Event: Interview with Michael Clarke, ABC North Queensland
Speaker: Jennifer Westacott (Business Council of Australia), Peter Strong (Council of Small Business Australia)
Date: 5 March 2018
Topics: regional economy, company tax, regulation, US delegation, small business, business working together, energy
Michael Clarke, host: Over the last year or so we have talked about the economy of Townsville and North Queensland and how it has taken some big hits, a lot of downturns, very high unemployment, the situation with water security has been an issue impacting business. Luckily that's better now, 85% in the dam, which is great, but still some really important issues to discuss. And those issues are going to be discussed today by some people who know local issues but also national and international issues. A special business lunch being hosted today in Townsville featuring Jennifer Westacott who is the CEO of the Business Council of Australia and Peter Strong from the Council of Small Business. Both of them have popped in to say hello to us this morning before all those meetings get underway. Nice to see you both.
Jennifer Westacott, chief executive Business Council of Australia: Thanks very much.
Michael: Welcome to Townsville.
Jennifer: Thank you.
Peter Strong, chief executive Council of Small Business Australia: Thank you.
Michael: It is good to have you here. There's international things we can discuss in a moment but first of all, locally, Peter Strong, when we talk about small business - small business is doing it tough in Townsville at the moment. We have really high unemployment. A lot of well known businesses have closed their doors in recent months. Do you hear concerns generally around the country that say Northern Australia is doing it tough?
Peter: Well people don't understand Northern Australia. I mean, I think everybody up hear will tell me that as well and they don't understand that different parts of Northern Australia are different from each other as well. And this is one of the things that I've learned already in this trip to Townsville. I've been here many times but the way it works here, a lot of industries represented but you're impacted when one of the industries have a problem and that impacts on people. I always say that small business is a person or a family and that's what we've got to talk about - is the impact on them because with confidence they will start to grow a business or they will open their business again and they will employ people and we need to work with those individuals. And that's why I am here with Jennifer Westacott who represents the biggest businesses in Australia because in the main we work pretty well together.
Michael: Well it's interesting to hear you say that because I would have thought for a lot of people who work in business they find that there's divide between the small and the big business and wouldn't expect the two of you to be sitting down at the same table all that often.
Jennifer: Yeah, look, I think people think that but of course, I mean, you've just given an example in Townsville and in many other parts of Australia, you need big and small working together. You need a big investor that comes in, be it a mining company, be it a big infrastructure project, that then allows small business to kind of carry on off the back of that, off the back of that big investment. So Peter and I, you know, are there to sort of remind people that we need to work together, not to be divided. Politicians love to divide big and small business. It's one of their favourite sports but of course it is very destructive for the country, and you come to Townsville and you realise how important it is to have big investors, big business and then small business working together and how we need to create the environment for all business to work together because that's what creates jobs.
Michael: Does small business become more of the lifeblood though for a regional centre? Generally speaking, I mean.
Peter: Well, well it does. I mean that's where most jobs are in regional centres, are in the small business.
Peter: It's interesting that medium business, who we don't talk about a lot, and I know Jennifer has some of them in her chain, is they're the big businesses as well in some regional centres when you go out to Innisfail or Ingham or what have you. But there's big business in the background always and we've identified some of the issues and last night we were talking to some people about the late payments. So, we've been talking to Jennifer and the BCA about the fact that over the last decade there's developed a late payment process coming from big business to small which is terrible. And we've said yeah that is terrible and a lot of big businesses have said the same. Jennifer's organisation has gone out to her members saying 'please sign up' to a pay on time code.
Jennifer: And not just pay on time but also we are saying to our companies, pay in thirty days. Unacceptable to pay longer than that, you know, to some people that's waiting for a hundred days is the difference between staying in business and going out of business. But also help with electronic invoicing. Help people, kind of, take all the red tape out of payments. So, Peter and I are working together to make sure that, you know, that it's a level playing field for small business. That their contracting arrangements are fairer and better and again we want to hear from people in the local community about how we can make that even stronger so that the business community is working better together as well as working for the whole community.
Michael: We've heard a lot recently from the government about the need for company tax cuts.
Michael: Where do you both stand on that?
Jennifer: We both support it and we both support the whole package going through. I think, you know, we've got to remember that we live in a world not just in Australia. We are competing for money from across the world. We are a very small economy compared to the US and China. We are very dependent on foreign investment. We are very dependent on foreign capital and you think about some of the companies that are sort of the engine of the Queensland economy, you know, the big mining companies that are multinationals, the big agribusiness companies, they now have a choice to go somewhere else. I was in the US a couple of weeks ago. You know, they have lowered their tax rate to 21%. Ours is 30%. If we are not competitive then we will lose investment to other countries and that means the sort of things we've been talking about that create jobs in local communities. You've got to get people to come to Australia first and that's what is going to drive jobs and higher wages for people and we just have got to get our Senate to understand that if they leave this on the table they have left a $20 billion stronger economy on the table. And that means less jobs, less opportunities, particularly for people in regions.
Michael: Why does this type of package help small business, Peter Strong?
Peter: Well because we are so connected to big business and as Jennifer said, Australia is connected to the world economy. So, for my indication, and I'm going back a couple of years now when I was looking at this tax cut, I found that Sweden, one of the highest taxing countries in the world, has a 22% company tax cut and that made me and my members really look and think why do they have 22% when income tax is 50 or more percent and the reason they've got a lot of jobs they can tax so much is because they've got companies that can invest in jobs and that 22% company tax cut is a key to that actually happening. They used to have 60% company tax back in the 80s and they learned the hard way that money just disappears offshore because if I am running a business, I want a return on it, whether I like it or not a 60% tax is not a return.
Jennifer: You know there was a story in the paper this morning about mining companies saying that they would, you know, they saw Canada as a more attractive destination to Australia. Now it's not just tax, it's regulation, it's water security, it's the huge problems we've got with energy but, you know, we've got a plan on the table to cut our tax rate, to make us more competitive. We should just get on and do that.
Peter: And can I say, when a delegation goes out from Townsville, and I've lived in lots of parts of regional Australia, and you get really good delegations at times coming especially from regions as big as Townsville, they want to have a good story. So, attracting people to Australia is what we might want on the national stage, attracting people to Townsville is what is needed to get the unemployment rate down etc. So, they need a full story not just about Townsville but about the national tax rate and it's a good tax rate - at the moment it's not.
Michael: Well Jennifer Westacott, you were recently on a delegation all the way to the United States.
Michael: How did that go in pushing Australian interests and interests, for say, North Queensland business?
Jennifer: Yeah, look I think people still see Australia as a great place to invest but you do hear American companies, multinational companies say, 'your taxes are too high, your energy costs are too high and you're crippled by red tape' and last night we were with a group of business people here in Townsville and they said the same sort of thing, you know, talked a lot about energy costs. So, people want to invest in Australia. They see the huge opportunities particularly in mining, agribusiness, manufacturing. Boeing has got huge activities in Queensland. But, they also say, you are getting too expensive, you've got too much red tape, your energy policies are a mess and those are the things that I've come back to Australia to say 'come on guys we've got to get this sorted otherwise we are going to see investment going somewhere else’. The good story, actually, that I think would be a great story to tell as Australians is about asset recycling. You know I was at a meeting of all of the Governors in the US who couldn't believe what some of the states have done around asset recycling and how it was pouring back into local communities in better infrastructure. So, we've got a good story to tell but, you know, the Americans are pumped because of that tax cut. I was there a couple of years ago and everyone was really down in the dumps. They are pumped and they are pouring money in, pouring money in to better wages, bonuses, big investments and we need to take a leaf out of their book and get on with it.
Peter: And the red tape is important because the red tape that we don't see impacting on a big business impacts upon small. So, if it takes six years or five years or four years for a development to be approved, you've got all these business people out there who can see an opportunity and they just want it to happen. They can open their shop or their business or get involved in construction but it takes six years to approve something. That is a real problem.
Michael: Did you get to see the President?
Jennifer: I did. I met him. He was very pleasant. Very polite. Very charming. It was great actually because he changed his diary so he could meet the Australian business delegation and he and his wife were very pleasant, very welcoming, very courteous. You know he is open for business and you know what we want to send is a message to the world - Australia is open for business, Townsville is open for business and when I talk to Governors in the US they say, we are open for business because it is business, be it large, be it small, be it mid-sized, that creates a job for someone, that gets a young kid a bit of an opportunity, you've got 14% youth unemployment here. I mean that's not a good prospect for a young person. And, you know, Business employs 5 out of 6 Australians. We've got to get business working.
Michael: Did he give you a hint though of a possible tariff trade war?
Jennifer: He made it very clear that he does not support the deals, I mean he's been very consistent, we may not agree with his position and clearly I don't on these tariffs but he has been consistent for a long time, that he feels that the US has been duped in a lot of these trade deals and he feels that other parts of the world have not done their fair share in things like global security. So, look you know, like him, not like him, he does what he says and you know a lot of people said he wouldn't get the tax cut through, well he did. So, we now have to be even more prepared...
Michael: Will that hurt us though?
Jennifer: It will hurt us. And that goes to the point about being more competitive. It will hurt us and obviously the government will kind of negotiate its way through this, as they should. But the less competitive we are and the more things that happen around us, then the harder it will be for us to get into these markets.
Peter: And if I can say at the moment the tax cuts are coming through for businesses that turn over up to $50 million, which is fantastic, so the people have challenged me and said 'well you've got to be happy, why are you fighting for big business?' Well I don't know if I'm fighting for big business, I'm fighting for small. Because those tax cuts will become meaningless if big business stop investing in infrastructure and stop investing in wage growth or whatever and start moving offshore. So, it wouldn't take long for that $50 million to become irrelevant.
Michael: Gee it's interesting as you say the whole world has an impact on what happens with business here and we can talk about this for hours but we do appreciate your time this morning.
Jennifer: Thanks very much.
Michael: You do have that business lunch later on today. Lots of business leaders will be very keen to pick your brains I'm sure and thank you for finding time to come in and talk to us.
Jennifer: You’re very welcome, thank you.
Peter: And thank you. Great to be in Townsville.
Michael: Enjoy your time here. Very different to Washington I’d imagine.
Jennifer: Certainly warmer.
Michael: Indeed. Exactly. Well that's good to hear. Thank you so much. Good to listen to Peter Strong from the Council of Small Business and Jennifer Westacott from the Business Council of Australia. Both in Townsville today talking about what is always an important issue but never more so in North Queensland with high unemployment and business closing so hopefully some good news to come on the business front.