Event: ACCI chief executive Andrew McKellar interview with Peter Stefanovic on Sky News First Edition

Topics: Budget 2024-25

E&OE

Peter Stefanovic: So we’ve had a bit time to crunch through the numbers now. In your view, is it going to help or hurt business?

Andrew McKellar: Well, morning, Pete. Look, I think there’s not a huge amount in it directly for business. I think what business fundamentally was looking for was a clear sign that there’s a medium term strategy to get the budget back into better shape. That we would be reducing net debt over the medium term. Now we’re not seeing that beyond this year, a surplus this financial year. That’s a good achievement, but out over the medium term, we’re seeing higher spending, higher deficits and higher debt. So we are concerned that that won’t take the pressure off inflation and it won’t take the pressure off interest rates.

Peter Stefanovic: So that’s your view. I mean, so we’ve kind of got short-term gain for long-term pain. Without that medium term strategy, what happens to business then if that’s not brought under control?

Andrew McKellar: Well, I think what business is looking for is to get those fundamentals right at the moment. Small business in particular is absolutely struggling against a tide of regulation red tape, but we need to ease those cost pressures that one of the best ways to deliver cost of living relief and relief in terms of business costs is get to a situation where interest rates can start coming down. Now, if I wasn’t alarmed already, I was alarmed after hearing your interview a short time ago with the ACTU President, Michelle O’Neill, because what she was pointing to was not only the fact that we have those question marks over the budget strategy, but the unions signalling that they’re going after wages. If we have those two things pushing together, it’s going to be even harder again to get interest rates going down. So I think that’s a real warning bell for business and for the Australian economy.

Peter Stefanovic: If she did say this was good for wages, but long term what the businesses don’t make it and they can’t afford to pay them, is that the line that you are taking?

Andrew McKellar: Well, absolutely, and the one word that seems to escape the union movement is productivity. That’s one of the things that we are looking for in the overall strategy. We didn’t see a lot of that last night, and I think really here it’s about how do we free up that opportunity to make Australian business much more competitive? We’ve got to invest in innovation, we’ve got to invest in skills. We’ve got to be making our markets more competitive. If we’re not doing that, then we’re not going to see those benefits.

Peter Stefanovic: Are they not doing that with the longer term plans future made in Australia with its tax breaks, housing plans? Can they be success stories?

Andrew McKellar: I think it’s an interesting strategy and of course we keep an open mind on that. The concern I would have is, whilst it’s been much vaunted, when you look at the detail and there’s a list of different measures there, as long as your arm, it adds up to $22.7 billion over 10 years. In practical terms, I’m not sure that that’s enough to shift the needle. I don’t think it’s a huge risk, but at the same time, I’m not sure that it’s going to be enough to really drive that sort of new investment.

Peter Stefanovic: What about these energy rebates, Andrew? Not just for households, but businesses too?

Andrew McKellar: They are welcome of course. I think there are many businesses and many households who are struggling with those higher costs. Absolutely. Look, we want to see a fundamental energy market reform, and the government last week announced its future gas strategy. That was a step in the right direction because gas is an important part of that energy transition. So I think with bigger picture items like that, business is more confident.

Peter Stefanovic: Is that inflationary? Just to wrap up.

Andrew McKellar: Look, it’s not inflationary. The energy bill relief will obviously detract from the headline CPI. Does it do anything for underlying inflation? I think that’s the real question and I’m not convinced that it does a whole lot in that area.

Peter Stefanovic: Good to see you, Andrew. We’ll talk to you soon.