BCA Chief Executive Bran Black interview with Sky News Business
Edward Boyd Host, Sky Business: To hone in on the priorities and concerns of Australian business leaders, I caught up with Bran Black, the CEO of the BCA.
Bran Black Chief Executive, Business Council: The key messages that we were pushing in our annual dinner, and that will continue pushing, are the importance of making sure that Australia is competitive in terms of its settings so we can deliver the investment that's required to drive productivity. And the second point is that critical role of business really acknowledging that it's business big, medium, small that fundamentally underpins Australian prosperity and our way of life in her way of life, and we've got to make sure that there's a strong emphasis on backing policies that are going to support businesses success.
Edward: Geoff Culbert on Tuesday night, said it's now becoming taboo to make a profit, but successful businesses are the backbone of our nation, aren't they and profits are just part of running a good company?
Bran: That's absolutely right. I mean, consider the counterfactual. When you see countries in which businesses are not doing well, you see jobs go offshore. You see business, of course, closed. That's the opposite of what we want to see. You've got to remember that in Australia, six out of seven jobs is supported by the private sector. In (financial year) 23/24 $145 billion in taxes were paid by companies. That's almost a quarter of all Commonwealth tax revenue. And then there are the dividends, the dividends that, of course, get paid to mums of dads, but also they go towards the 16 million Australians that have superannuation accounts. It's that business success that is fundamentally underpinning our prosperity and our capacity to continue to enjoy a high quality of life.
Edward: If we recap some of the key parliamentary events this year, there's been a price gouging inquiry to supermarkets, calls to restore divestiture powers to break up large companies and a Robin Hood super tax as well. Look, has populism really come at the foreground in recent months?
Bran: We are concerned. At the end of the day, the key issue, the key issue that we're all trying to address is cost of living. Now, cost of living is a hard challenge, but fundamentally, there are two key areas that we would assert as being the basis for good policy in this respect. The first is reducing government spending. The second is really attending to the hard productivity driving reform that we know is absolutely necessary if we are to ensure that we can lock in that quality of life for our children. If we're talking about Robin Hood taxes that come from The Greens or divestiture proposals, we know that they're just scapegoats. They're not policies that will deliver us that economic growth and the opportunity that we're looking for into the future.
Edward: You mentioned the Robin Hood tax from The Greens. Are the Greens really the ones that are leading the populist charge here against big business.
Bran: I think that's absolutely correct. You know, the reality is, as I say, big business underpins with small business and with medium businesses. It's business altogether working together that helps underpin our quality of life. You know, the exchange between big and small business is worth $700 billion to our economy. That's a total economy in Australia for about $2.67 trillion so it's getting up towards about 30 per cent. So it's that business environment that counts and if you're going to have these types of policies, then they just do the opposite of what we want to see. You're really setting yourself up a failure of these types of taxes. And you've got to remember here that Australia already has the second least competitive company tax rate in the OECD. You know, this time last year we had the third least competitive company tax rate. We've dropped a spot. We're ahead only of Columbia, and there's a reason for that. Our peers in the OECD recognise that by having competitive settings, including tax settings, they can go about attracting investment. And it's an investment that drives jobs, that drives prosperity, and as I say, that's what locks in a capacity to live up long term quality of life.
Edward: The mining sector is clearly concerned with the three tranches of IR legislation that have been introduced over the past 18 months or so. It doesn't sound like the Government will yield to your request to end multi-employer bargaining. So you know, where do we go from here?
Bran: Well, we're going to keep making the case really strongly. We know that the Government said in the course of the last week that it doesn't propose to backtrack on the changes that it's made. I won't use the word reform, because it's not reform. These are ultimately negative changes, and they go to the capacity for individual businesses to be able to compete as they want to. If you consider multi-employer bargaining, it's administratively easy for unions to be able to lump employers together simply because they might be in the same sector or in the same jurisdiction. But ultimately, what drives business success is the capacity for individual approaches to how you engage with employers, how you engage with the suppliers.
Ultimately, businesses are competing, and we need the best possible environment to compete. Multi-employer bargaining is the opposite of what we want to see. It is a top down, very square peg into round hole approach. We don't want to see that. We want to see more engagement, more opportunity for enterprise level workplace arrangements. Now we'll keep making those cases. We acknowledge that the Government has been very clear in terms of its own position.
But what I'm most concerned about is that we've seen this week with Minister Watt’s speech to the National Press Club, the government may be considering further rounds of industrial relations reform. We're deeply concerned by that, deeply, deeply concerned. We already know that businesses are suffering as a consequence of the changes have been made over the course of the last 18 months. The simple reality is that business can't afford to see more of that.
Edward: You mentioned Government spending a minute ago. This week, the US Federal Reserve cut interest rates by 50 basis points, but our Reserve Bank can't really act yet because inflation is too high. And a big role, I believe, is that government spending. So how does the Government change this? They obviously want to keep spending money. We've got an election coming up, but they're dealing with inflation as well.
Bran: Government spending from memory here is about 26.4 per cent of GDP. That's the highest its been other than during Covid since 1987. We've been proposing a series of measures for some time. We think it’s very important in the context of trying to make sure that we can maintain government spending at a manageable level. For instance, we'd like to see a cap on government spending increases in year about 2 per cent and equally, we'd like to see a tax-to-GDP cap of about 23.9 per cent. As to the other point on activity, the Reserve Bank’s being very clear in its commentary around interest rates and around its decisions at the board level, that what we fundamentally need to see as an increase in productivity.
Now, right now, economic growth in Australia is sitting at about 1 per cent over the course of the last year, and over the course of the last year, productivity is at 0.5 per cent. The long run average for economic growth is around 3 per cent and for productivity it's about 1.2 per cent. It's getting up to those higher levels that should be our priority, because we know that when we have those higher levels, we guarantee that high quality of life that I talked about before. What we also know from last year's Intergenerational Report is that if we project 40 years into the future, we're facing into a revenue to expenditure gap of about $140 billion a year.
If we want to address that and make sure that we're not bequeathing to our kids a lower quality of life, because that would necessarily involve high taxes, we've got to make sure that we're taking the steps now to deliver productivity enhancing reform.
Edward: Yeah, I remember in February you proposed a national reform fund to offer financial incentives to states and territories to help improve productivity. You know, is that proposal starting to gain some traction, just because productivity, as you say, it's incredibly low right now.
Bran: We think that that's such an important proposal. If you look at the late 90s and the early 2000s with competition reforms, payments were made by the Commonwealth to states and territories, and $5 billion was invested … that time, and that's delivered today, a $16 billion year on year dividend to our GDP. We'd like to see similar approach taken with respect to what we've described, as you mentioned, a national reform fund. Again, incentivising states and territories to undertake that really long term productivity enhancing reform that's absolutely necessary.
We know from the Productivity Commission that a lot of the really productivity driving reforms do sit at the state and territory level. In that regard, I'm talking about payroll tax reforms, stamp duty reforms, what we can do with respect to making sure our planning systems work better, that's the kind of stuff that will make such a big difference. And I consistently hear from businesses that those are the areas where we see challenges.
Edward: Okay, so you're in New Zealand at the moment. What's brought you over there?
Bran: Yes, I am in New Zealand. I'm sitting here in Auckland. The BCA is fortunate enough and very privileged to host the Australian side of the Australian New Zealand Leadership Forum. That Forum has been around for about two decades, but we've just really sort of given it a bit of a boost and tried to put a lot of energy into it, because we regard it as important. What it does is bring together CEOs from both sides of the ditch, so they can address issues that underpin economic opportunity and development across both sides.
This Forum is really much focused on where we can find alignment, alignment with respect to standards, rules, regulations and so forth, but particularly with respect to the energy transition, digital economy and so forth. We had our first meeting post reboot, if I could use that expression, in Brisbane some weeks ago, that was attended by ministers on both sides and what came out of that is that, because the economy is changing, there's scope for us to make sure that our rules and our regulations have that level of alignment that's really up to date and quite modern. So that's going to be the focus, I think, for these discussions.
Edward: Bran Black, Chief Executive of the Business Council of Australia thanks for coming on the program.
Bran: Always my pleasure. Thanks for having me.
