Topics: Federal Budget, red tape, tax reform
E&OE
Peter Stefanovic, Host: Well, let’s get back to the Budget and the post-Budget now with more reaction and joining us is the Business Council of Australia, Chief Executive, Bran Black. Good to see you this morning, Bran. So let’s start off with your thoughts and feelings post-Budget.
Bran Black, Chief Executive: Thanks so much for having me. Look, the key thing for us is that we’ve seen some positive change, which is very pleasing, with respect to productivity. The Treasurer’s productivity package is most welcome. The highlight of that, from our perspective, is a commitment to reduce red tape by $10 billion year on year.
And that makes a big difference for Australians and for businesses right around the country day to day, it’s the 37 licences, for instance, that you need to pour a coffee if you’re a business owner in Victoria, or it’s the license that you need in order to change a tap if you’re in New South Wales, if you’re a plumber operating in Queensland.
Those are tangible examples of poor application of red tape. So the process of going down the road of starting to reduce red tape is really welcome. We also welcome the resilience components of the budget, the $10 billion set aside for fertiliser and fuel security.
Where we see challenges and what we don’t support are the measures with respect to CGT and negative gearing. Our assessment there is that overall, they make our tax settings less competitive.
Peter: Okay, so what do you think those changes, those tax changes, will actually do to housing fairness and housing supply, which the Government is saying is the point of it?
Bran: Well, I have seen the Government’s commentary in terms of, as you say, saying that these changes are intended to generate more fairness and indeed, more supply. Our perspective is that when you look at the figures, the CGT and negative changes actually reduce supply.
The total package is intended to increase supply by 30,000, that’s 30,000 over the course of a decade, 3000 a year. That’s against the stated target of delivering 240,000 homes each and every year, which means it comes in at just over 1 per cent of that year on year target.
What we would say is the better way of looking at this is investing in the supply side measures. Ultimately, we need more investors. We need more people to feel confident making investments in property, because it’s the supply that ultimately generates the opportunity that particularly young people are looking for in the housing market. So it’s those measures, like supporting supporting infrastructure, enabling states to facilitate the improvements of their own planning systems, that stuff really matters.
Peter: Okay, so off the back of the CGT changes, then Bran, will venture capitalists and start-ups head overseas now, where the tax breaks are better – Singapore, New Zealand, to name two.
Bran: Well, we certainly hope not, and I appreciate that hope is never a strategy. But I am somewhat pleased by the fact that the Treasurer has indicated that there will be a consultation process with respect to those particular types of businesses, the early-stage businesses. And let’s be clear, we want more of those early-stage businesses in Australia. We want to encourage venture capital. We want the opportunities that they bring because ultimately, it’s that new discovery that drives new industry, creating more jobs, more opportunity for Australia more broadly. So if there’s a consultation process, we hope that those particular negative outcomes can be avoided.
Peter: Do you hope there’s a carve out then because, I mean, there’ll be a huge hit coming for them, right because folks probably won’t invest in them anymore because of those CGT changes?
Bran: I think we would certainly be looking for a carve out in those key areas. As I say, we don’t consider that the net impact of CGT and negative gearing changes as things stand, make our tax settings more competitive.
When the Business Council looked at our overarching competitiveness settings earlier this year as part of the first of our annual assessments in this regard. We came in as a country, 21 of 42 competitor nations and in tax, we came 38th of 42. So we’re starting from a low base in terms of the competitiveness of our tax settings. And our perspective is therefore that if we do anything to our tax system, we need to make our tax settings more competitive, not less competitive.
We don’t have room for error. We have to make sure that we do everything within our power to attract the capital that will ultimately support living standards and improved lives for all Australians. And just to be clear, the Treasurer himself noted in last night’s Budget that if we want to drive real wages, the best thing that we can do is lift productivity. Tax settings are a big part of that.
Peter: Okay, Bran Black, good to see you this morning.