Event: Tim Reed, Business Council of Australia president interview with Kieran Gilbert, Afternoon Agenda, Sky News
Speakers: Kieran Gilbert, host; Tim Reed, Business Council of Australia president
Topics: Response to the Prime Minister's National Press Club address; Business Council of Australia's federal budget submission
Kieran Gilbert, chief news anchor Sky News: President of the Business Council of Australia, Tim Reed, thanks very much for your time. First of all, your overall view of the Prime Minister's address and what he's describing as a Modern Manufacturing Initiative. What do you make of it?
Tim Reed, president Business Council of Australia: Look, I think there's lots to like in what the Prime Minister announced today. Firstly, he acknowledged that there needs to be good underlying fundamentals in the economy for all businesses to thrive. These are things like a competitive tax system, to making sure that we've got good trade arrangements in place, that skills are being invested in, industrial relations have got the appropriate settings and that the energy prices are there, so that all Australian businesses can flourish. But then there's the $1.5 billion that was announced, really around this modern manufacturing initiative, which is about helping manufacturers in Australia, and yes in specific industries, to ensure that they are able to commercialise ideas into products, to ensure that they are able to create the scale so that they can compete on a global basis and to make sure that they are able to participate in global tenders. And those are all really good things for our nation.
Kieran: The PM focused on a few areas like resources, medical, food, and beverage. What did you think of the areas that he chose to zero in on? Clean energy was another one. Give our viewers a sense of just how much scope there is. Is there scope to scale up those industries and make them internationally competitive?
Tim: Yeah, so he did. He focused on six specific industries and there's always criticism of anyone who suggests that we should start focusing in particular areas because of what's not included. But I think we've got to recognise that Australia is about 2 per cent of global GDP, that we are a wealthy nation and in large part because we're an open trading nation. When you're 2 per cent of global GDP, but are an open trading nation, you're not going to be good at everything. We're just not big enough to be able to create the scale to be good at every single thing. And therefore, if any company were looking at this, you'd absolutely say, well, let's pick a few areas to focus and make sure we do really well at those. Some of what he chose are quite obvious areas, mining and minerals, resource technology, we've got the world's best miners here, but the more that we can encourage investment in the commercialisation of ideas that make mining even more productive, then that's a great thing for our nation. Food and beverage, we have a great agri-sector and it's a large sector and it is an area again where we've got some real breakthrough research that has occurred. So, I think there is a logic to the areas that the government has selected. I think if you asked a hundred people they'd probably all come up with slightly different lists of the areas that government should focus but I think the six that they've chosen would all be close to the top of the list of most informed perspectives.
Kieran: And given your background particularly at MYOB, and the digital focus over recent days, does the government have that right? Because they're saying during the COVID pandemic business, individuals have been moving online more, are they getting that right in terms of that strategy in your view?
Tim: I think everything that the government announced in terms of the digital announcement a few days ago was absolutely headed in the right direction. I think there is more that the government could do but as a- if you like - a down payment, and you've got to remember that these are fairly extraordinary times that the government is dealing with, there was some really good long-term direction and markers that were set down. Certainly in terms of the infrastructure around broadband and around 5G, they were great announcements. Also in terms of digital government, that was a first couple of steps where the government is investing over half a billion dollars. Absolutely headed in the right direction. We would like to see more to help small businesses adapt to the digital uptake that is currently underway. We'd like to see the government do more in terms of things like E-invoicing, because we know that it costs about $25 across all participants every time an invoice is sent from one party to another and we think it could be a real source of competitive advantage in Australia if we were a leader in E-invoicing. So there are areas like that but what the government has done is shown that they are absolutely interested. They're putting some action behind the Prime Minister's commitment to make us a top five digital nation by 2030, and my hope and my belief is that there's going to be more to come in next May's budget.
Kieran: Yep. Okay. And finally, let's look at this coming Tuesday's budget because there's been a lot of talk about an investment allowance, incentives basically for business to invest. Would you like, I know the Business Council of Australia has included that as a big part of their submission, how pivotal is that to drive the sort of growth that we need out of the recovery? Because it looks like the company tax cuts won't be preceded with but this investment allowance, how pivotal is that?
Tim: It is absolutely critical. So in our submission to the government for next Tuesday's budget, we called for four things. One, to make sure that there is an emphasis on opening up the economy so that businesses can really start to trade again. The state borders et cetera, we need to streamline those processes dramatically. Two, to move from emergency support to long-term sustained actions that will underpin demand in the economy. Three, to put in place measures that will unlock the balance sheets of both governments and business. And four, to make sure no one is left behind. So, if I go back to that third one, an investment allowance is absolutely critical. We know that Australian businesses would like to invest. We know that there is a pipeline of opportunities. You know, the Prime Minister spoke about clean energy today, there is over a hundred billion dollars of business investment ready to go into clean energy opportunities but often the ROI, the return that the business will get, isn't there relative to investing somewhere else because of our tax regime. So, we believe that an investment allowance which would cost about $10 billion a year, which is less than JobKeeper is costing every single month, would create about half a million jobs and would drive the economy to be about $200 billion larger in 10 years’ time. So for us, it is absolutely the number one thing that is needed. We need jobs and the single biggest thing that we could see happening next Tuesday night to underpin those jobs and to get people back to work is an investment allowance.
Kieran: Tim Reed, President of the Business Council of Australia. Thanks, great to chat. Talk to you soon.
Tim: Always a pleasure. Thank you.