Event: Business Council President Tim Reed interview with Ticky Fullerton and Adam Creighton, Business Weekend, Sky News
Speaker: Tim Reed, Business Council President; Ticky Fullerton, host; Adam Creighton, host
Topics: Victorian business support package, federal budget, economic recovery, Rio Tinto
Ticky Fullerton, co-host Sky News Business Weekend: Joining us now is Tim Reed. He's Chairman of the Business Council of Australia and former CEO of MYOB which of course is a window onto small business as well. Tim thank you so much for joining us. Can we ask you first about Victoria? You, like us I'm sure, are just getting your head around this $3 billion package. I mean is this the sort of thing that you would welcome, this sort of support? And is it going to make that much difference when you think about the extended shut down in Victoria?
Tim Reed, president Business Council of Australia: It's great to be with you Ticky and great to be able to discuss these topics. Broadly we are supportive of what the Victorian government has announced today. It is good that they recognise the impact that the restrictions are having on businesses, and they are severe. I mean, the restrictions are severe and the impact on small businesses are severe. With that goes not just the profit and loss impact but behind these businesses are people and it's those people's dreams, their aspirations, it's what they've put their time, effort, blood and sweat into. So it's great that the government has come out with that support package. It is a large one at $3 billion, a combination of grants, a combination of the deferral of tax payments. There's lots of things in there that the government is showing that they're doing to support small businesses. Of course, at the root of it, we can't just continue to have government support for business, what we need to do is to get the economy turning over again. We do need to lift these restrictions and we've had multiple discussions with the Victorian government about being more far more targeted in the restrictions that they have and really starting to open up the economy so that businesses can thrive on their own without the need for this. But for the time being, absolutely, today's announcement is very welcome.
Adam Creighton, co-host Sky News Business Weekend: Tim, certainly traditionally CEOs and chairmen of the big companies in Australia have been quite reluctant to speak out on the policy front but in recent weeks we've seen more and more criticisms of restrictions. There are calls to open up the economy, bring tax cuts forward and so forth. Is this a good development in your view?
Tim: Look, I think that there have been many voices in the public policy debate for many years and certainly at the BCA we've tried to be a very constructive one. So we have regularly put together for example budget submissions that we make public where we do put forward ideas that we would like to have the Treasurer take up and at different times we'll do that across all different sorts of policy issues. I think what you have seen in the last six months though, as we've been called to be a part of team Australia, is that there has been a lot of collaboration across different groups in the community. There's been a lot of work between the trade union movement and business organisations. There's been more engagement between environmental groups and business organisations and between those like ACOSS that represent on social welfare et cetera. I think as we've been asked to come together and problem solve, what everybody collectively has done has been, a) done that, done it with really good intent and come up with some quite creative solutions and ideas. And then b) they have been willing to speak out about it. And so I think we have seen a lot more voices in the community but that's very much in response to the Prime Minister's direct request for everybody to really work together so that as a nation we can come out of this as well as possible.
Ticky: I mean we've even seen Paul Little from Toll, ex Toll chief, and he's on the COVID commission, calling for a change of thinking in terms of how fast Victoria can open up. But I was really interested in your budget submission which is now out Tim, and you're comparing the cost of support, constantly comparing the cost of support with the cost-benefit of reform, the cost reform and then the benefits of it. In terms of getting the sort of changes and reform that you would like to see in this October budget, what is the best bang for the buck?
Tim: We think the best bang for buck in the October budget would be to have an investment allowance for all businesses, business that are both big and small. What that really means is those businesses that do make investments are able to have an additional deduction from the taxes that they pay. It would be able $10 billion and create about half a million jobs. Now we think the challenge ahead is that it will be somewhere between about 1.5 to maybe two million jobs that we need to create over the next five years, and it took us ten years to create that, if we look backwards in time. So we need to halve the time or double the rate. Business as usual just won't cut it. That $10 billion per annum cost is very, very small when you compare it to almost everything else that is being spent right now. You look at it just in the announcement in Victoria today and that's $3 billion from just one state, whereas this is across the nation. So we think the challenge for the October budget is one of creating jobs. It's one of transitioning off the emergency support measures to more sustainable measures that will drive demand in the economy and that will also then create jobs and drive investment. We think the best thing would be for that investment allowance that would very directly unlock the balance sheets of businesses, big and small.
Adam: One of the other recommendations Tim was to benchmark JobSeeker. I think 75 per cent of the age pension. How did you come up with that three-quarter figure? That's still a substantial increase I would image on the current rate of Newstart, sorry on the old rate of Newstart. Do you see it likely that the government could take that up?
Tim: Look we're hopeful that the government will take it up because we have four objectives when we put our budget submission together. Number one was to reopen the economy and to do that in the smartest possible way, taking into account the health challenges, but really making sure that we did get the economy moving as quickly as possible. Number two was to make sure that we moved and transitioned from these emergency support measures to ongoing demand and underpinning ongoing demand. Number three was to make sure Australia comes out more competitive and to really unlock the balance sheets of governments and businesses. And number four was to make sure that no people and no group in our community were left behind.
Ticky: Would you though Tim, sorry to interrupt, would you support what's thought to be in the budget which is really direct support for things like refineries? That Victorian refinery that might be facing closure. And what do you think of a manufacturing-led recovery?
Tim: So there's three things there. On the JobSeeker, we looked back at history and JobSeeker has been continually dropping as a percentage of the age pension and we think having some relativity there is the right thing to do because we don't want people left behind. It's been in general between 90 and 75 per cent, and it's now fallen below 65 per cent. We think lifting it back up to at least 75 per cent is the right thing to do. In terms of oil refineries, this is the challenge of the restrictions. The challenge of the restrictions is that they're having what could be long term impacts and consequences on industries that could be permanently bad for our nation. So, we absolutely believe that we need to look at those industries that are under pressure. We've done it in relation to airlines, so if you look at aviation it's not just been JobKeeper that the airlines have received but there have been multiple support packages around the removal of airport fees et cetera, because they have been unable to operate in this environment. So, we would encourage governments both federally and state to really look at making sure that we don't have a long term, regrettable incident of an industry leaving Australia because of the short term challenges.
Adam: Tim just finally, we're just running out of time. I just wanted to get in one question of course on the big business news of the week at Rio Tinto, the departure of the CEO. Certainly lots of people are hopeful that the firm might bring back its headquarters to Australia. Is that something that you'd like to see?
Tim: I think the situation at Rio is very regrettable and let's not lose sight of the real impact here which is on the local Indigenous communities who forever have lost a deep part of their heritage, and that's a loss to all of us here in Australia. I do think that companies need to be in close contact with the communities that they are a part of and the communities that they serve. If moving the headquarters from London back to Australia enables Rio to do that then given the majority of their activity is here, I think that could be a very positive thing for company to look towards but I think the more important thing is that they really look at the recommendations that came out of their report around how they can engage with local communities wherever they operate in the world. Because they are a global business and it would be just as devastating if something like this were to happen in another country as well.
Adam: Tim Reed we do have to leave it there but thank you so much for joining us.
Tim: My pleasure, great to be with you.
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