Jennifer Westacott - RN Breakfast

Event: Jennifer Westacott interview with Fran Kelly, ABC RN Breakfast 
Jennifer Westacott
11 October 2017
Energy, company tax and education


Fran Kelly, host: Jennifer Westacott, she’s the CEO of the Business Council of Australia and they are calling for business to have a seat at the energy table, basically, the indication is that the government hasn’t been able to work this out if they are going to drop the clean energy target, business wants to be around that table to try and help figure out what the new solution might be. She’s also got a major reform plan for higher education which she will be outlining at the National Press Club today to elevate the status of vocational education and the funding that goes with that. Jennifer Westacott joining us shortly.

Fran: …the divisions within the coalition that could see the Turnbull government now abandon plans for a Clean Energy Target. The CET, remember, was meant to drive future investment in renewables, it was meant to give a bipartisan way forward too on this. Now business says if it is abandoned, and all signs on the government is that it will be then business wants to have a bigger say in what policy comes next. Here’s hoping though that they can get a win on another front too, Treasurer Scott Morrison is set to introduce his bill to cut taxes for big business when parliament resumes next week. Jennifer Westacott is the chief executive of the Business Council of Australia, which is the peak business lobby group. Today she is addressing the National Press Club in Canberra, not about tax cuts and not about clean energy targets but in fact about a root and branch reform on university funding. She wants to put more money and power into the hands of the consumers, the students, and to elevate the status of vocational training. We will talk about that in a moment. Jennifer Westacott, welcome back to breakfast.

Jennifer Westacott, Business Council chief executive: Thanks Fran.

Fran: We will come to your plans, your thoughts on vocational education in a moment but can I start with energy. Can we clear this up? Does the business council back a clean energy target and will it lobby the coalition to introduce one in some form?

Jennifer: Last time we talked I made it really clear what business wants. We need a signal, a stable signal about how emissions will be treated in the economy and as I said to you last time we spoke, if I said to you what will the way that we will be able to deal with carbon in 2036, what will be the carbon price or mechanism for setting it? We don’t know the answer to that and that means that there is a chilling effect on investment which we need to deal with affordability and reliability and that is what…

Fran: The energy target was meant to be that.

Jennifer: Exactly, and we’ve supported that.

Fran: Well, yes, except your BCA president Grant King was reported in the fin review yesterday saying he backed the Turnbull government’s move to drop the proposed clean energy target.

Jennifer: I think there was a misunderstanding there. What he said very clearly was this, that if the government is not going to pursue the clean energy target, then it needs to put the alternative on the table and he made it very clear that the business council had been a strong supporter of the clean energy target as have other business organisations as a way to send this signal not just for renewables but for other technology as a way we might get bipartisanship and he was making the point, as I am this morning, that if the government is not going to pursue Alan Finkel’s recommended clean energy target mechanism as a way of signalling emissions then what is the alternative? And let’s make sure that in doing that, we are sitting down with business and industry to make sure we get this right. Because we both have had some false starts at this.

Fran: You are calling for a seat around the table, it sounds like you have given up on business to figure it out themselves. Essentially if we drop this are we back to square one again.

Jennifer: Well we look like we are back to square one and we go back to the same questions, how do we put a signal in for emissions reduction? How do we treat renewable energy? Now we’ve said, as you know, that we do not want to see an extension of the renewable energy target once it is completed but, you know, no modelling that I’ve ever seen has suggested that we can meet the target that has been target by the government without some kind of mechanism. Now, clearly, renewables are becoming cheaper but that’s not the only story here. We want to see a technology neutral approach. So, you know, we keep going one step forward, two steps backs.

Fran: Are you frustrated with that?

Jennifer: I mean there is never any doubt that this is very difficult and the Minister has tried very very hard on this but you know there is tremendous politics with that as you know and it is extremely difficult for government to cut through that. Business wants to be helpful here to make sure we get a scheme that works, that doesn’t impact severely on affordability and reliability which for Australian consumers and small businesses is hugely important and doesn’t detract from our competitiveness. We want to see a solution to our emissions reduction, an achievement of the target the government has set without actually, destroying our competitiveness or putting more pressure on affordability and that is why business has to have a permanent and continuous seat at that table because this has to be solved by industry. 

Fran: What has been your reaction to the speech given by Tony Abbott this week where he says,  basically, that you know that science is not settled on climate change and in fact global warming could be doing more good than harm.

Jennifer: Well I’ll leave other people to make comment on that, you know, the business community across the world, the business council, has accepted that we need to take action on climate change. Our issue is how you do it. How do you achieve the target that Mr Abbott’s government actually set in a way that doesn’t impact on the competitiveness of our economy? And we have to take meaningful steps here. Companies have been leading the way on this. They have been doing as much as they can. They have been investing. They now need a more certain framework to go forward.

Fran: Ok, let’s turn to taxation because the Treasurer, Scott Morrison, next week will introduce the bill again for corporate tax cuts.

Jennifer: Yep

Fran: Donald Trump has outlined plans in very recent weeks to cut the US company tax rate from 35% to 20%. He signalled he will do it but the proposal now which you say means Australia has to act to cut our company taxes if we want to stay competitive but would we be rushing to policy on the basis of what Donald Trump is promising? He is pretty unpredictable.

Jennifer: Well let’s remember what policy is being proposed here. You would hardly call it rushing, we’ve got a 10 year plan to reduce the company tax rate from 30 to 25 per cent.

Fran: But you say that we have to act now to cut the company tax rate now because the US is going to do it.

Jennifer: Absolutely, because companies, big companies particularly, act on long term signals and the international monetary fund, not just the business council has come out saying that Donald Trump’s move would actually see investment go back to the United States and the United States is still the largest foreign direct investor in Australia. I was in Washington a few weeks ago, meeting with very senior people about tax reform and there is tremendous momentum to get this done and there is actually an interesting higher degree of bipartisanship that the current system isn’t working and we have to face into the fact that we are global economy. We have one of the highest corporate rates in the world and if we want to get wages rising in this country there is only one way of doing it other than a terms of trade hit and that is productivity and by that, I mean innovation, getting access to different markets, investing in new equipment and plans so that we can do things more efficiently. We have to have business investment, which is the lowest it’s been since 1994 by way of the last recession.

Fran: But company tax cuts of $60 billion cut to company taxes doesn’t necessarily guarantee business investment. There’s a lot of other leavers that can be …

Jennifer: Of course

Fran: Do you have a new argument that can be brought to the table because so far the public is not convinced nor is the cross bench.

Jennifer: Well, I don’t agree with that. I mean 44% of people in a recent survey said they supported that well that’s more who is supported a major political party in their primary vote. You know, this is an important thing and it’s not about finding the new spin it’s about going back to the basics. Why do we need this? Because we need business investment. Business investment is what drives higher wages. It’s what drives more job creation and we are falling behind the rest of the world and if the American’s do half of what they are saying they are going to do, we will see investment flow and the jobs that we could create flow with them. I mean this is a very important time in our economy. We need to protect our capacity to compete on a global stage and we need to stop our continued slide falling further and further behind the rest of the world. That’s what this is all about Fran, and there isn’t some new kind of spin line that I’m going to put to this. I’m going to argue the basics of this and the senate did accept that for small business and that’s important but it’s big business that is going to drive investment in manufacturing, in agriculture and in mining. The things that are hugely important to our economy. The things that are going to drive the new jobs of the future. We need that investment. We cannot afford to fall further and further behind.

Fran: Ok you’re listening to RN Breakfast, our guest is Jennifer Westacott and she’s the chief executive of the Business Council of Australia today she’s going to give a major speech at the National Press Club in Canberra looking at higher education and the whole system here in this country. In your speech today, you are going to call for the creation of a single tertiary system with a reinvigorated  vocational educational and training sector. This would be a major change currently the states fund and run vocational education to the most degree and university education is funded by the federal government. What are you proposing?

Jennifer: What we are proposing is a new approach to the tertiary system. Firstly, we are proposing is a Lifelong Skills Account that someone would have as an undergraduate and then they would have access to it for the whole of their life. It would be made up of an income contingent loan and a subsidy. We are proposing a new market information platform that would allow students to actually choose courses based on better information about what job they are likely to get, the fees of their course, the subsidy of the loan, their repayment schedule and the likely prospects of getting a job and we are proposing a new governance arrangement which would see a Commonwealth and state run body that would set the subsidies giving, set that marketing information. Why are we doing that? Because this isn’t about university. This is about a tertiary system and this is about removing some of the distortions that have happened between the VET sector and the higher education sector that has seen many people, too many people, going to do university courses because the subsidies are higher, when in fact they would be better suited doing vocational.

Fran: People may not understand that if you want to go, say TAFE, now you pay for that yourself largely don’t you?

Jennifer: Well its mixed in different states but you are not guaranteed the same subsidy levels and the same loan system that you would be guaranteed in universities now that is creating this kind of cultural bias towards people doing university. We have 1 million people in Australia at the moment doing university qualifications. Now as the economy changes, as we go to kind of artificial intelligence and robotics as we upskill the economy. The vocational system which has been a really neglected part of the system, needs to be reinvigorated, needs to be put on the same funding footing as universities. Now that is what we are proposing. We are not proposing that they be merged, we are not proposing different the same regulators for them, we are proposing to keep that in place. But we are proposing a funding model, and this is the crucial point Fran, where the student controls that money and they decide which provider and they decide which course and they can decide that not just when they are an undergraduate but throughout their working lives.

Fran: Jennifer Westacott, thank you very much for joining us.

Jennifer: You’re welcome, thank you.

Fran: Jennifer Westacott is the chief executive of the Business Council of Australia and she will be launching this push to overhaul vocational education training at the National Press Club in Canberra later today.