Topics: Productivity, regulation, investment
E&OE
Alica Barry, Host: The Business Council of Australia’s Chief Executive Bran Black joined me to discuss. Bran Black, welcome to The Business.
Bran Black, Chief Executive: Thank you very much for having me on the show.
Alicia: This week, the RBA Governor Michele Bullock suggested that productivity is doing nothing. Is she right and is the Government doing nothing?
Bran: Well, I think it’s absolutely clear that productivity is doing nothing. Indeed, on our analysis, productivity is doing less than nothing. In the last 12 months, it’s actually gone backwards by 0.2 of a per cent. What this points to is the importance of taking action that will turn this position around.
Ultimately, productivity is the primary driver of real wage increases, but it’s also obviously so critical to our capacity to reduce inflation. If we want to get ahead of the curve, if we want to give Australians the best opportunity to get ahead, then we need to look at our productivity settings, particularly in terms of taxation, regulation, industrial relations, and planning.
Alicia: Michele Bullock also said that business needs to step up to the plate to help drive productivity. Does it?
Bran: Well, we agree we want to see business step up and do more, but business is confronted with uncompetitive settings that make it more attractive to invest capital offshore. We see in our own analysis the BCA’s International Competitiveness Index that what that shows is that Australia ranks 21 of 42 competitor countries, and critically, we’re behind key economies like the US, the UK, Canada, and New Zealand.
And on core metrics like taxation and regulation, we want to make sure that we’ve got the right type of competitive settings that draw companies’ attention and make them more inclined to invest capital here.
Alicia: Isn’t a productivity lag a result of a lack of investment by business intergrowth?
Bran: Well, that’s exactly right. We get productivity by getting more business investment, but we get more business investment by having more competitive settings.
If you look at regulation as an example, our economy is drowning in red tape at the moment. $160 billion in cost each and every year. That’s worth about 6 per cent of our GDP. And what we see is that other economies are looking at opportunities to reduce that burden. The United Kingdom and the EU both have targets to reduce the burden of red tape by 25 per cent.
Alicia: Can you suggest some examples of red tape that could be removed or altered?
Bran: I certainly can. There are some great examples that are really standing out at the moment. The first, of course, is the work that is already underway in terms of the environmental planning at a federal level. The EPBC Act, at the moment, requires some projects to seek federal and state approvals.
Equally, we see that there are all sorts of challenges on the ground for businesses day in day out. We know, for instance, that if you’re pouring a cup of coffee in Victoria, you need about 37 different licenses before you can do that. There’s got to be a better way of approaching that.
Equally, we see that for a plumber in Queensland, if they want to do some work in New South Wales, then often they need a new licence in order to do that as well. Those are absurd examples of where red tape is standing in the way of our economy’s potential to perform.