Event: Tim Reed interview with Ross Greenwood, Business Now, Sky News
Speakers: Ross Greenwood, host, Business Now; Tim Reed, president, Business Council of Australia
Topics: Increase to the cash rate, Same Job, Same Pay

E&OE

Ross Greenwood, host, Business Now: The government is also now seeking the Same Job, Same Pay legislation, which aims to ensure labour hire workers are paid the same as full time workers in the same company. Again, inflationary? You bet it is. In a rare show of solidarity, eight business groups have united to campaign against this legislation. One of those, the Business Council of Australia's President is Tim Reed, who I spoke with earlier.

Tim Reed, president, Business Council of Australia: I don't envy the Reserve Bank, they are in a fairly precarious position. Their overall objective is to make sure that inflation comes back down to that target 2-3 per cent. That is very important. It is important for households, but it's also important for businesses because it allows much greater certainty for decisions to be made. But the increase in interest rates will hurt businesses, particularly small and family businesses. Many of them use a credit card as their working capital, they’ve perhaps drawn down on their family mortgage to be able to fund an expansion of their business over the past couple of years. As those interest rates flow through, that is going to be a direct hit to their family budget. For bigger businesses, it does raise the cost of capital and that makes it more difficult to get investment. We know how desperately Australia needs investment, so that we can keep new jobs coming online, and we can have better paying jobs coming online. So, I don't envy Phil Lowe and his job, but certainly it's going to make it a more difficult environment for business.

Ross: So, going to the Same Job, Same Pay legislation does that, in your opinion, only increase the pressure for wages to rise in the future?

Tim: Look it does a few things. The first thing I would say is the Same Job, Same Pay legislation is not well understood in the community. It is not well defined by the government at this point in time. Part of why these business groups - and we are a part of them - they've been coming out and speaking over the last 48 hours, is we'd really like to get more clarity and more definition on that. It's just not fair that somebody that has 20 years’ experience in a workplace cannot be paid more than someone who has been there for two weeks. We should be able to reward employees that commit themselves to jobs, that build skills, build knowledge and build professions so that they can be paid for the investment that they've made. This legislation, as it's currently framed –  or as we understand it might be framed, I should correct myself there – brings into question whether that can happen. There is no doubt that those things will take away from flexibility in the workforce, and taking away from flexibility adds to the cost of business. So, when you layer on interest rates, when you layer on the Fair Work ruling last week that you referred to earlier, and then you layer this on. It becomes a more and more difficult environment to make investments and a more and more difficult environment to create jobs and as we see unemployment go up, everyone will be unhappy with those circumstances.

Ross: And that full interview will be on Business Weekend this Sunday at 11.00am.

Business Council media team

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