Topics: Wages, tax reform, artificial intelligence
E&OE
Laura Jayes, AM Agenda Host: Joining me is the Business Council of Australia CEO Bran Black. He’s here in the studio with me. Bran, good to see you. Before we get to some of the Budget, I want to ask you about the Fair Work decision that’s coming down in what is it, 15 minutes time, there’s a case to raise the minimum wage. Would that put pressure on businesses already under pressure?
Bran Black, Chief Executive: Well, there’s no question that any time we see wages increase, it does put some pressure on business. The question is always, is that pressure too great? So the challenge for us more broadly is that we want to see wage increases, we want to see wage increases that are backed with productivity and sustainable productivity gains.
Now our productivity rate is sitting at 1.1 per cent right now over the course of the last 12 months, but if you go back 12 months it was flatlining. So what we need today’s decision to recognise is that we haven’t seen sustainable real wage increases and sustained real wage increases, but we do want to make sure that in the long term, we can obviously deliver those real wage outcomes that guarantee higher living standards.
Laura: Obviously, it’s probably more a question for small businesses because they have costs that they probably can’t absorb, as much as big businesses that you represent, but is there an inflation fear for you? Is there, again, you talk about productivity, what is the concern about the inflation and this kind of, you know, do we get to that stagflation issue?
Bran: Well, I’ll leave economists to comment on the stagflation implications, but we do see that inflation is reasonably high at the moment. It’s sitting at 4.2 per cent, that’s well above the target band for the RBA. We need to be taking steps to try and bring it back under control.
We see that there are two core ways in which we can do that, and this obviously has implications for both small businesses and for big businesses, but we’ve got to make sure that we’ve got our spending as much as possible under control, so that we’re not putting increased pressure into the economy, and then there is the productivity piece, and it doesn’t matter how you cut it, whether or not you’re looking at analysis from the RBA, the Treasury, or other economists, it all shows that over the course of the long term, it’s productivity gains that are the best guarantor of real wage increases. That’s what we need to be driving for, and it’s those types of policy outcomes that deliver productivity that we should focus on.
Laura: You would have seen in the papers this morning the RBA seemingly at odds with the Government when it comes to housing policy, migration a big part of that, the Prime Minister and the Treasurer really saying any changes to CGT will just be tinkering. Does that to you look like proper consultation?
Bran: Well, I think it’s very clear that there hasn’t been proper consultation with respect to the tax changes that are proposed. Our concern, more broadly with respect to these changes, is that we are in an uncompetitive position on our tax settings as things stand right now. So, on our analysis, that’s BCA analysis, we rank 38th of 42 developed economies, and critically, we’re behind the likes of the UK, US, Canada, even New Zealand, in terms of our tax settings.
So what we say there is we’re already in a bad spot. So, if you’re increasing the tax burden, then you are making us less competitive and less likely to secure investment. It goes back to that point we were just talking about, in terms of real wages growth. If we’re not getting that investment, we can’t drive productivity to the extent we need to.
Laura: I mean, I look at this, and this is not strictly from the budget changes here, but I think it has highlighted the fact that there’s a lot of smart people in Australia, but they’re starting businesses overseas because they get better tax treatment. Is there a way to get around that? Of course, that’s a company tax level, but if you were to reduce it down to what’s competitive with Singapore, for example, like 15 per cent that’s not really doable. But how do we make it a better place to start a business?
Bran: Well, there are lots of different ways you can do it, and it’s not just tax settings, although I’ll come back to that, but we do need to look genuinely at our industrial relations settings, because they are too much of a burden for business, as things stand.
Laura: Right to disconnect?
Bran: Absolutely, we’ve seen that there have been challenges in terms of recent implementation of changes like that that have put additional pressure on businesses, but there’s our regulatory settings as well, $160 billion worth of red tape in our economy, that’s an awful lot, that’s about 6 per cent of our GDP. And then, in addition to that, there’s our planning settings, which make it hard to get developments off the ground. And then, as you say, there’s our tax settings as well.
And our position consistently has been we think it’s best to look at tax holistically, and to be honest, I think the challenge that we’ve seen with respect to the recent discussion on tax that’s come out of the Federal Budget has emphasised that point that we should be looking at tax not just in terms of discrete areas like CGT but with respect to personal, company, consumption, state and seeing if we can put together a package that ultimately delivers productivity gains, fairness for individuals, and the best thing that we can do is ultimately guarantee intergenerational fairness for future generations.
Laura: In all honesty, though, we’re going to get these massive productivity gains out of the implementation of AI in big businesses. Well, businesses, big and small, aren’t we? And that’s going to come at the sacrifice of jobs. That has been canvassed, but although I would note that Sam Altman just last week he was addressing CBA customers, saying well, some of his worst predictions haven’t actually come true.
So, what is your view now that AI will actually enhance jobs or create more jobs, or do you think we’re going to see a period where we see a lot of job losses that it is significant for the economy?
Bran: It’s a really good question, because it goes to that fundamental point of how we go about delivering productivity in a changing world, and there are so many different factors that are making it harder for businesses to engage and to be productive, even if you look at geopolitics, that in and of itself might be a reason for a business to stop and pause and not make decisions to invest, but increasingly we’re seeing businesses say, “All right, the world’s just so uncertain, we’ve got to get on with it”, you’ve got to take the same approach we think with respect to artificial intelligence.
Now when you look at the data here in Australia, and the data that’s coming out of jurisdictions like the US. We’re not seeing big job losses. Indeed, we’re not seeing significant impacts by any stretch.
Laura: Is that a not yet or just not now?
Bran: Look, I don’t know, that’s the short point. And I don’t think anyone knows. When I was first in this role, about three years ago, I was reading predictions saying within 12 months we’re going to see mass job losses. I didn’t see that. 12 months later, I saw the same predictions, and 12 months following that, we still hadn’t seen those type of outcomes.
The simple point is I don’t think anybody knows, but the experience that we’re seeing on the ground at the moment is that in the far, far, far great majority of instances, AI is augmenting roles, it is changing the nature of tasks. It is not replacing positions, but there is a trust problem, and we do need to address that in terms of how we implement AI.
Laura: Trust problem how? For businesses integrating it or people using it?
Bran: Yeah for businesses that are integrating AI.
Laura: That’s probably the thing saving jobs, right? Because there’s still that human oversight.
Bran: Well, a big part of the challenge that businesses are facing is that they do see that workforces have a low trust level, particularly in developed economies and particularly in Australia, and people are concerned about the implications for their jobs.
But what we would say is that the best way of integrating AI is to demonstrate to your workforce that you’re engaging with them early, that you’re taking on their perspective, you’re clear on the problem that you want to solve, and that they have input into that. That’s how you get the best out of integration.
Laura: Okay, just finally, when we talk about AI, obviously we need the data centres here. Are we getting enough, quickly enough? Is that being serviced?
Bran: I think there’s more that we could do, and we just had the experience of being in the US, meeting with investors and companies in New York and Washington, and what they were very clear on and one of the lines that was used with me has stuck with me, it was that “The US says yes, Asia says yes, Europe says no, what will Australia say?” Investors are still looking for a signal, a definitive signal from Australia that we want that investment. There’s US $1 trillion or up to that, that’s available over the course of the next six to 12 months. We should be looking to secure the lion’s share of that.
Laura: Okay. Bran Black, good to see you. Thanks so much.