Photograph by Nic Walker
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PILLAR: ECONOMY Business must contend with the breakdown of trust in our institutions. This is behind the crisis in community confidence and giving rise to feelings of frustration.
Slower economic growth in Australia is fuelling a seething undercurrent of discontent, where people feel they’re not getting ahead. Anxiety around the kitchen table is real. Wages are not growing as fast as people want and their bills are increasing.
They feel the balance is wrong. They worry about changes in technology, the future of their jobs and changes in interest rates. When they work hard, they are discouraged by a tax system with too many cliff edges in it.
We have to understand it is easy to blame the business community. The anti-business forces argue the solution is to hold businesses back and, at an extreme level, to see them fail. But we know the proper remedy is to make business work, profitably and ethically.
So how did it come to this? What’s at stake and what do we need to do to restore our credibility, our legitimacy and our strength?
We must ensure our contribution to the broader community is not ignored in the pursuit of ideologically driven point scoring. To surrender now would be catastrophic. The consequences would be failed businesses, failed communities and failed lives. The victims would be the poorest Australians, not the richest. The social compact would fracture. The ultimate dividend of a strong economy is a stronger society that creates wealth in order to give back.
Business is the foundation of Australia’s prosperity. It makes things possible, connects us and helps forge ambition into achievement. It helps create the opportunities that can enable all Australians to reach their full potential – whether it’s the local store, the large mining company providing the backbone to regional Australia or the technology company driving the new jobs in a more diversified economy. Business is the 10 million of the 12 million working Australians. It’s the almost six million Australians who own shares in Australian companies. It’s where their superannuation is invested, and their retirement depends on those businesses continuing to grow.
It’s the ecosystem of small, medium and large businesses that together generate $555 billion of economic activity a year.
We create the jobs, the conditions for higher wages and the revenue that underpins the social compact. Business invests and innovates. But by far the starkest illustration of what business delivers – how we make good on the social compact – is contained in this year’s federal budget.
An anti-business agenda is the antithesis of fairness.
By the end of the forward estimates, business will be paying $100 billion a year in company tax and over the next decade this will reach a cumulative one trillion dollars.
This is even after the full implementation of the government’s proposed company tax cuts.
The flow-on impact from the success of private enterprise will help fund things like aged-care reforms and personal income tax relief, starting where it is needed most – with low-income earners.
It will go towards health and education and helps fund $24.5 billion in new infrastructure spending. This increase in revenue means the Medicare levy doesn’t have to be lifted to help pay for the National Disability Insurance Scheme. This is what economic growth fuelled by a strong business sector delivers for Australians. It supports and creates employment and pays the wages that contribute to the collection of $260 billion in personal income tax in four years’ time.
If business doesn’t have the environment to compete then we will be forced to have a very different conversation about the budget.
Without successful business there is no pay-off. There is no social compact. We’ve all heard the saying that we don’t live in an economy; we live in a society. True, but try living in a society with a moribund or sluggish economy.
Without prosperity, you cannot give people a decent way of life. You cannot protect the vulnerable.
I want to put paid to this absurd and futile debate that fairness is somehow at odds with economic growth. Low growth without a strong social safety net creates disparity. Low growth without support for the most disadvantaged drives inequality.
High growth with a strong safety net is our best defence against inequality. High growth guarantees the provision of sustainable essential services. Fairness can only be sustained through strong economic growth.
Business is at the heart of that equation because it generates 80 per cent of Australia’s economic output and 86 per cent of all jobs.
Without stronger economic growth, 10 million Australians working in a business would be worse off. How can it be fair if 10 million Australians are unable to get ahead? How can it be fair for small businesses to be prevented from expanding? An anti-business agenda is the antithesis of fairness.
This is an edited version of a speech by CEO of the Business Council of Australia Jennifer Westacott to the CFO Forum in May. To read the full speech go to https://bit.ly/2M4TR2W
The Press is a publication by PwC Australia, aimed at sharing expertise, capturing insights and working together to solve important problems.
This article first appeared in Edition 6 of The Press
By Lucille Keen, Senior Reporter, The Press
National Thought Leadership Manager, PwC Australia
Tel: +61 2 8266 0252