Event: Jennifer Westacott interview with Patricia Karvelas, ABC RN drive
Speakers: Jennifer Westacott
Date: 19 October 2017
Topics: Company tax and energy
Patricia Karvelas, host: We know Prime Minister Malcolm Turnbull is appealing to the opposition and state leaders to support the federal government's new energy plan. The National Energy Guarantee will put the onus on energy retailers to provide a reliable power supply and a reduction in emissions. It'll be their job. Labour says it needs more details to decide if it will back the proposal or not. It's saying it needs more modelling.
One group that's welcomed the new energy plan is the Business Council of Australia. Its CEO is Jennifer Westacott. Welcome back to RN Drive.
Jennifer Westacott, chief executive, Business Council: Thanks very much.
Patricia: The government's policy, is this an architecture you can work with?
Jennifer: Absolutely. This is the most practical work of all the things we've seen for a long time and there's a couple of reasons for that. The first thing is it brings together affordability, reliability and meeting our carbon target. Previously they've been sort of separated. You're trying to do one thing and you cause another problem in another area.
The second thing, and this is really important, is that it's put the onus on the retailers to source dispatchable power to meet both an emissions reduction obligation, and a reliability obligation. That's very important in terms of both affordability, but also certainties to how emissions will be treated going forward. That will bring more investment into the system and those retailers would source the most affordable, most cost-effective sources of power in a competitive world.
I think this has got all of the hallmarks of something that can actually really work. I really call on people not to dismiss it until the work is done to work constructively, call on the states not to dismiss this out of hand because we need a breakthrough here, Patricia. We cannot go on having these stop-start schemes because business needs certainty and this scheme, which has taken a lot of the politics out and put it into the existing market arrangements and put these kind of automatic arrangements in. That is the certainty that business was looking for.
Patricia: You're saying that's the certainty business is looking for. Do you agree, at least, with Labor's critique that there's not enough modelling or information about the way it'll work?
Jennifer: Well, it's an extraordinary comment from an organisation that set a target and I'm yet to see a lot of the modelling behind the 45% target and there wasn't a lot of modelling, frankly, around Alan Finkel's clean energy target.
I mean the principle here is right. We need to, of course, do the work, but you have to do the work on anything and it's crucial that people don't play politics with this, that the states get involved in working through the detail. That detail has to be worked through with the industry as well. But we're willing to say on the basis of the discussions we've had, what we've seen and the design that we think this can work and we want to work constructively with government to get it right.
Patricia: Is it a carbon price?
Jennifer: Absolutely not. I mean this is just one of these classic things where people want to sabotage public policy.
Patricia: But I've got to interrupt. It involves trading between companies. It looks like it is a price on carbon.
Jennifer: It is not a carbon. It is not a carbon tax in the way that we have been used to seeing this. There's no new mechanism. There's no new architecture.
Patricia: But there's a price on carbon.
Jennifer: Well, there is a requirement on retailers to source power, to meet both an emissions reduction target and a reliability target. In the same way that retailers now source renewable energy products and they turn up in your bill. I mean this is a nonsense. This is just another sabotage attempt to try and give something a label that people think, "Well, that will be unpopular. We'll give it this label." This is not a carbon tax in the way that we have seen these schemes. This is not what people are trying to describe. Really, frankly, just a form of mischief.
Patricia: Just on another issue, you're urging the federal parliament to lower the company tax rate from 30 to 25%, but parliament has already passed a tax cut for businesses with a turnover of up to $50 million, which will see their tax rate gradually cut to 25%. Isn't that enough? Haven't you failed to build a consensus beyond the business community, a community-based consensus, to support what you're calling for?
Jennifer: Absolutely not. It's not enough. It was interesting today. We had the Council of Small Business standing next to me calling for the parliament to pass the entire package. Why? Because they need large companies to be investing to create the opportunities for small business to expand and grow. We had Tim Reed from MYOB saying how important it was for companies of all sizes.
The bottom line is we are just falling behind. I was in Washington a few weeks ago. There's tremendous momentum in the United States to lower their corporate rate. The International Monetary Fund who said if the Americans do that, you will see a lot of investment flowing into the United States. That's investment that drives jobs, that drives higher wages.
Look, the last time this was polled, Patricia, it had 44% support from the community. That's higher, though, than the primary vote of any major political party in this country. The simple reality is that the parliament has to come to terms with the fact that we are not competitive. We are not competitive on tax, that tax drives investment. It drives the investment decisions of companies, and those investment decisions drive productivity. That drives higher wages and Australians are calling and crying out for higher wages. Frankly, the opponents of this do not have a solution to that.
Patricia: But equally you haven't convinced Australians, have you, because politicians, as you talk about, that cross bench, people that need to support this are not convinced because voters are unconvinced.
Jennifer: Well, let's see how we go. I mean nobody thought that 15 million would go through. We are going to continue to call on the senate to think about the national interest, to think about our competitiveness, to think about how we protect Australian jobs, how we protect Australian wages, how we protect Australian workers because my view is this. If we are not going to get behind this and we don't have another plan and I haven't seen one, then we will lose investment, we will lose the capacity to pay higher incomes. We will be less competitive and we will fall behind and we will be floundering compared to our competitor economies.
Patricia: Jennifer Westacott, thanks for your time.
Jennifer: You're very welcome. Thank you.
Patricia: That's the CEO of the Business Council of Australia, Jennifer Westacott. This is RN Drive.