We can’t build a better Australia without business
This opinion article by Business Council chief executive Jennifer Westacott was published in the Financial Review on Thursday 11 April 2019.
An anti-business and anti-growth agenda simply cannot deliver the wider horizons that Australians look for.
Rarely have Australians faced a more important set of policy choices.
Do we really believe the economic growth we’re currently achieving is good enough to deliver the higher wages, better living standards, much-needed infrastructure, and the health and education services that Australians want and need?
Do we seriously believe the economy can continue growing if we don’t do the hard yards of implementing the pro-growth policies that will increase investment to drive productivity and innovation?
We need to stop kidding ourselves and remember that Australia’s fortunes are exposed to global forces, where some elements can be managed but others are beyond our control.
Against these headwinds, every single thing done at a national, community and business level must be to make Australia stronger and more resilient.
Over the past 12 months we’ve travelled to Adelaide, Broadmeadows, Penrith, Gladstone, Busselton, Toowoomba, Geelong, Townsville, Cairns and Hobart, listening to Australians.
Just like other major institutions, employers know we must work to rebuild trust with the community – and we are.
The Australians we’ve spoken to are clear: an anti-business, anti-growth agenda won’t deliver the increased opportunities they want for themselves and their families.
Australians want action to increase their wages, lower their electricity bills and living costs, increase their skills to keep working as technology changes their workplaces, and action to reduce congestion in the cities.
To deliver on these concerns, we must keep the budget in order while accelerating economic growth.
One of the best ways to drive faster economic growth is to increase productivity. This means attracting more investment and innovation, so businesses can improve the way they operate; working smarter and more efficiently.
This has always been, is currently, and will always be the central plank to delivering lasting increases to wages and living standards, outside of a commodity prices boom.
Over the past 55 years, the Australian economy has grown at an average of 3.5 per cent, and experienced five recessions.
But right now, the economy is growing at just 2.3 per cent. To put this in context, consider this: If economic growth averages 3.5 per cent over the next 36 years, the average real income for an Australian would grow from around $75,000 today to around $160,000 a year in today’s dollars.
This is about $40,000 higher than the average income per person of $122,000 predicted in the last Intergenerational Report (IGR).
It would also mean an extra $290 billion plus of tax revenues in today’s dollars – more money to spend on schools, hospitals and infrastructure.
If economic growth runs at just 2.5 per cent a year, then by 2055 each Australian would have an income around $108,000.
Tax revenues would be more than $100 billion lower than the IGR projection in today’s dollars.
To achieve faster economic growth and strong budgets, we are releasing a to-do list of practical pro-growth measures.
On delivering infrastructure, let’s introduce an infrastructure planning trigger as part of a population plan. Population projections would be used to better inform infrastructure planning and investment priorities to meet demand in growing communities, instead of playing catch-up.
On growing regional centres, let’s audit the strengths of regional areas, then prioritise infrastructure dollars for centres with the potential to grow.
On giving Australians the right skills, we need to urgently reform the post-secondary education and skills system. We need to remove the cultural and funding bias against vocational education and training by moving to a single funding model for both VET and higher education.
On delivering higher wages, one of the steps is to maintain and strengthen the enterprise bargaining system, ensuring it works better for low-paid workers. Increasing wages cannot be a quick fix and cost someone else a job or force consumers to pay higher prices.
And we have to reject the straitjacket of industry-wide bargaining that limits the ability of employers and workers to adapt to technological change and prevents them from putting in place the conditions that will work for their individual workplaces.
On taxes, we need to keep personal income taxes as low as possible. We support efforts to tackle bracket creep.
On firing up investment, let’s lower the rate of company tax (in stages) from 30 per cent to 25 per cent for all companies.
We should introduce a broad-based investment allowance that stays in place until the uncompetitive tax rate for larger companies is tackled. It would apply to all investments that are depreciable under current tax law, such as machinery, equipment, intangible assets and buildings.
On lowering power bills, we need a bipartisan long-term national energy policy to ensure reliable, affordable and secure energy. On tackling climate change, action must strike a balance between reducing emissions while protecting jobs and living standards, especially in regional Australia. A price signal that places a value on technologies that produce lower emissions is the simplest, most efficient way to drive the investment and innovation needed to move to a lower-carbon economy.
On Newstart, we repeat the call we have been making since 2011 – increase the single rate and improve the ability of long-term job seekers to find jobs and stay in work.
And, on tackling entrenched disadvantage, we continue to call for a Productivity Commission inquiry into why some Australians are just not getting ahead.
Businesses don’t sit on the sidelines of the economy – they are at its centre. Business is people. Businesses employ 11 million of the 13 million working Australians, and are responsible for 80 per cent of all economic activity in Australia.
Australia has great people, great endowments, and great institutions – let’s get on with it.