Event: Jennifer Westacott interview with Ticky Fullerton, Sky Business
Speaker: Jennifer Westacott
Date: 7 December 2017
Topics: Year in review, China, marriage equality and politics
Ticky: Now we are ashamed of our business community, just ask the alien who landed on planet earth recently and he'd surely give you this verdict. Look at these stories we tell daily in the media, the scandals, the bad corporate behaviour, the new powers of our regulators, the activist investors, the Royal Commission into banks and beyond. Government bashing business intervention in banking and gas and in electricity, and the opposition bashing business even harder. Just read Miranda Devine's extraordinary account on the Daily Telegraph this week with Bill Shorten was meeting with shocked business leaders. All this is ridiculous, why because in really difficult conditions since the GFC, there was a story this year across Australia of hugely successful business execution, of turn around, and within company reform, a restoring of staff morale, and a delivery to shareholders.
A song that is unsung, think about this, Alan Joyce at Qantas has driven the turnaround of the decade. He had to ground an airline globally to do it, for which he could have been fired, instead backed by his board, his strategy reset the airline on a path to profit, and he lead the legalisation of same sex marriage. So important for so many of his employees. A true captain of industry. Neve Power’s Fortescue with an eye watering story around cost cutting that now puts the minor as the cheapest iron ore producer beating even Rio Tinto. Every result he divides the cynics and he says there is still more to do. Brad Banducci brought consistency to retail at Woolworths Supermarkets and beat Coles for the first quarter of 2017-2018. On the October analysts call long-time critic, David Arrington, remarked on "the best set of Woolworths numbers I've seen 10 years." James Fazzino leaves Intersect Pivot leaving half a billion dollars in productivity gains.
Paul O'Malley faced a steel plant shut down at BlueScope’s Port Kembler. He finishes his decade as CEO as driven the toughest of turnarounds balancing community jobs, the Union, and shareholders. And pulling it out of the hat for the state government.
Mike Kane at Borol, another transformer on culture, as well as financial recovery has made the huge investment decision with Headwaters, Inc. and is now riding the infrastructure bomb. And Mike Cain like Allen Joyce has lead business interests beyond his company, his high profile battle against misuse of Union power against folk like John Setka at the CFMEU has made him a champion with reformers.
And both Paul O'Malley and James Fazzino were the earliest business leaders as manufacturers to ring the bell on the energy crisis. Mr. Fazzino remains chair of Manufactures Australia.
And there is a new face in town, Sanjay Gupta, head of GFC group. Who is on a mission not just to save the Whyalla steel works in the community, but to build his own cheap power for his businesses and even put back into the grid. Watch this space as he looks to buy up the energy hungry aluminium sector.
And note how traditional all these businesses are. Not the services economy, the widget building economy. These leaders do not fester over 360 performance reviews or hot desking or gender equality, they just get on with it. James Fazzino and Nev Power, thanks to their boards as well, are handing over to female CEOs, who on the face of it look very promising business leaders. Currently these companies employee over 170,000 people in Australia and overseas, good on them.
Well who better to join me at the desk to talk the year in business is business council, then Australia's CEO, Jennifer Westacott. Jennifer Westacott, I just read all those stuff out and talked about it all but it's been a tough year in business.
Jennifer Westacott: It's been a tough year but look at those results. And I think we just constantly forget that in the midst of that tough year, in the midst of a very competitive economy, off the back of a GFC, you know Australian companies large and small are still in employing 10 million of the 12 million working Australians. They're still paying 70 billion dollars in tax. They're still reaching out across the globe. They are still innovating. And as you say, this story is not just in the service industry, and the start ups, it's in the hardcore part of the economy, the big employers, the big parts of regional communities that have been doing it tough but through dedication, good boards and good focus, they've turned their companies around. And they're great success stories. But more importantly, they're great success stories for the country.
Look at Alan Joyce, look at Qantas, what a fantastic result. And able to pay their teams a bonus this year. Giving them back after [INTERUPTED]
Ticky: How are you going to get this message through? It's been hard for BCA on the reputation front. Even your own organisation, never mind your members.
Jennifer: Yeah it has been hard. And so there are a few things that we have been doing and that we have to do. One is to tell these stories that you have just told. And not just tell the stories of kind of the headline numbers but tell the stories about what that means for a local community, a Rio Tinto in Busselton, putting their fly in, fly out there, 500 extra jobs in that town. You know, little thriving regional centre off the back of the actions of one company and those stories are all around the country so we got to tell those stories.
We obviously have to tackle what I call the kind of lightning rod issues that really bug the community. Trust and this whole thing of supplier payments, so as you know, this year we signed a memorandum of understanding with the Council of Small Business, we've been working through issues with them. We've got a code with our members that they'll pay their small business in 30 days. You know, doing stuff on the ground, not just kind of spinning a story but doing stuff, tackling this issue of tax transparency. We've got to kind of tackle these issues.
Ticky: So, especially after you've got together with small business, it really surprised me to read Miranda Devine's column the other day on just how apparently shocked the business leaders were at the attitude of potentially a future prime minister of Australia, potentially even next year. Now, how accurate was that report?
Jennifer: Well, look, I'm not going get into the details of the meeting because it was a private meeting but let me just make a couple of points about it without getting into 'so who said what?' The first thing is what does the business council stand for? We stand for policies that create a job, that create the conditions for higher income, that allow us to export, that allow companies to sort of achieve the results that you've talked about because that's about giving someone a job, giving a shareholder better return. We will support any political party whose package of changes, package of policies goes to those issues and there's no doubt there are things we agree with the Labor Party on and there are things we disagree.
Ticky: Well, it sounded like, from that meeting, that company tax was talked about a lot and it was just a complete Mexican standoff.
Jennifer: Well, it's not a Mexican standoff in the sense that we don't agree but that's not new. I mean, that's not news, it's pretty clear that we don't agree with the Labor party about company tax. We're disappointed that they've dropped their long standing support for a company tax reduction.
Ticky: But Bill Shorten sounds like the high spend, high taxing government, that's what the Labor government would be.
Jennifer: Well, we're worried about that but let me just put the positive side to it as well, put some balance in it. We had a terrific discussion about vocational education and training a patient of mine and we had a great discussion about skills, a great discussion about trade. There are many things we agree with the Labor Party on.
Ticky: Very surprising what he said about Ged.
Jennifer: Obviously, I'm not going comment on the actual conversation but the point is, at the end of the meeting, he asked us for a statement pf priority. He said, "Let's kind of work on the priorities that we agree on." We don't agree on company tax and it ended on a very convivial note.
Ticky: It did? Because, certainly from the direct quotes that were provided from people who were there, in other words, business leaders, it sounded like they were shocked, they were taken aback and they were very disappointed at the attitude.
Jennifer: Well, it was a frank exchange on things like company tax but that's what you want. You don't want a wussy conversation where you just skirt around issues. Where we left it was, we agree on this, we don't agree on this, let's actually continue to work on the things we agree on and that's a platform for us to go forward.
Ticky: Let me ask you about another sensitive issue: how the business's relationship with China is really become quite a political football sort of wound up in this Dastyari stuff, the government taking advantage of that and these extraordinary announcement from the Chinese embassy basically saying they are very, very angry and upset about all this.
Jennifer: Yeah, look, I think this is a very complex issue, balancing the strategic concerns, the strategic issues, and the economic issues. What I have from business, though, is that the biggest concern they've got, Ticky, is still the barriers to entry. It's still the roadblocks who are investing, it's still the “on the ground”, what people call the 'behind the borders' barriers to trade and investment and so, we're focused on that. I think the white paper was very, very strong because it's the first time I've seen, in a long time, the government pull together economic and strategic to redefine the Indo-Pacific area to-
Ticky: But it was very robust from China's point of view and it came on the back of the quadrilateral announcement that was made. And then you've got somebody like, say, Angus Grigg up in China for the Financial Review saying, "Well, you know, they can only take so much." Every time they're here, something more from Australia, it's almost like a game that Australia has show that they're strong.
Jennifer: When I talked to the China CEOs, we have the CEO round table once a year, it's still, for them though, the issues about certainty, still the issue about certainty of rules, about the FIRB process of which, when you look at the data, overwhelming those applications are approved. Look, I think business has to continue to focus on Asia and broaden out beyond China. It has to get the greater Asian literacy, it has to get stronger capability around its boards and it has to look at different business models for how we go into China and how we go into Asia. If we take our business models from Australia with the exception of the Commodities industry, we're not going to get the traction of that middle class and it also goes to the areas we have to grow agri-business, manufacturing and…
Ticky: But looking at someone like Andrew Mackenzie at BHP, making the very strong point about we shouldn't forget this very important relationship we've got with China. I mean, I certainly It's not helpful, some of this stuff, that's being opportunist-
Jennifer: Absolutely, this is a huge important relationship to us. It's our number one trading partner, it's a huge source of opportunity, not just China but the broader range and so it's very important that government, at all levels, the opposition send the right signals, send a consistent signal. I thought the white paper was good and I thought it was excellent that the Labor Party came out and said, "We're going to support the direction of the white paper and not in government, start again." That's hugely important to business to say, "Okay, we understand the strategic environment." But you're absolutely right, we've got to be very careful, very careful with our language, very careful with our signals and our behaviours.
Ticky: What is going to happen as far as your concern next year? What are your big plans with BCA?
Jennifer: Well, hoping that kind of general sense that we start having a conversation about the jobs and wages of Australians, rather than jobs and wages of people in Parliament house.
Now, I know that that's been something that no political party has had control over but I really think people want get into the New Year and build off the green shoots we've seen in the economy, and yesterday's quarterly results are good, but they're not great. I mean, they're still showing GDP figure with a 2 in front of it and Australians have built their living standards [INTERUPTED]
The wages growth issue is hugely complex and that means you look at the productivity numbers, they're still kind of not great so what are we going be focused on. We're going be continuing to focus on a policy agenda that drives competition, that drives our ability to compete, that drives the creation of new businesses that encourages investment, which is why we continue to argue for that company tax cut and in the middle of all of this, we're seeing the Americans. The one thing we know, the two bills both agree on lowering that corporate rate to 20% and we know from the International Monetary Fund and economists that if they do that, it will see capital move back to the United States. We can't afford that to happen, we cannot afford to fall behind the rest of the world so what we want to do, at the BCA, is continue to push that we put the pedal on the accelerator for growth, that we do everything we can, removing barriers to entry, getting investment going.
Ticky: And what about the equality side of things and the understanding from the top floor that really the whole executive packages, there's a lot of focus on it.
Jennifer:There is and there should be and we've got the instruments in place now for shareholders to introduce the two strikes and you can see the shareholders being quite active. You can also see boards lowering some of those big salaries and responding to that shareholder concern and obviously, we've got to have greater accountability, greater transparency. I'd like to see the REM reports as they're called, be a bit simpler so that people can understand them, they're very complex so I think some of those things.
But, in terms of the BCA, we're going continue to advocate for those policies that drive faster levels of growth, higher wages, more job creation, more businesses and at capacity for Australia to win at its strengths to continue to press into those areas where we've got a comparative advantage. And, of course, in terms of the BCA, continuing the work we've started this year on building our social media capacity, building our communications functions so that we can reach a wider range of people in the channels that they relate to and the messages that they understand.
Ticky: Jennifer Westacott, we'll just have to pause there. Head for a break, after the break: a mixed bag of data this week. We break it down with UBS's Tracey McNaughton. Great to talk to you.
Ticky: Yes, welcome back and in breaking news, in the House of Representatives, the same sex marriage bill has actually passed. Jennifer Westacott, chief executive of the BCA is here with me, she stayed on, congratulations. How are you feeling?
Jennifer: That's fantastic, thank you.
Ticky: That's just bloody terrific!
Jennifer: No, it's fantastic, so many people to thank but you just have to thank the Australian people who saw fairness and decency and I say to the people who said 'No,' look, there's nothing to fear in your way of life. We've always been there. We're your daughters, your cousins, your friends, your colleagues, the people who looked after you in hospital. But this has been a triumph of leadership. People like Alan Joyce who you mentioned, Penny Wong who's just been amazing, Warren Entsch, Dean Smith who put in kind of bill. But I do want to thank the Prime Minister. It wasn't the process everyone wanted but he's got it done and-
Ticky: And that process is an endorsement.
Jennifer: There's a national endorsement and I don't think we can ever say now, "Well, this wasn't a legitimacy." It's one of the biggest electoral mandates in history and it's a great day for Australia.
Ticky: No, personally, I’ve got be cheeky, what about Tess? Are you going to ask her, is she going ask you?
Jennifer: Well, I'm not going do anything live on TV because I know she's shopping so she's not watching your programme, Ticky, but look, it's a private matter but the great thing is, I've never had the right to even have that conversation with her and today, the Australian people and the Australian parliament have given me that right and I know you and Michael have announced you're getting married-
Ticky: Well, you can't have it all. You’ve got to have the meat and potatoes heterosexual marriages as well.
Jennifer: No, no, no, that's right and I'm really pleased for you and I know you'll be incredibly happy but at least now, I have the opportunity and the right to have that conversation.
Ticky: Absolutely, it's a wonderful thing. Jennifer Westacott, thank you so much. Great day for you.