President's address to the Business Council's 2018 annual dinner
21 November 2018
I would like to welcome you all here this evening and particularly welcome the Prime Minister Scott Morrison and thank him for making the time available to talk to us this evening.
I would also like to acknowledge and welcome the former Canadian Prime Minister, Stephen Harper; as well as those Ministers and Shadow Ministers, Departmental and Agency Heads that are here this evening.
I would also like to thank my colleagues on the BCA Board, our Members for their support and contributions; the leadership shown by our Chief Executive, Jennifer Westacott; and thank the Business Council staff for their efforts over the year.
Before I call on the Prime Minister to speak, I would like to reflect briefly on the year just past.
Any reflection must begin by acknowledging how difficult a year it has been for the reputation of, and decline in trust, in business. A decline of course matched by a decline in trust in all our major institutions. I think there has been two contributing factors.
Firstly, a focus on business behaviour through, but not confined to, the Royal Commission, which has highlighted behaviours well below community expectations. To restore trust requires individual businesses to act appropriately in response to the issues they face. In our discussions with many member CEO’s and Chairs these issues have been acknowledged and are being progressively addressed.
Business is not alone with this breach of community trust as has been evidenced in other Institutions. NGO’s, Government and media have also had their fair share of egregious behaviour.
The important point here is not about the company we keep but to acknowledge these events have occurred and to be clear that they do not define us in business or in any other Institution. No one would argue that we can do without NGO’s, Government and Media. These institutions still remain a great force for good as does business.
I think all Australians have a high level of agreement on what we most want from the Country we live in.
- Meaningful jobs
- A growing income
- A social safety net that looks after the genuinely disadvantaged.
Business plays a key role in delivering these things.
Every six months over 100,000 people, a city the size of Ballarat, enter the workforce. Business finds jobs for these people. Business employs five out of six working Australians and contributes 80% of economic activity. Big businesses such as those represented by the BCA account for the majority of Australia’s exports and for 60% of corporate tax payments. The success of small and big business is inextricably linked with trade between the sectors being about $500 billion per year, and the importance of this relationship is acknowledged through the Supplier Payment Code initiated by the BCA.
The paradox is that despite the decline in trust in business, in Australia 75% of employees trust their employers, up 20% on the prior year. To make sense of these numbers one must assume that the businesses people don’t trust are not their own.
Secondly, I believe another factor that has damaged the reputation of business is the relentless propagation of mistruths regarding business by groups with other agendas – a matter I will turn to shortly.
The BCA will continue to call these mistruths out whenever they occur. I won’t give a long list of these mistruths here, and there are many, but some of the most common are;
Mistruth – companies don’t pay their fair share of tax.
Fact – according to the Tax Commissioner, company tax compliance by businesses in Australia “is around global best practice”. Companies paid $86 billion of company tax last year.
Mistruth – work is becoming less secure, casualisation is increasing and job security is declining.
Fact – casualisation in the workforce is at much the same levels since the mid-1990s, and involuntary job loss as a proxy for insecurity has almost halved in the last twenty years.
Mistruth – that inequality is increasing.
Fact – according to the Productivity Commission inequality has in fact declined recently and has only risen modestly since the 1980s. Importantly, the Commission found that sustained growth has delivered improved living standards across all income groups.
At the BCA, the two most significant policy issues we have strongly advocated for during the year were competitive tax rates and sensible energy and environment policy.
In respect to tax, the Parliament chose not to support this for larger businesses. When it became clear that this matter would not progress through the Senate we thanked the Government for their efforts and criticised Parliament for condemning Australia to an uncompetitive tax rate at least for the foreseeable future. This issue will not go away and must inevitably be addressed.
When the Government did not bring forward the National Energy Guarantee in the form that so many had worked hard to achieve we expressed disappointment at the missed opportunity this represented. This is a matter that many of our members feel strongly about. Whilst we know the importance of a competitive energy price, the issues are more complex than this. The community expects all jurisdictions across all levels of government to work with business to deliver leadership on this issue.
In light of these circumstances we have revisited our policy agenda through discussions with member CEO’s and Chairs and our Business Summit with members seven weeks ago.
We look forward to discussing this agenda with our members in our meeting tomorrow but want to share the broad context with you this evening.
In short, growth matters and we need good policies to drive that growth.
We are nostalgic about the major policy reforms from both sides of politics in the 1980’s and 90’s that arguably underpinned a period of growth that has seen the Economist magazine label Australia as boasting “the world’s most successful economy.” We lament the difficulty our governments have in implementing major economic reform today and fear that in its absence our prospects for the future are diminished.
It is a strange situation when there are so many positive economic and social indicators that there is so much negative sentiment in the community. Some might say that it is because wages growth is low, that expectations are too high, that too many people want too much. We say that in a prosperous, democratic country expectations should be high but there are only two ways to fulfil them.
The first is that some benefit at the expense of others. This is the argument from those that don’t have a plan for growing our economy. These are the people I referred to earlier who seek to argue that business is somehow unworthy of the policies that will allow it to prosper and spread mistruths to support their cause. That business somehow has too much and everyone else so little – an argument that is difficult to understand when all business is, is the sum of the people who depend on it. Employees, customers and shareholders – in short all Australians.
The second way is too make sure the economy is on a path of sustainable growth.
It is encouraging to see last quarter GDP growth of 3.4% - we have been calling for sustained GDP growth in this range to create the capacity to meet community expectations. We saw in the last budget the benefits of growth. Prime Minister, you as Treasurer, showed how increased revenue from business taxes created a more confident pathway to budget surplus whilst allowing many to benefit from personal income tax cuts.
The contrast in these two approaches is stark. More for me or more for all. Those organisations whose primary focus is more for me set up rancorous, win – lose debates that erode community confidence in all institutions.
At the BCA our focus has and will continue to be on more for all by sharing in the benefits of a more strongly growing economy.
A growing economy drives growth in jobs and incomes and is driven by investment and innovation.
Australia has always been a net importer of capital to fund investment and growth. For this to continue to be so we must be a competitive destination for investment. Business investment in Australia remains, as a share of GDP, as low as it was coming out of the 1990s recession and if we see a downturn in housing investment, which many economic commentators increasingly see as quite likely, then business and dwelling investment might together fall, not grow.
The US is the largest source of foreign direct investment in Australia. It makes no sense that following reductions in US tax rates that have now made the US much more attractive for investment than Australia that we have done nothing to improve our competitiveness. In the World Economic Forum’s Global Competitiveness index the US ranks first, Australia 14th. Not that good for a country that depends on investment and trade for its prosperity.
This is even more problematic when the fastest growing source of foreign direct investment amongst our major trading partners has been a China with whom we have a more complex investment relationship.
That is why one of our major policy focuses will be on competitiveness in all its forms – tax, energy, industrial relations, regulation and project approvals to name just a few. We must be an attractive destination for capital if we are to grow at the desired rate.
The other major area of policy focus is innovation and education. At a recent presentation at the National Press Club, our CEO Jennifer Westacott launched our work on what many call the ‘future of work’. This work is publicly available, and I commend it to you. In short the prospects for the future of work are good – not to be feared. Provided we get our policies right on education and innovation.
I am sure that you have all heard the comparison that five of the top ten listed US companies are less than thirty years old and all of Australia’s top ten are more than thirty years old. Our ability to create new businesses in a future of rapid technological change is critical if we are to create a future of sustained growth, job creation and income growth.
We need to embrace policies that will allow these things to occur and oppose policies that will put this at risk.
To state the obvious the next Federal election must be held next year, most likely by May. We know it’s a contest and we wish participants well. What we most want to hear is a contest of ideas, of priorities and policies that our politicians believe will see Australia grow – because to be a better place in the years ahead we need to grow. History shows that in the long run it takes hard work and good policies to assure this growth.
As I said earlier we very much appreciate the Prime Minister giving us his time this evening to share with us his vision, priorities and policies that he will take to the Australian people in the weeks and months ahead.
As he comes to the stage to speak he needs no formal introduction from me as he is well known to this audience. The last time he addressed a BCA audience was as Treasurer presenting the 2018 budget in a presentation widely regarded by our participating members as one of the best budget presentations in many years. We are now looking forward to your presentation as Prime Minister. Please welcome the Prime Minister to the stage.