Grant King - The World Today, ABC Radio
31 March 2017
31 March 2017
Topics: company tax, advocacy
KIM LANDERS, HOST: Well, closely watching the corporate tax debate is Grant King, the president of the Business Council of Australia, which represents the nation's largest companies.
He's making his first major public address in Sydney this lunchtime, at an event hosted by the Australia-Israel Chamber of Commerce. Before that, he joined me in our Sydney studio.
Grant King, it's clear the Government's going to have to compromise when it comes to its plan to cut tax rates for all businesses. There's not enough support on the Senate crossbench for its original plan. So, what compromise would the Business Council be happy with?
GRANT KING, BUSINESS COUNCIL OF AUSTRALIA PRESIDENT: Well, firstly, and I won't go through the arguments again, but we've argued strongly for the whole plan being passed, but I accept your comment. You know, current indications that looks unlikely.
When it comes to compromise, the first and most important point is that the plan still stays on the table. The plan's there for a good reason. It's a 10-year plan to reduce the corporate tax rate. In the early part of that plan, those major reductions, if you like, to the larger business don't kick in for quite some number of years.
So, first and foremost, we want to see the plan stay on the table as part of...
KIM LANDERS: So, you want to make sure that it's in next month's budget, for example?
GRANT KING: In the budget, and in the Government's plan. Not just the budget, the Forward Estimates and, of course, the Government's plan for the long term future.
KIM LANDERS: And have you had a guarantee from either the Prime Minister or the Treasurer that they will keep that full corporate tax plan in the budget?
GRANT KING: Well, they are working very hard to have the enterprise tax plan approved and passed through the Parliament. Now, again, I accept the reality, you know, the reality of your observation that that's looking difficult at the moment, but I have every reason to believe...
I think the Prime Minister spoke very, very strongly to this a week ago, so I believe the Government is very committed to putting, you know, keeping their plan on the table, putting it in front of the Parliament, and getting as much of that plan through as they can.
KIM LANDERS: In the meantime, because a compromise is going to be needed... One Nation, for example, says that it would accept cuts for businesses with a turnover of up to $50 million. Would you be happy with that sort of compromise?
GRANT KING: That's a step on the way. I think, at the end of the day, if the broadest context is the plan stays on the table, the Government remains committed to the plan, it is the best plan, in fact, the only plan, you know, to grow the economy and grow the jobs, then...
KIM LANDERS: But you want to see something pass through the Parliament?
GRANT KING: Yeah, that's right. So that... If that was to be where the first step was, well, that's a good first step. And, of course, there are thousands and thousands, I mean, what we call small businesses - all of the small businesses would benefit from that. And at $50 million revenue, you're starting to even see some medium businesses benefit.
Now, of course, larger businesses would not yet benefit from that step, but they would be encouraged that the Parliament has shown support for the plan and taken the first step. Now, it's not a great first step, because then, of course, we have a two-tier tax system.
So, I think, above all other things, what we want to see is a commitment to that plan. We recognise the reality of the Parliament. It may not get through in its full form. It may involve compromise.
We would always urge compromise is better than failure. So, we would far rather see the Government get any part of its plan through, but remain committed to that plan.
KIM LANDERS: Earlier this week, Richard Goyder from Wesfarmers was repeating his warning that companies, including his own, would have to examine options to move some operations offshore to a more competitive environment if the full tax plan wasn't passed.
Can you give me specific examples of businesses who might be doing just that if they don't get this corporate tax cut?
GRANT KING: Well, capital's mobile. I think that's the absolutely critical point. If we look at the Australian economy over the many, many years that Australia's been growing, of course, as a country, we've acquired foreign capital to do that.
It's always been the case that foreign direct investment has been an important part of driving Australian growth, and it's that growth that creates jobs. That's the jobs we want.
There are many investments that Australian companies can make. There's a great deal of expertise in Australian companies. And if that expertise and that capital can provide a better return by that money being invested overseas... In the UK, the tax rate's heading towards 15 per cent. We're yet to see where Trump ends up.
KIM LANDERS: So, how much capital, though, is mobile? How much money really would be taken overseas by Australian companies?
GRANT KING: Well, I don't think it's about saying Australian companies will take money overseas. The important point is investment, and where will that investment occur? I don't think you would need to sort of have this fear that Australian companies are going take their money and go overseas.
What they will do is invest where they believe they can best apply their skills and get the best returns on their capital.
And we are falling behind in that competition. So, it's the investment that goes overseas. And, of course, the problem and the challenge for the Australian economy is the jobs are, therefore, where the investment goes.
KIM LANDERS: Is there something else other than a company tax cut that you would like to see the Government doing in the upcoming budget, in order to drive economic growth?
GRANT KING: There are really two quite important signals, I think, in terms of, what do they call it, the economic health of Australia. We quickly just talked about the argument for tax cuts, and it's fundamentally about investment in Australia, job growth, and growth in incomes.
I think the other very important thing is what you call a budget. So, if you go back five or six years, we've been promised probably, if you looked six years ago, you'd say we were being promised surpluses today. That's not happened. It's probably pretty difficult to think we'll have a surplus in four or five years as well.
The debt will continue to grow. We'll exceed $350 billion by about 2020. The problem there is if, for example, we're at the bottom of the interest rate cycle, interest rates will go up.
That will cost the Australian community more in servicing a very large amount of debt that will compete for other expenditure we like to make on education and health, for example. Balance the budget, but not just balance it, go to surplus so we can start to pay down some of that debt.
KIM LANDERS: You haven't long been at the helm of the Business Council, and you've mentioned that the Business Council is changing its approach, changing its lobbying approach. How are you going to do that?
GRANT KING: I don't think there's any great novelty in my comment that, at the end of the day, the world has changed around us. Politics has changed.
The days when, you know, we had a two party system and we could talk to either side of government, those days are gone, I think. The community has spoken - wants a much more diverse parliament, and, as we can see, in the Senate, getting legislation through is a far more complex issue.
So, quite clearly we need to talk, I think, quite differently to people than we have previously. We need to recognise that the arguments that we would put to the bureaucracy in Canberra, to politicians and their advisors are very different than the arguments that the community at large wants to understand.
I think what the community wants to see is why do we need to do some of these things, and they want to see and hear it in language that they understand and through channels that they're used to talking through, and that's very different from today.
I'm sure radio will remain a very, very important channel for communication, but, at the end of the day, we all know that people are receiving their information in very, very different ways, and we need to make sure we're talking directly with the community about why we advocate for some of the things that we're arguing for.
KIM LANDERS: Grant King, thank you very much for speaking with The World Today.
GRANT KING: Thank you very much, Kim.
KIM LANDERS: The Business Council of Australia president, Grant King.