the economy and lift productivity really - participation, so it's important that we get women participating in the workforce, because it will have a flow-on effect to the economy and it will be substantial.

Emma: A number of women in senior management positions in our biggest companies, and in fact on the boards of those businesses, isn't growing particularly fast. But when you talk about quotas, people say it's better to appoint on merit than gender. What's your view on that?

Jennifer: I understand the quota debate. I mean you would always like to be appointing on merit, but the simple reality is that we're not making the progress, so I understand why people say, "Well, maybe we have to go to a quota system."

The difficulty I've got with that is that we're not doing the work on the pipeline, we're not bringing women through into senior management positions so that their natural kind of next step is onto a board or into a chief executive position.

And the concern I've got with them just imposing quotas without fixing that problem is that you end up with the same people on every board and we don't get the diversity of thinking and creativity that we want in some of our major corporations.

This is a really difficult problem, but we do have to do a lot better at getting people through the pipeline and getting them into senior management positions, and making sure they're successful in senior management positions - not just, you know... there's a lot we can do to promote more targeted recruitment, better recruitment practises, much more targeting a pipeline of people, developing people. We need a kind of comprehensive approach here and I'm not sure quotas on their own will fix the problem.

Emma: Next week the Treasurer will introduce the bill to lower big business tax to 25%. Why is the Business Council urging the Senate to pass that particular piece of tax reform at this time?

Jennifer: Well this is very important for solving many of the issues that confront our economy. Our wage growth is very low and when you talk to most Australians they'll say that one of the things that really is on their mind is the fact that their wages aren't going up. The only way you get wages to rise without a terms of trade hit is by increasing productivity, that requires investment, and investment is the lowest it's been since 1994. We have one of the highest tax rates in the world - the second highest in the OECD. So that's the first reason.

The second is this whole question of we're falling behind. The Americans are talking about going from 35 to 20%.

I was in Washington a few weeks ago, there's a lot of momentum behind this. That will see billions of dollars of investment flow back to the United States. We need investment in this country, particularly in sectors like manufacturing, in mining, in agriculture, to create those jobs, those export opportunities, and of course to create higher wages. So for me, this is a really fundamental issue - about protecting Australian jobs, protecting Australian workers, protecting the capacity to pay people more in Australia. And if we do not act ... And let's remember, the Government's plan is a plan over a decade. Other countries are acting immediately. We are going to flounder in terms of our competitiveness.

Emma: Household spending accounts for about 60% of the Australian economy, so if lifting economic growth is the aim, doesn't it make more sense for the Government to be prioritising personal tax cuts?

Jennifer: Well when we first brought out our tax paper, we called for Government to lower personal taxes and they've done that in the Budget last year, when they lowered for people who are going to be going from $80 to $87,000 and who were going to get caught up in the bracket ring. I don't think this is a one or another kind of issue, because we absolutely have to grow our economy in order to grow the wages and lift the productivity that I've just talked about.

But of course we should be looking at how we can give people personal tax relief, but, if we don't have a growing economy, we don't have revenues coming into Government, we don't increase the activity of business that drives a vast majority of economic activity, we will not be able to sustain tax cuts for households, we will not be able to sustain our social security system, our social safety net, and we will not be able to pay people more. And that is absolutely vital. So I don't see these things as either this or that. I see these things, hopefully one day, will get Government's interest in comprehensive tax reform.

I tell you something, I'm passionate about this, because I can see us falling behind the rest of the world, and the jobs and the capacity to pay people more will go with it.

Emma: Pre-tax profits are now at their highest in more than ten years and yet wages growth is still falling. So companies have been giving out more in dividends to their shareholders than they have been in paying the people more, even though their profits are higher. So what gives you such confidence that there is this relationships between companies getting more money and wages growth?

Jennifer: Well if you look at all of the data - all of the historic data about wages growth, it says it's driven by two things: 1) in terms of trade hit and that's been some of the kind of recent history and secondly it's productivity. And the Treasurer gave a very important speech to the Business Council a couple of weeks ago reiterating this point - that the only way you can get wages growth to happen, sustainably overtime, is to lift productivity. And that's about getting investment in…

Emma: Sorry for the interruption. Then how do you explain the fact that there's companies have been having the, this incredible rise in profits over the last ten years but haven't given that back to their workers?

Jennifer: Well I think you'll find that certainly the large corporations and their EBAs have increased wages, and I think this is an economy-wide problem ...

Emma: But it’s not borne out in the statistics...

Jennifer: Well this is an economy-wide problem across all sectors and I don't think it's true to say that profits are huge across every sector in the economy. That's just simply not correct. There are some sectors in the economy that are still struggling and are still kind of trying to keep pace with global competition. The bottom line is this: either we want to increase our productivity - and by that I don't mean people working harder for less, I mean people in more creative, more constructive workplaces, getting the investment. If we want to succeed in a global economy and we are not an attractive destination for investment either by Australian companies or by international companies, we will not be able to sustain rising incomes, we will not be able to create the jobs the future as workplaces are disrupted and we will not be able to get the export income this country really needs and we will not be able to see local and medium-sized businesses expand. This is just a vital part of our economic development. And I'm very confident that if we get this done, and we get our productivity up, we will see overtime, big investments coming from companies and a greater capacity to compete and sustainably pay people higher incomes.

Emma: You launched a bold plan to overhaul the education sector today - the centrepiece of which was a lifelong training account. What would deliver... that would deliver money to, I think you were saying, every adult pretty much in society. How would that work and what would it cost?

Jennifer: Let's go to the problem we're trying to solve. At the moment we've got two sectors in the tertiary system - the higher education system - universities - and the vocational system. And at the moment, funding is distorted massively between those sectors, with really terrible incentives that are distorting a system, which is encouraging more people to go to university, possibly people who should go into the next system and do a more vocational qualification. I gave the example today of nurses. That an enrolled nurse is not guaranteed a subsidy, it depends where they undertake the course and the provider they go to. They get a loan entitlement of 15000 dollars. So a registered nurse goes to university, they're entitled to a 40000 dollars subsidy and they can get a 99000 dollar loan. So what course are people going to do? They're gooing to universities. Now, that makes that system unsustainable but most importantly it's driving people into the wrong system.

So what do we want to do. We want to  put a funding in the hand of the learner so that they can pick the provider, they can pick the course they want to do. We want that to be something that people have got for their lifetime. Now when we say it's available to every Australian, that's every Australian that's doing a vocational qualification or a university qualification. It's capped over their lifetime, it's based on a subsidy and a loan. The subsidy's determined based on public and private benefit and we're suggesting an independent body make those determinations. But this is really to break down a couple of things. The cultural bias against the vocational system that's crept into our system, where people as I said are being pushed into a university qualification where they might be better suited in a vocational system.

And of course it's creating a situation where people are spending a lot of time in study and they're not able to get employment. There was a report in the Sydney  Morning Herald today about that. So we want to level the playing field, we want to put the learner in charge. And the other really crucial thing, Emma, is as our workplaces change, as work changes, and people will need to up-skill, they will need to get qualifications much more quickly in some kind of module. They'll need to be able to pick a provider, they'll need to be able to kind of assemble modules and qualifications from a vocational provider, from a university and we cannot have everyone going back to an undergraduate study in that really rapid transformation of our workplaces. So that's what we put on the table today for consultation, because we're very worried that if we don't get ahead of the transformation in our workplaces, many people will be left behind and we don't want that.

Emma: How does this fit into the Government's objective, which since 2014 has been to actually take money out of the higher education system?

Jennifer: Well I think this is the problem with reform. We keep kind of taking one part of the system and we don't fix the whole system. We keep making the objective funding reductions versus how do we make the system work better. So what we're saying today is, let's try and make the system work better for people in vocational study, for people in higher education study. I mean there's 20 billion dollars of funding spent in this system. I mean I think we can get a lot better value out of it, but we can certainly make it more learner-focused. And the other thing we're calling for today is very important, which is that learners have access to better information. There are apparently a thousand categories of jobs, which really surprised me. How, if you're a young person, trying to work out what you going to do, do you know what course to study, what job you go in to, how much you're likely to get paid, what your loan repayments going to be. If you're a worker who can see that your job is going to be disrupted, how will you know how to get that information? So we want to see a lifelong skills account married with vastly better information.

Emma:                              And before I let you go. The same-sex marriage postal survey, one of the 'No' campaigns loudest members, Matt Canavan, says it's all about what's in children's best interests. Now you ran the Education Department in Victoria in a former life. Victoria is where they're most enthusiastically embracing the safe schools program, which Matt Canavan says that material is filth. Cory Bernardi says far from being an anti-bullying program, it's peddling radical gender theory. I want to know from you the value in the safe schools program in protecting vulnerable LGBTIQ students.

Jennifer:                           Look I don't want to comment on any particular program - that's up to education departments. Let me make this principled point, which I think is really important. I'm in a same-sex relationship. I've spent my life, as I've said in a few interviews recently, feeling like an outsider. When I was at school, I knew that my life was going to be different - it was a very confronting thing. You didn't want your life to be different, but you knew you were not going to have the same life as your friends at school. And it was cripplingly lonely, it was cripplingly isolating and it was a very, very difficult thing for a young person to come to terms with. What I want to see is education departments and schools making sure that people feel accepted and respected and valued. And that's not just for one group of people, it's for all people. I'm sure people with disabilities, people who are in real poverty, all feel the same when they go to school, they feel like an outsider.

And this stuff about children, I mean I ran, not only the education department, I was the Deputy Director General of that Department of Community Services. This idea that children are only safe with heterosexual people, I can assure you, I saw example after example of horrific cases of neglect and abuse by heterosexual couples.

So the idea that people like me cannot look after children and cannot be responsible around children is deeply insulting, it's incredibly ignorant this comment and I think this is one of the really unfortunate parts of this debate, but I can tell you, as a young kid growing up and as an adult, you're suffered with tremendous loneliness and a sense that you didn't belong. And these sorts of comments do not help people in that situation.

Emma: Jennifer Westacott, we'll leave it there. Thank you.

Jennifer: Thanks very much.