Speakers: ABC Afternoon Briefing, Host Patricia Karvelas; Business Council of Australia Chief Executive Bran Black
Topics: Tax reform, fuel excise
E&OE
Patricia Karvelas, Host: Bran Black is the CEO of the Business Council of Australia and joins me now. Bran Black, welcome to the program.
Bran Black, Chief Executive: Thanks so much for having me.
Patricia: Okay, the Prime Minister was on a little earlier. He said he is consulting. He mentioned your group, he mentioned ACCI, he mentioned all the groups over the changes. Lots of ideas are percolating. What is your issue with the changes before us?
Bran: Well, I think the fundamental point that we are seeing come through with respect to these changes is that they create a greater tax burden on business and indeed across the country, and what we’re concerned about in that respect is that Australia is starting from a bad position.
On our own analysis, we rank 38th of 42 competitor countries in terms of the competitiveness of our tax settings. If we increase the tax burden, then that sets us further backwards and makes it less likely that we’ll secure the investment that we need to power our economy forward, and frankly, just to maintain our existing standards of living.
We want all Australians to benefit from improved productivity, and that lifts living standards, but we’re not going to deliver those outcomes if we can’t secure investment with competitive settings.
Patricia: Has this decision to march forward with this legislation without serious changes, the Prime Minister said it wouldn’t be significant changes, damaged your relationship with the Government?
Bran: We continue to engage with the Government and will always look to engage with the Government. If you consider this Budget package as a whole, we’ve seen measures that have been introduced that we strongly support, we’ve seen the productivity package that the Treasurer has brought forward, his steps, his initial steps in terms of reducing regulation, the support for research and development, the changes that are proposed with respect to payroll tax systems, and so forth.
Those were all really positive changes, as are the steps that have been taken around resilience, but we see also these changes in terms of tax and the role of the Business Council at the end of the day is to stand up for what we consider to be the broader national economic interests. We don’t consider that these changes serve that broader national economic interest and that is why we take issue with them.
Patricia: There will be an inquiry. What, in your view, does the inquiry have to look at to be effective?
Bran: Well, I think it needs to look at everything for a start. We were quite concerned today to see that there isn’t going to be a regulatory impact statement that’s prepared with respect to these changes. They’ve been described, of course, by the Government as the most impactful tax changes in the last 25 years. In our view, that necessitates having a full regulatory impact assessment undertaken, and that’s right across the board, whether you’re talking about CGT or negative gearing or trusts, people need to understand what the impact of these changes are on the Government’s own analysis, but it is a short inquiry, and that speaks to one of the many concerns we’ve had with respect to these changes, and that is that at the end of the day, the process has not been as effective or as robust as we would have liked it to be by any stretch.
Patricia: The Government still wants this passed before the midwinter break. The inquiry will report on June 22. Is that too short in your view?
Bran: It is, it’s manifestly too short. We think that again, going back to that point, in terms of the nature of these changes described as the, on the Government’s own language, the most significant changes in the last 25 years.
If we’re going to approach these types of changes in that way, we should have a fulsome inquiry. There should be a robust process that enables all stakeholders to come forward and express their views as to each and every proposed change.
Patricia: The Nationals have challenged the Government to call an election over the tax changes. Do you agree with that view?
Bran: I will leave that type of commentary to the politicians. Our view is always just going to be focused on the policy itself.
Patricia: Okay, inflation data out yesterday, slightly better than expected. What does it mean?
Bran: Well, look, it’s always good to see that inflation isn’t, and isn’t, as high as anticipated, and so we were pleased to see that, but it is still high. So it’s beyond the target bracket, that’s very clear. We know that there are some challenges coming down the strait, and particularly from the Straits of Hormuz.
What we’re concerned about in that respect is that as we move towards the European summer, we know that many European countries have been running down their fuel reserves. We’ve been on the open market, the global market, competing for fuel supplies, as those European countries run down their own supplies, they’ll start competing for the same fuel that we are.
What we’re worried about is that that will put upward pressure on prices here in Australia, and in turn push inflation up. What it all means, we need to really focus on making sure in these times of uncertainty, that we’ve got the strongest possible investment fundamentals, and that brings us back to what we talk about a lot, the quality of our regulation settings, the quality of our taxation settings. Those are the things that investors are looking to right now.
Patricia: Do you have a view on whether the fuel excise cut should be extended beyond July?
Bran: Look, we think that these types of supports, they’re important, but we think that they should be targeted. We think they should be temporary, and we think they should be proportionate to the challenge that you’re facing at the moment.
Now, we think that what’s been applied at the moment is, of course, useful, and that has contributed to the inflation figures that we’ve seen, but we think fundamentally this support, this particular support, and any further support should be targeted to those that need it most.
For instance, I don’t think it’s appropriate that somebody in my shoes should benefit from that type of support.
Patricia: Yeah, well, we’ll see what they do on that one, that’s still, of course, floating around. Bran, thank you so much for joining us.