BUDGET PROOF THAT WHEN BUSINESS THRIVES, AUSTRALIANS THRIVE

This is a strong and sensible budget focussed on growth and built overwhelmingly on the contribution of the business community, says Business Council of Australia chief executive, Jennifer Westacott.

The budget is stark proof that when business thrives, Australia thrives.

A strong business community and sound budget management by the government has delivered the dividend of tax relief for low and middle-income earners, increased support for older Australians and funding for much-needed infrastructure.

Growing and confident businesses have delivered the revenue which has helped the budget to return to surplus, as well as continue to sustainably fund the services that all Australians depend on and expect.

Company tax revenue over the forward estimates is $15 billion higher than forecast in last year’s budget – and that is after the first tranche of the Enterprise Tax Plan.

By 2021-22 business will be paying $100 billion a year in company tax and over the next decade this will reach a cumulative $1 trillion – even after the full implementation of the Enterprise Tax Plan.

This budget is proof that when business activity grows, when you get the settings right and the economy grows, tax revenues go up too.

It was 30 years ago that the Hawke Labor government cut the company tax rate from 49% to 39% to turbo-charge economic activity and it contributed to a 50 per cent increase in company tax revenues.

It is time to end the nonsense that economic growth is at odds with fairness. The exact opposite is true. We cannot have a fairer society with a weaker business community and a sluggish economy.

But as tonight’s budget makes clear, there remain many risks in an economy still relying overly on the terms of trade and at the mercy of global uncertainties.

We need to get the settings right for business to improve competitiveness to continue to drive economic growth.

It would be self-defeating to abandon the growth strategy, weaken the business community through uncompetitive taxes and switch to a high-taxing approach.

BUSINESS COUNCIL TRANSCRIPT

 

Event              Interview with Ross Greenwood, 2GB

Speaker          Jennifer Westacott

Date                8 May 2018

Topics             Budget, company tax

E&OE

 

Ross Greenwood, host: Joining me is Jennifer Westacott, the chief executive of the Business Council of Australia. As always Jennifer, many thanks to you for your time.

 

Jennifer Westacott, chief executive Business Council of Australia: Thanks very much.

 

Ross: Okay, a lot of people sitting out there are seeing now tax cuts potentially coming to individuals, tax brackets being changed, which is all great news for individuals down the track. The immediate thing for businesses that you've been arguing for a long time and that a lot of people really can't get through, including the Labor Party, is whether it's actually business that deserves these tax cuts first or whether it is individuals. 

 

Jennifer: Well, look, I think, you know, what is the story from this budget? It's business that's done the work. I mean, it's business conditions that have created the environment that we can actually give people tax relief. That we can invest in infrastructure, that we can invest in our older population. It's business who's done the heavy lifting here. So what we need to do, given the things that Chris has talked about, the risks that still run in the economy, we have to pull out all stops now to make sure that our businesses are more competitive - that they can do more. They've done the heavy lifting, they're going to do the heavy lifting. But if we hold them back, then, you know, we're not going to actually be able to sustain some of this spending. We have always argued, as you know, for income tax relief and for company tax relief. And, you know, income tax relief is hugely important. I mean, it's hugely significant. To take out a whole tax bracket, that's big tax reform, but we won't be able to sustain that if the economy is not growing. This is a message. This is absolute proof that if the business conditions are thriving, the Australian community can thrive.

 

Ross: Haven't you just argued against yourself though? If all of a sudden businesses actually helped to create this bonus of tax revenue that the government has got through the door, without the benefit of tax cuts. Then you could argue, why doesn't the business sector right now need those tax cuts?

 

Jennifer: They absolutely need them because what's changed since all these assumptions of course, is other countries have lowered their rate. The Americans have lowered their rate substantially. We're also tremendously reliant still on the terms of trade. We're still relying on external factors. We now have to do the hard work to increase our productivity, to increase our competitiveness, to increase the rate of business investment - that is all driven by tax. We have to bring this home now. We have to make the business conditions even stronger and then we can sustain that higher benefit to the Australian community through lower taxes, through improving spending to services. This is one of these, kind of, binary things. If business is not strong, if we do not now bring it home and we see a, kind of, muddling through economy, all those assumptions you just talked about - wage growth at 3 per cent, continuing revenue from company taxes, they are put at risk if we are not competitive. Here's the number, by the end of the forward estimates, $100 billion will be paid by Australian companies, factoring in the tax cut. Over a decade that's a $1 trillion, factoring in the full tax cut. This is about companies doing the heavy lifting so the Australian community can benefit.

 

Ross: Okay, the government cracking down on the black economy and companies with offshore havens, reasonable? 

 

Jennifer: Absolutely. Absolutely, I mean we've always said people have to meet their tax obligations. This is building on the other multinational tax avoidance measures the government's put in place. We think this is good. We think the idea that you can't get government work unless you're a good taxpayer, we think that's good. All these things are important to build community trust but also to make sure that people aren't avoiding their tax obligations. 

 

Ross: Okay, I'll tell you what...and if you were to give the government a score out of this would you give them a decent score out of this?

 

Jennifer: Look, I never kind of rate these things as I'm not sure it helps. But I think this is a very good budget. I think it's sensible. I think it strikes the right balance, between getting growth going, investing back into the Australian community, but we now have to make sure that we bring it home and that we don't reverse the trend of growing the economy. It's a stronger economy that allows us to do all these things.

 

Ross: I tell you what, Jennifer Westacott, always good to have a chat to you on budget night. Many thanks for your time.

 

Jennifer: Thanks very much. 

 

Ross: The chief executive of the Business Council of Australia, Jennifer Westacott.