A transcript of the Q & A section of Business Council of Australia President Catherine Livingstone’s National Press Club Address on 29 April 2015.
LAURIE WILSON: Catherine Livingstone, thank you very much for your speech today. Let me begin a round of questions from our media members by asking the first one myself. If the community is ready and looking for a new social contract, is that starting to dawn do you think on our politicians? Is there a level of agreement - if only unofficial - that we do need to do something? If that is the case or even if it isn't, how frustrated is the business community becoming with this seeming sort of ongoing inability to drive at least if not all certainly some major policy changes, the sort of continuing gridlock or lack of bipartisanship?
CATHERINE LIVINGSTONE: Thanks Laurie I think what we're dealing with is a very reactive and incremental situation and it's hard for the community to understand because there's no context. Things come from left-field and they come suddenly with no warning. People need context and they need time. You get time by talking through issues and asking the questions. I think what we're saying is really important to start asking the questions and keep driving until you're quite confident you're asking the right question and then you can start designing the appropriate policy frameworks. Concerningly I think politicians think that they need to have all the answers, and the expectation that any one or even a small group of people can have all the answers in the complexity that we're dealing with today is unrealistic. But I think it is realistic that they start asking the right questions and then listening to the community and absorbing the answers.
LAURIE WILSON: Let me open it up to my fellow members. Sophie Morris has the next question.
QUESTION: Sophie Morris from the Saturday Paper. Thank you for your thoughts on the next 10 years. One issue you didn't touch on was climate change and I'm curious, to what extent do you see climate change and the policy response as an economic challenge? And what do you make of the Climate Change Authority's recommendations that to match the targets already offered by comparable countries, Australia would need to reduce emissions by 30 per cent by 2025 and 40 per cent to 60 per cent by 2030? What sort of economic impact do you think that would have and do you think those deep cuts are necessary?
CATHERINE LIVINGSTONE: OK, thanks Sophie. I think starting from the point that it's certainly the case that we need to have strategy for emissions reduction, but in the context of what is economically appropriate and certainly in terms of appropriate timeframes. It's fine to establish a target, but if you haven't done the analysis around that target and what are the consequences and how we actually get there, what transition would be required over what timeframe and what would be the economic effects of that, it's hard to comment on the target. So probably starting with the target is the wrong place to start. We need to start with what's the analysis behind that target. I think that's the mistake that's been made in the past. The targets are just set without an understanding of the analytical basis, which is not to say the targets are wrong, but we don't know they're right and we don't know they're achievable and we don't know what the cost of achieving them is and what are the trade-offs we would have to make. So it’s hard to form a view when you don't have the analysis underlying it. Having said that, it's important we have constructive policies around emissions reduction.
LAURIE WILSON: David Speers.
QUESTION: David Speers from Sky News just following up on that, with some lived experience now of direct action and lived experience of Labor's carbon tax or emissions trading scheme, which does the BCA prefer? Can I also ask, appreciating the need for a philosophical direction over the next ten years, in the here and now governments have to make directions. What do you think about a couple of the options on the table in the lead-up to the Budget? A separate company tax rate or a lower company tax rate for small business and Labor's idea on taxing multinationals?
CATHERINE LIVINGSTONE: Thanks Dave so going to the various climate change policies, I'd go back to the point that it's important that we have policies around emissions reductions. In terms of the BCA, we've always worked with the policy that's there in terms of the government of the day and therefore trying to find the best approach, currently direct action. I think we feel also when you're looking at emissions reduction it's quite helpful to look on a sector-by-sector basis and look at what are the appropriate policies for that particular emissions sector; what's going to achieve the greatest level of abatement in that sector? So it's getting down to that level of detail. But again, we work with the policy of the day to make whatever it is work as well as it possibly can.
In terms of the Budget measures and tax, again I think we've said that tax reform has to be part of a major exercise in looking at all of the elements of tax to change one element without looking at all elements could have unintended consequences. So of course while we would support a reduction of company tax, the major issue for Australia is that we have a very narrow tax base. Both on the income tax and within income tax it's very narrow on personal and on company tax. So it's very volatile, and very narrow, so we need that complete conversation on all elements of tax to come out with a reform package.
LAURIE WILSON: How frustrating is it? We've been having this debate for as long as I've been a journalist and that's a long time. We go back to a couple of landmark reports which were largely ignored, one the Matthews report we adopted some of it, the other was ignored. They were in the mid '70s, there have been reports - the Henry report since then - we never seem to get anywhere - how frustrating is it that that's the case? And really from your point of view, what would be your advice to governments when it is so difficult to bite the bullet on all the things that need to happen?
CATHERINE LIVINGSTONE: I think this comes back to the transparency point, don't try and second guess what people's reactions are going to be. Be open with people, don't leave things out of the equation and make sure that you have the right people in the room and that means everyone's represented in the room. So this has to be a conversation with the complete community. To be concerned that certain things shouldn't be included such as the GST, we will never get a reform package unless everything is included and all of the interdependencies analysed. I think we're calling for that and we're calling for the right people to be in the room. It's one of the reasons that I'm here speaking. We have to get long-term reform on the agenda, on the agenda now and including the community.
And actually have some courage on this, and that's what leadership is. Leadership involves a lot of courage. It doesn't mean knee-jerk reactions, it just means courage to do the right thing. The right thing for Australia at the moment is to get a solid program of reform, including tax reform, including federation reform and the other three areas that I went through today are actually part of that, because we have to triangulate across them all. You can't solve the Budget if you don’t solve health. You can't get growth in the economy if you don't have a skilled, educated workforce with the right skills for the businesses that are going to grow.
LAURIE WILSON: Question now from Phil Coorey.
QUESTION: Hi Ms Livingstone, Phil Coorey from the Financial Review, thank you for your speech. I was listening on the radio the other morning to the Australia and New Zealand manager of Uber and he was making the case that his organisation shouldn't be regulated like the taxi industry, because it creates jobs notwithstanding the fact that the taxi industry also creates jobs. I was wondering without resisting this disruption, but could we - why shouldn't it be subject to the same regulation as traditional industries like the cab industry? Why shouldn't, for example, Uber have to pay tax on the earnings in Australia? Why shouldn't Uber drivers have to be registered? Why shouldn't the cars they drive be registered? Did you see a problem with that? It wouldn't be difficult to enforce... or should we just surrender to these forces?
CATHERINE LIVINGSTONE: Not at all. Thanks, Phil. I think the key is to understand the dynamics of what's going on. We need to be careful with regulation, because regulation often tends to solve yesterday's problem and we do know that regulation needs to be more adaptive. The more adaptive it is, the more ability it will have to absorb the new business models that are coming through. I know I'm talking in generalities, but not to understand the new business models and have new business models entrenched and then have to come back and reverse engineer the regulation is the worst of all worlds. So it's nimble regulation, but it’s really being aware of those emerging business models. They're very visible. Uber's been coming for quite a long time really, so there's no reason we can't know, but it's actually being very forward-looking in terms of regulation.
LAURIE WILSON: Colin Brinson.
QUESTION: Colin Brinson AAP, thank you for your speech. How far behind the 8-ball are we? You talk about this ten year plan now, but from what you're saying we're way behind already and why do you think that is? Secondly, the Reserve Bank governor Glenn Stevens often talks about the lack of animal spirits within the business community. Again, why is that, or is it a lot to do with what you're talking about today?
CATHERINE LIVINGSTONE: I think the business community has plenty of animal spirit. If we didn't have animal spirit, our business models wouldn't survive, so I think we're very alert to what's required. Yes, we're talking about we're behind so you can go through a lot of handwringing and say we're behind, but actually the important thing is to look forward and how quickly can we get back on a path that makes sure we maintain our competitiveness?
It doesn't take a great deal, it just takes the resolve. If you go back to the old adage that 90 per cent of the effort is actually starting and then actually doing is about 10 per cent. So if we could just get our head around starting some of these initiatives, we'd actually find that it develops its own momentum. That's why it's important to lay out this philosophical shift in the three policy areas, because actually you're then starting at a point that you can get your head around and that provides a framework from which then more detailed policy in those areas will flow.
If you're working at the detail before you actually have this overriding principle, it's a guiding principle, progress is very slow if at all and you just fall further behind. The power of a guiding principle - a beacon - is quite extraordinary. That's why you'll find businesses spend a lot of time trying to define their purpose, because when you've got 30,000 people in an organisation it provides a guiding light. Why are we all here, what are we trying to do? Defining that high-level purpose or philosophy is critical to getting things done.
LAURIE WILSON: David Crowe
QUESTION: David Crow from The Australian Ms Livingstone thanks very much for that speech. Lots of ideas there to ask about, but there are other events in the world and I want to ask about one of those today which is the execution of the Bali Nine due only a few hours ago. In fairly gruesome and sometimes grotesque circumstances. You were with Prime Minister Tony Abbott when he went to Indonesia shortly after he was elected and I know that Telstra's long been involved in Indonesia so you'd have some knowledge of that country, and our relations with Indonesia. I'm interested in your personal view of course, but I'm also interested in your view as president of the BCA in terms of what Australia can do? Is there anything else that Australia can do in this situation to send a message to Indonesia? Is there a role for the business community in sending a message to Indonesia?
CATHERINE LIVINGSTONE: Thanks, David. I think the first thing to say - these events are not something the BCA would comment on. I think they're a matter for government. From a personal perspective I think today we can just really be thinking and having heart-felt sympathy for the families and what they've been through and I think that's as far as we should go just in these recent hours. I think, too, business plays an important role in the ties between countries and business has demonstrated in many countries over the time that if business keeps going and the person to person links that are achievable through business, it maintains a fabric of relationships on which governments can then build and they can draw as the political issues ebb and flow. But what's really important for the world is that the business relationships continue because that underlies the well-being of all countries.
LAURIE WILSON: I was going to ask you this question a little later, but given that David has raised the issue – Telstra, as you said, has significant business interests in Indonesia, I think you were mentioning earlier that it recently launched a new joint venture up there. Alan Joyce from Qantas is in the audience today; he has major business through both Qantas and I guess Jetstar into Indonesia, particularly Bali. There will be a public backlash - there probably already is I would imagine - to this, and there will be some response from the government. Are you concerned about the potential impact, certainly in the short-term, on business relationships?
CATHERINE LIVINGSTONE: I think that's up to every individual business. But as I said, I think it's important that the business relationships are maintained through periods of events such as this.
LAURIE WILSON: Could it damage our relationship? And that's really what I'm getting at here, is it going to impact, potentially, on Alan Joyce's business, possibly? Australians say I'm not going to go to Bali. It's going to affect his company.
CATHERINE LIVINGSTONE: Well, that will be for individual decisions ...
LAURIE WILSON: That’s just one example [indistinct].
CATHERINE LIVINGSTONE: Yeah. Look, I don't think we want to speculate. Life's pretty resilient in that sense, and life goes on. And business will go on, so.
LAURIE WILSON: OK. Question now from Xinhua, Hijing Zhu(*).
QUESTION: Zhu Hijing(*) from Xinhua News Agency of China. The Chinese Government just recently unveiled its so-called One Belt, One Road project. How do you see it is related to the future of Australia and the future of the business sector in Australia in 10 years’, or maybe longer, time?
CATHERINE LIVINGSTONE: I have to say, I'm not quite familiar with what you were describing, sorry.
QUESTION: It is a project in two parts, one part is to the old Silk Road linking China to the central east Asian countries and to Europe, and the other - the second part is called 21st Century Maritime Silk Road, which can link to the South Pacific region, including Australia. Now, also, the recent AIIB, the Asian Infrastructure Investment Bank, because you were talking about the weak investment in Australia, maybe you can talk about this bank and maybe some opportunities Australians can get from this? Thank you.
CATHERINE LIVINGSTONE: Okay. Thanks. Well I think just on the infrastructure bank, we know globally there's a huge shortfall in funding for infrastructure, and good infrastructure obviously underpins robust economic activity. So I think we'd say the more availability there is of funds for infrastructure the better, in that context. In terms of the new Silk Road and the maritime road; again, it's important to have global trade and global trade mechanisms. So, to the extent that they're facilitated by those initiatives from China, they complement initiatives from other countries. So we've seen a lot of discussion about trade, and we've seen Australia with free trade agreements, and all of that is really important to underpinning global economic growth, which is struggling so much at the moment.
LAURIE WILSON: A question now from Gareth Hutchins.
QUESTION: Hi Miss Livingstone, Gareth Hutchens from The Sydney Morning Herald and The Age newspapers. You said before that we need to develop a national obsession with teacher quality and teaching standards, but one would assume that that would require paying teachers much more than they are today. Do you think that's the case? And if you do, how do you propose that that happens, given current funding arrangements with public and private schools?
CATHERINE LIVINGSTONE: Thanks. Well certainly teachers should be among the most respected profession in the country. And I think there'd be general agreement that, yes, they should be paid more, but you know, again on a merit-based system. The other point, though, is that we're able to use technology - because we don't actually have enough teachers in some of the skills areas, so in the digital technology skills area we actually don't have the teachers. So it's not a question of paying them more, we just don't have them. So how we can use technology to, if you like, extend the capability of teachers more broadly. We have a system where you have every school has its own set of teachers, and three or four schools in an area, so they're all trying to replicate senior maths, or senior science, or languages. How we can use technology to have a more collaborative environment and through that access better teachers and making them more available to more students, I think, is part of the answer. Because as you say, in a constrained funding situation, it's not necessarily possible to suddenly increase the pay of all teachers.
But it does come back to the new social contract, and what we think's important, and what we're prepared to trade off. And the community, we will have to trade off - if we want good skills, best teachers, if we want best health care, then what are we prepared to trade off? And that's the conversation we have to have. We can't have everything.
LAURIE WILSON: Does industry have a greater responsibility here? I mean, is there- we have apprenticeships and the like, but I'm just wondering, do we really need to see a model developed perhaps where there are significant industry-based and supported learning centres for the sort to develop focus on the sorts of skills that need to be developed?
CATHERINE LIVINGSTONE: Well I that's what I was trying to say in terms of integrating study and work much more closely. The fact that you might have people entering the work force for the first time when they're 23, 24, it's, as I said, a huge waste of capability. But getting industry more integrated with the skills development program will mean that they get more of the skills that they actually need at the time they need them. And we wont have this adaptation gap that we have which is what's producing 400,000 students or young people who aren't studying and aren't working. We have to close that adaptation gap.
LAURIE WILSON: Okay. Question now from Roger Hausmanm.
QUESTION: Roger Hausmanm for Inside Canberra. You seem to lament leadership so I'm gonna ask you, what sort of traits and characteristics would you like to see in a Prime Minister of Australia, for example, to basically, you know, bring the country forward with better leadership?
CATHERINE LIVINGSTONE: Okay. Well the first thing I would say is leadership is a collective dynamic, it's not an individual dynamic. So as I said before, no one individual can be expected to have all of the answers. So it's important that leadership is seen as collective - and that's collective within Cabinet, collective within government and then collective across the whole of Parliament. I did reference the importance of personal values, and the congruence between personal priorities and the national priorities. If you go to business, that is very key in the leaders in business. If is there a lack of congruence between their personal priorities and the business that they're involved in running, it shows up pretty quickly in a poor culture in that organisation. So, take the learnings from business and take it into politics, it's making sure at all times you can see alignment between personal values and hence behaviours, and what's in the national interest.
LAURIE WILSON: Steve Lewis.
QUESTION: Ms Livingstone, Steve Lewis, I’m Director of the National Press Club. You lamented in your speech the growing gap, the growing digital literacy gap between Australia and its competitors, and you say there needs to be urgent 10-year plan to try to address this and try to make Australia - make sure that we are more prosperous and productive. What would you like to see both the Federal Government and business do to try to and actually achieve this? Is there something that you're looking for, for instance, from the Federal Budget in, what, less than a month to try and address this?
CATHERINE LIVINGSTONE: So how long have we got?
UNIDENTIFIED SPEAKER: [Indistinct].
CATHERINE LIVINGSTONE: [Laughs] I’ll tell you what I really would like to see, and that's the - what we call the digital technology stream in the curriculum as a separately identified stream and starting from pre-primary. So teaching four-year-olds how to code, introducing them to computational thinking, design thinking, problem solving - they're absolutely capable of it, and that's when they should be learning those skills. So I'd like to see that coming into the curriculum immediately. And we do see fragmented attempts at individual schools introducing this, but actually we need a broad-based approach in the curriculum so that all schools have that capability and we don't end up with a secondary disadvantage by those schools that don't. And carrying that through as an identifiable stream, right through to the secondary level. That's what I'd really like to see. And I think that would have a huge impact. Universities are crying out, they can't get enough students entering the IT streams. Well we'll never have enough students if they don't take the secondary courses; they won't take the secondary courses unless they take the primary courses; and they won't succeed at the primary courses unless we start right from the beginning. So in a nutshell, if I had a wish list, that's what I would like to focus on.
LAURIE WILSON: Ken Randall.
QUESTION: Ms Livingstone, I'd like to ask you about the Business Council. I get the impression from some of the recent statements from the Council, including your own, that the role is being rethought a bit. I mean, are you still happy with the idea that the media constantly represents you as talking for the big end of town, for example, which is the label that was originally given to the Business Council and has stuck almost ever since?
CATHERINE LIVINGSTONE: Not happy with that, because I think the Business Council in just the recent few years has made a huge effort to be far more collaborative, and collaborative with other business organisations like ACCI and AIG, as well as with ACOSS, and really trying to engage the community in the various policy debates that we're having. We have to have a collaborative approach, and the BCA certainly sees a very strong role in promoting that collaboration. So yes our members are large business, but our intent as an organisation is to be very collaborative across all interests.
LAURIE WILSON: Peter Phillips
QUESTION: Ms Livingstone, Peter Phillips, one of the directors at the National Press Club. Thank you for a most compellingly interesting address today. And it's good to welcome you to the Club. I want to take you to the employment area of the subjects which you covered in your address, and at a time when, in youth unemployment, the national average is running at around about 14 per cent but it pockets down into areas of dismay and despond in say places like Burnie in Tasmania where it runs at 27, 28 per cent. That's the good part of the story. The bad part of the story is at the retirement end, the ageing end of the spectrum, my end of the spectrum. With 13 days to go to the next Budget, what can, what should government do, urged along by the Business Council, to show that it does understand, and that it is going to do things about the imperatives of keeping people in employment longer or creating opportunity, and incentive, and concession if necessary, for people to stay in employment longer? Can you open up the pathway for government, 13 days to go?
CATHERINE LIVINGSTONE: That's quite challenging. The answer is yes and no. Again, be concerned about cherry-picking of initiatives in a budget context, which is why we've said it's much better that long-term policy go through a Cabinet process with full debate, and inquiry, and consultation, just to pick individual measures and put them through the ERC and the Budget process risks having unintended consequences. So, what we would say about the whole retirement income system is that it needs a very detailed review and systemic review, and from that then policy initiatives would flow. But to cherry-pick through a budget process is potentially very counter productive.
LAURIE WILSON: Let me just ask you a final question. We’ve seen New Zealand effectively rebuild its economic base over the last couple of years; when people say well we could learn from New Zealand of course others say well they’re quite different - they’ve got one house of parliament, they really haven’t got the same levels of government that we have, you just couldn’t do it here. So how do you respond to this notion that we just couldn’t do it here?
CATHERINE LIVINGSTONE: Well if we start with that we’ll never do it. So, you’ve really got to start with the point about we have to do it. The risk of not doing it is so extreme that we have to focus on doing it, and so have to work out the how. And I think if you’ve got the intent you’ll certainly work out the how. But if we get all despondent and we get cynical, that will be just a whole mental barrier to actually moving forward at all. So, we need to do it, of course we’ve got the capability to do it. If there’s one culture that’s very good at solving problems it’s the Australian culture. So, for Heaven’s sake, let’s get on and do it.
LAURIE WILSON: Let’s conclude on that point.
Catherine Livingstone, thank you very much again for your comments today. I’m sure that I suspect what you’ve heard(*) today isn’t going to influence the outcome of the Budget, but I suspect you’ve already had plenty of input into that process anyway. Hopefully successfully, from your point of view. But I do hope that your comments today have influenced, if you like, sort of public debate more broadly, and the level of public understanding about some of these issues.
We never send our guests away empty handed. It’s a great pleasure to be able to offer you membership of the National Press Club. I hope you’ll accept it [laughs] on your world travels you are able to use this at various important venues around the world, and a copy of our recent publication by Steve Lewis, our Vice-President, Stand and Deliver, which covers principally a number of speeches, but the most important, interesting, significant events, principally speeches, over the last 50 years. And it’s possibly you might learn a few things in here yourself, because there’s a lot of interesting content. Thank you very much.
CATHERINE LIVINGSTONE: Lovely, thank you.
View Catherine Livingstone's National Press Club Address here