Topics: Federal Budget, productivity, tax reform
E&OE
James Glenday, Host: We are now joined by the Chief Executive of the Business Council of Australia. Bran Black. Bran, nice to see you up bright and early.
Bran Black, Chief Executive: Nice to see you too. Thanks for having me.
James: Gosh, there’s a lot in this Budget. Let’s start with probably the headline out of it last night, the changes to property investment and capital gains in particular. What do you make of the changes to capital gains tax and the discount? What’s that going to do to business in Australia?
Bran: I’ll come to that. But can I just emphasise to get things moving, the changes on productivity, which I think really do need to be called out. They are important. They are changes that the Business Council and indeed, the business community have long called for. These are changes that will ultimately make it easier for people to do business, they’ll make it easier for businesses to operate and to come to Australia, and ultimately, that will make Australia a better place for investment.
So these are changes that see a $10 billion reduction in the value of red tape. That’s a really good thing, and we welcome those changes and the opportunity to work with the Treasurer.
In terms of the changes with respect to CGT and negative gearing, our concern there is ultimately that those changes increase the overall tax burden on our economy, and therefore make us less competitive from a tax perspective than we were otherwise.
Emma Rebellato, Host: Before the Budget, you said one of the big focuses should be on resilience, making the Australian economy resilient. Do you think the Budget has done that?
Bran: Well, I think there are two key elements that we need to think about in terms of resilience, in the context of a budget, that is. The first is what we can do to improve our overall fiscal position, and the second is what we can do to try and drive productivity. There is a further element to that which has come through with respect to fuel security and fertiliser security, the $10 billion that’s been committed there is very welcome.
In terms of our fiscal position, we’re pleased to see there is an improvement, and we are also pleased to see that the Government’s taken difficult decisions with respect to the NDIS. That is deeply challenging, it affects so many Australians, and it’s a deeply personal issue as well, but this is a challenging reform, and the government’s lent into it which is to be applauded.
What we do see is there is still more work to do. We’re still forecasting eight years of deficits. We need to return to surplus as soon as we possibly can. In terms of that broader piece on resilience and our capacity to deliver improved living standards for all Australians, there is still, again, work that needs to be done, but the steps that have been taken on productivity reform, the reduction in red tape, the streamlining of processes that pull skilled migrants into the country so that we can plug skills gaps, those are useful measures that we applaud.
James: So you’re highlighting the things that you like about the Budget. Just back on capital gains, does this, in your view, change the way that people might look at investing in Australian companies, for instance, through the share market?
Bran: Well, yes, that is one of the concerns that we have and some of the feedback that we’ve had from some of our members and the broader business community is that they have concerns with respect, particularly to the implications of CGT changes and early stage investment. We know that the Government’s spoken about undertaking a further consultation in that regard to look at settings, and we hope that through that process, we’re able to try and mitigate these changes.
But to go back to your point, at root, we do see that through negative gearing and through capital gains changes in this Budget, we have a net overall position that reduces our competitiveness from a taxation settings perspective.
James: So is tax cuts the answer then?
Bran: Well, what we want to see is broader reform. We’d like to see a broader tax reform approach along the lines of what New Zealand did back in 2010. They looked at consumption taxes, they looked at company taxes, they looked at income taxes, and they also looked at tax transfers, so how they could return money to those that are most in need. And the net effect of all of that was that in New Zealand, we saw net debt get reduced, we saw the overall GDP increase, and ultimately, that was good for all New Zealanders.
Emma: Bran Black, thank you for joining us.