Tell Big Business They're Dreaming


You’ve got to hand it to Australia’s business lobby: they know how spin a good yarn.

That’s about all you can say for the likes of the Business Council of Australia, the Australian Chamber of Commerce and Industry and the AI Group, though. When it comes to the broader interests of Australian business, let alone the Australian society in which business operates, our business leaders are letting us down badly.

That’s the take-home message from this week’s economic forum, convened by Prime Minister Julia Gillard in Brisbane.

Gillard is conscious of the constant criticism of her government from business, and this forum was an attempt to listen to business leaders, present them with the best economic information the government has to offer, and to propose ways to achieve key business goals — like lowering taxes.

And that was what happened. Those present included a fair swag of Australia’s top executives, plus the usual suspects from the big business lobby groups. And they got to hear about the economy from some of the best-informed people in the country, like the Governor of the Reserve Bank, Glenn Stevens.

Stevens’ presentation was a wake-up call for any business leaders claiming that Australia’s economy is in the doldrums. Australia’s real GDP has outpaced every other major industrial nation: Canada, New Zealand, the Euro zone, the US, the UK and Japan. Our household wealth is rising. Our unemployment rate is low, and so is inflation.

The mining boom is benefiting consumers and businesses in all sorts of ways — for instance by making imports cheaper. Given that most Australian businesses sell their wares domestically, but use some imported goods and services for their business inputs, this is actually improving their bottom line.

Stevens also pointed out that he much of the pain currently being felt by the retail sector was due to Australians saving more: a good sign for the future. Australians are saving more than they did during the long boom of the Howard years, he explained. Indeed, they have to, because for much of the 2000s, they didn’t save anything at all.

"There’s no science really, I don’t think about what is the correct or normal saving rate," Stevens remarked drolly, "but I’d hazard a guess that zero probably isn’t normal, probably isn’t optimal and probably isn’t sustainable… that was always going to change."

And the Prime Minister was listening. If business wants lower taxes, then she told those assembled that she wanted to deliver them. "We’ve heard you loud and clear on the company tax rate," she said yesterday. "We see it as the priority for the next step in tax reform."

Gillard told the forum that she would be happy to find a way to lower company tax rates, if a way could be found to keep it revenue-neutral — that is, to finance it without further cuts to government spending. "We’re in the cart for a lower company tax rate but it has to be affordable," she said. "And that means it has to be funded by other changes in the business tax system."

This is not an unreasonable position to take. Australia’s government spending as a percentage of GDP is amongst the lowest in the OECD. In this year’s budget it will be 23.5 per cent, the lowest since 1993. Among the things that government spending pays for are many of the things business says it wants, such as transport infrastructure like roads and ports, as well as education and training for businesses looking for skilled workers.

But could business agree to such a proposal? No. "We think that [tax cut]should be through finding savings," the ACCI’s Greg Evans told ABC radio. According to Fairfax’s Tim Colebatch, the BCA’s Jennifer Westacott agreed. The AI Group’s Innes Willox reportedly called the proposal "ludicrous".

Lowering taxes by broadening the tax base? Not for Australia’s business leaders. They want lower taxes and lower government spending. Oh, but they also want all the good things that government provides, like more infrastructure, a stable rule of law, a sound currency, government-funded science and research, and government-subsidised public health care for their workers.

It’s difficult to take this stuff seriously, frankly. Australia’s business lobby wants the best of both worlds: low taxes and less regulation, but also a safe and stable business environment in which to operate. And the truth is, those two goals don’t necessarily add up.

For a closer reading of business lobby hypocrisy, let’s examine Innes Willox’s media release from Tuesday. In it, Willox nominates the Australian Industry Group’s central priority for the business forum as "how to create the more productive workforce of the future." What does that entail? Well, the AI Group says "we need a major boost to lift our inadequate language, literacy and numeracy levels in the workplace. 75 per cent of employers report that their business is negatively affected by insufficient language, literacy and numeracy skills."

But hang on: who undertakes the bulk of the language, literacy and numeracy education in Australia? It’s the federal and state governments. Australia’s primary and secondary education system is almost completely publicly funded, even if significant numbers of private and religious schools operate outside the public system. And that funding comes from taxes, in case you didn’t realise.

What would increase Australia’s levels of literacy and numeracy? Well, it turns out the government has recently released a major report into just that question. It’s called the Gonski Review and takes a forensic look at Australia’s schools system. What did Gonski recommend? More government funding, actually: about $5 billion a year, shared between Canberra and the states.

So does the AI Group recommend that the government increase spending in public education? No, Mr Willox does not recommend that. His main fiscal recommendation goes in the opposite direction: lowering company tax rates from 30 per cent to 25 per cent.

And that’s the point about the business lobby today: it just isn’t serious about the challenges facing Australia in 2012. A serious business lobby would level with ordinary Australians about what sort of government spending cuts would result from the tax cuts they want. A serious business lobby would engage in public issues like climate change or public education from a position that acknowledges the reality of the world around us. Such realities might include things like: school teachers cost money; Australia does not have the highest carbon price in the world; the Fair Work Act has not caused an avalanche of industrial disputes, and Australia is actually already a low-taxing nation.

Of course, acknowledging pesky realities like that makes it so much harder to criticise the government. And, given that much of the media reports what business leaders say, uncritically and with little in the way of factual verification, why would Jennifer Westacott, Greg Evans or Innes Willox stop?

After all, business lobbyists are not paid to engage in policy debates for the good of our nation, or general community. They’re paid to represent the interests of their members. And their members are driven by the relentless pursuit of shareholder value. It’s called capitalism, and for big business, it’s more important than democracy.

Ben Eltham is New Matilda's National Affairs Correspondent.