Tim Reed interview on Business Weekend, Sky News with Ticky Fullerton and Leo Shanahan

20 October 2019

Event          Tim Reed interview Business Weekend, Sky News

Speaker      Tim Reed, Ticky Fullerton, Leo Shanahan

Date            20 October 2019

Topics        Incoming Business Council President, surplus, the economy, workplace relations, big stick legislation

Ticky Fullerton, host: Tim Reed, well congratulations on your new role. In two to three years, which is about the time a president spends at this, how would you like to be measured? Your success?

Tim Reed, incoming BCA President: Firstly, Ticky, thank you. It is a privilege and an honour to be put forward by the board for this role and it's something that I'm looking forward to immensely. The BCA exists to help ensure that Australia remains a prosperous nation. We want that prosperity to be shared by all Australians. The BCA wasn't set up just to represent a voice of business, but it was to make sure that business contributes to that vision of a prosperous Australia and an Australia where all Australians are able to see improvements in their standard of living. In two or three years, I want to make sure that the BCA is known for that. I want to make sure that the BCA is contributing actively to the public discourse and to the conversation around what sort of nation we want this to be.

Ticky: It's been a bit on the nose. Let's face it.

Tim: Well look, I think the BCA has worked hard over time and, if you look over the last three decades, continued to work and contribute towards that. It's a role that is involved in a political discourse and I think political discourses have habits of going in different directions. But I actually think the BCA has been a very positive and constructive voice in that, but I do think that times change and the way in which that voice is conveyed needs to continue to progress and move forward.

Leo Shanahan, co-host: Okay. Tim, on that point that Ticky alluded to, the BCA has been criticised in the past and perhaps not getting involved enough, especially in recent years in political debate about Australia's future and its wealth. Can we expect a different kind of BCA under yourself?

Tim:  I think the BCA has been criticised at times for being not involved enough in conversations, and other times for being too involved in conversations, the conversations that it is involved in or the conversations that isn't. And I think that is just part of the nature of these organisations and this role. I think the BCA needs to be present in conversations about the future of our nation because 11 out of Australia's 13 million workers work for businesses and if we want those people to have prosperous futures, if we want to see incomes rise, we need to make sure that Australia remains competitive on the global scale in terms of a place to do business. That is the role that voice has to bring. Now, what does it mean to be competitive in business then? You know, frequently that's about public policy. It's about industrial relations, it's about tax et cetera. But it's also about the workplaces that we're creating. It's about our vision of the workplace of the future. You know, if you talk to a CEO, they understand those hard things, but they also understand the importance of bringing people on a journey. And so, I think the BCA needs to be a part of that discourse and needs to be a part of that conversation. I'm very proud of what businesses do every single day. I'm proud of the jobs that we create. I'm proud of the incomes and the prosperity the we provide to Australians and so I will be an active part of that debate and I think that is a part of the role that the BCA plays and one that I'm looking forward to personally acclaim.

Ticky: A clear and present danger is this level of government intervention, which seems to be happening everywhere in big business. We've got the energy big stick, we've got the NBN mission creep into sort of cherry-picking telcos business. We've got big bank intervention for example by regulators and the ACCC. Now you're close to small business, from MYOB, you’re a tech guy. You are not a banker, you are not an energy man and actually you don't come from a telco. Is that going to help do you think? Not having that baggage?

Tim: Let me tackle a couple of things there, Ticky. Firstly, you're right, there are all of those areas where the government is leaning in and is, I'd say, you know, reaching further into those sectors than they have in others. I haven't thought about whether it's helpful or unhelpful to come or not come from there. But I do think that what I bring to this role is an understanding of the positive role that business can play in the community. I look at those things quite objectively. So, if we take the big stick legislation, for example. I think that does create sovereign risk with it. You know, that makes it bad for investment. I'm not in any way convinced that it's going to bring down power prices and so I'm going to be very happy to speak my perspective and the perspective of the BCA on those things.

Ticky: I've just spoken to the energy minister and he, I believe, has ruled out, in the vote that comes next month, ruled out and any sort of extensional mission creep across other parts beyond the energy sector, you'd be happy to hear that?

Tim: I would be happy to hear that; that's good news.

Leo: I wanted to ask you on a macro level, Tim, there's this debate about surplus fetish and is it something really worth pursuing in an economy that looks increasingly, if not going through recession, at least stalling and globally all sorts of concerns? The IMF was out this week downgrading both Australia and global expectations. Is surplus worth it for the sake of it or should the government be investing in a stimulus?

Tim: We think given the current economic conditions that the government should stay the course and should deliver the surplus it has been hard fought for and it will be a hard-won outcome when it is achieved.

Leo: Even if the economy is going backwards?

Tim: Well, Australia is in a period of 28 years of continued economic growth. We are in a period of a global slowdown, but if you look at the G7 economies, we're still growing faster than all but one of those economies. So, what we think the government should be doing is taking a medium-term perspective and focusing on policy areas that will drive productivity. So, if you think there's monetary policy, there's fiscal policy and then there's a reform agenda, we would really like the government to focus on the third of those, which we think is the most sustainable way to make sure that we have medium term economic growth.

Ticky: Part of that reform agenda involves industrial relations, which is always the hairy one isn't it? Jennifer Westacott, your CEO, talks about the number of EBAs falling by I think 20 per cent and they are the things that have driven productivity. How are you going to turn that around?

Tim: Yeah, that is a great question, Ticky. It's a very tricky area but when we stand back and look at the EBAs, we think enterprise bargaining overall has been a success and it did lead for a period of almost a couple of decades of continued rising real wages for people who were covered by those EBAs and that was faster than the general economy. When we look in recent years, it has started to drop off and we believe that is that one of the largest contributing factors to that is the better off overall test.

Ticky: The PM says you've got to prosecute your case, can you do it?

Tim: Yeah, absolutely. So, this was a change that was made. There was a no disadvantage test that was brought in when a new EBA came into place. Those rules were changed to what was called the better off overall test. What we've seen since then is that everything has just clogged up in the system. EBAs are not being approved. Even if unions and employer groups agree, they're getting stuck in Fair Work Australia because of this test. I think it was probably brought in with good intentions. I think it's had a very negative impact and I think we need to really examine removing that or even reverting back to where we were prior to its introduction.

Leo: Tim, we discussed stimulus and one of those is possibility of more tax cuts. There's both personal tax cuts, but business, company tax cuts. Have you given up on that particular crusade? You lost the first time around in the last electoral cycle, will you continue to push the Morrison government for further company tax cuts?

Tim: Yeah, I would actually argue that we won the debate the first time round. We just didn't get the parliament to legislate. What happened when we discussed company tax rates is the majority of the Australian population ended that public debate supporting a reduction in company tax cuts for all companies. What we saw progressively over time as that debate took place, that more and more people understood the importance of Australia being a competitive place to do business. You know, for the majority of those, sort of, almost three decades of continued economic growth that we've had, our company tax rates have sat just below the OECD average. We've seen them creep up into the third quarter and now they're right up in the very top quartile. So, we have one of the highest tax rates of the OECD. Now, that is not a competitive place to do business. You know, Australian businesses are therefore more encouraged to invest overseas. Overseas businesses aren't encouraged to invest in Australia. So, we're going to continue to make that point because we believe if we want to have continued economic growth, it is an important policy agenda. That said, we're not expecting the government to do anything in this term of parliament because they were very clear that's not going to happen. What we are encouraged by are the discussions that the treasury has put out there about an investment allowance because we do think a step towards that could be using the tax system to encourage more investment in business.

Ticky: Tim Reed, you've got a huge agenda ahead of you. We wish you and Jennifer Westacott a lot of luck. Thank you very much for coming in.

Tim: Thank you. Great to be with you both.


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