Topics: Tomago aluminium smelter, migration, work from home laws
E&OE
Laura Jayes, Host: The Tomago aluminium smelter is guaranteed to stay open until 2030, with the help of $2.5 billion worth of taxpayer funds. It will save around 1,000 jobs, and there is a sovereign capability argument in all of this as well.
Joining me now is the Business Council of Australia CEO Bran Black. Bran, good to see you. Is this a good use of taxpayer funds?
Bran Black, Chief Executive: Well, Laura, thanks for having me on the show. Look, the key thing for us is that at this early stage we are in the process of interrogating the detail behind the announcement. But the key point that we note is that ultimately the need for this type of intervention springs from the fact that we have uncompetitive settings right across the board, be it with respect to energy, or be it with respect to industrial relations, or taxation, or regulation, and ultimately that’s placing a burden on companies, that’s adding to cost, and that it means it’s more difficult for companies to justify investment decisions in Australia.
What we advocate for is a series of settings that ultimately mean that governments don’t need to feel the urgency to make these types of interventions because we’ve raised the tide for all boats, we’ve made it better for businesses to invest. That’s what we ultimately need to move towards.
Laura: It’s a bit of a joke, isn’t it though, when this is only necessary because energy has got so expensive, it’s making this entity non-commercially viable yet they’re still penalised in the pursuit of lower emissions under the safeguard mechanism?
Bran: Well, we see in our own analysis that Australia is uncompetitive in a number of different areas, including with respect to energy settings.
But we conduct our own analysis of the competitiveness of Australia as against our competitor nations, and there are 42 of those that we assess, and we sit slap bang in the middle. We’re 21 of 42. That’s not where we need to be, but importantly, we sit behind those nations that we compete with day to day for capital. So the US, the UK, Canada, and even New Zealand they’re all ahead of Australia, and that’s underlined by these types of decisions, where ultimately companies are saying very clearly, “We are finding it hard to justify investments here in Australia.” That’s not the position that we need to be in.
Laura: Because of the cost of energy and our tax settings. Are they the top two?
Bran: A range of different settings. So we look at a number of different settings, but that includes the cost of energy, it includes our tax settings. Importantly, it also includes our industrial relations settings, our regulatory settings more broadly, and also the processes associated with bringing capital into the country.
So when you consider all of those different processes and those different settings, we don’t compete well. For instance, with respect to our tax settings, we rank 38th of the 42 countries that we measure against. With respect to our investment openness settings, that is how quickly you can go about securing the approvals needed to deploy capital. Again 38th, regulation 37th.
We’re a long way behind, and that means that consistently we see companies say to us, both here in Australia and overseas, “right now we’re looking elsewhere.”
Laura: One of those settings has got to be something that’s happening in Victoria, and that is this work from home legislation. The legislation is delayed, but it isn’t dead. What would you say to both the major parties as we head to an election?
Bran: Well, directly to your point, this is legislation that should die. There has been no case for this legislation articulated. There is no economic modelling as to what its consequence would be. There is no problem that this legislation needs to solve. Employers are already offering flexible working arrangements. Rights already exist at a federal level, and the consistent message that we hear from businesses is that this will add compliance costs, it will add further uncertainty, and it comes at precisely the wrong time for Victoria.
Victoria, on our own analysis at the BCA, is ranked last in the country consistently for the last few years in terms of its competitiveness against other states. And so our message to the new Premier is very simple: ditch Jacinta Allan’s Bill.
Laura: It’s not just up to Labor and the new Premier, though it’s been delayed till July. I mean, the Liberals could be in power with One Nation, who knows at the other side of the election. The Liberals still say they support work from home and they want to see legislation go through. So this is, you know, pressure across the board.
What would you say to them? I mean, what is work from home doing to industry, to the CBD In Melbourne?
Bran: It’s a really good question that you ask, and I should stress, it’s not as though anybody in industry associations that I talk to, or any of the companies that we speak to across our memberships or beyond our memberships, it’s not as though any of those people have a challenge with the idea of flexible working arrangements. Indeed, they are offered. They are offered right across the board.
Where the challenge arises, as I mentioned before, is that there is a lot of uncertainty associated with this Bill in circumstances where there are already federal rights, and in circumstances where there hasn’t been that economic case articulated. And so, for a lot of businesses, they’re scratching their heads and wondering what the implications are for them here in Victoria, but also if passed, what the implications would be with respect to this Bill in terms of their national workforces.
And the sad reality is that I’ve heard directly from CEOs, again within my membership and beyond my membership, that in some circumstances they would find it so challenging to operate with the existing drafting of this Bill that they would move their operations out of this state.
Laura: Right, and have you seen that happen already?
Bran: No, I don’t think we’ve seen it happen already. But what we have seen is that Victoria is not in a strong position. I mentioned before its unemployment rate at 5.1 per cent, that’s the worst in the country as things stand right now. It’s led the country in unemployment for 18 of the last 24 months.
Again, on our own analysis, incredibly uncompetitive settings in terms of payroll tax, stamp duty, land tax, business licensing. To be clear, if this Bill were to be ditched, it doesn’t actually put Victoria ahead it just stops it from going further behind. What we really need to do is start the conversation meaningfully about the policy steps that can be taken to genuinely put Victoria on the path to getting ahead.
Laura: Interesting perspective, not getting further behind there in Victoria. Let me ask you about immigration. Does the BCA have its own position on what the right level of immigration is?
Bran: So we think that we’ve really got to account for the skills requirements that the country has and that that needs to be the primary consideration that we need to have at the front of our minds in terms of the immigration conversation.
It’s really important here to remember that back in 2023 with the last intergenerational report, what the Federal Government found was that on our current trajectory, we will see a gap between revenue and expenditure, come 2060, of about 140 billion dollars a year. That’s an extraordinary amount.
Now we can solve for that crisis amount of annual debt by increasing our debt. I don’t think that’s fair or intergenerationally viable. We can increase our taxes. Again, I don’t think that’s fair. We can find savings, and we should be certainly looking to do that or most viably, we should be looking to grow our economy. But to grow our economy, we know right now one in three occupations are reporting skills shortages.
So our argument is very simple: we need to fill those shortages. We need to enable projects to proceed in order to be able to continue to deliver the quality of life that we’re fortunate enough to enjoy today. And that means, when it comes to the immigration debate, we have to put that question of skills shortages first.
Laura: So it’s not so much the number, it’s the make-up and it needs to be overwhelming? So, are you concerned that 130,000, which is One Nation’s figure, might be too low? The Coalition seems to be at 180,000. There’s some conjecture over that today I would say, though.
Bran: So I think the critical thing is the analysis that is required on where are the skills gaps right across our economy, in terms of those key industries that we know we’re going to need. But I’ve spoken with CEOs again right around the country, within my membership, beyond my membership, that say that they’re lacking chefs, surveyors, plumbers, cyber security professionals, architects, practically every profession or trade that you might care to poke a stick at is reporting skills shortages.
And the consequence of that is that we’ve got to do everything that we can to try and meet them and to pull people into the country that have those skills that we are presently facing shortages on as quickly as possible. The reality is, Australia can afford to be choosy in that regard because we’re a desirable location.
Laura: Bran Black, great to talk to you. Thanks so much.