Event:  Andrew McKellar interview on Sky News

Date: Wednesday 13 November 2024

Topics: $900m productivity fund, tax reform, immigration, international education

E&OE

Cheng Lei:

Joining me now is Australian Chamber of Commerce and Industry CEO, Andrew McKellar. Hi Andrew. Thank you for your time. So do you think this fund will do anything to lift productivity?

Andrew McKellar:

Well, good afternoon Lei, look we think it’s a positive initiative. Obviously there needs to be some more detail about precisely what the scope of and purpose of the fund will be, but honestly, we know that productivity is one of the most fundamental economic challenges that we are facing. We’ve seen productivity growth being pretty weak over the past decade. In the past year or so, it’s been absolutely flat. It has to be prioritised if we’re going to have those long-term growth in living standards that we want to achieve. Productivity is at the core of that, the states and territories and federal government working together. I think there’s some important things that they can do. So if the federal government is putting some incentive on the table to get the states to work on that agenda, we think that’s constructive.

Cheng Lei:

Looking at all the structural challenges like high costs, like our move towards a service economy, like excessive regulations and high taxes, what are some of the areas where things can be tackled? Things are relatively easier to address?

Andrew McKellar:

Look, it’s a very broad ranging agenda, and I think the Treasurer will speak about some of those points when he’s addressing this specifically. But from a business point of view, we think that things like tax and fiscal reform, those have got to be on the agenda. If you’re going to incentivise future business investment. So the capital productivity side of the equation has to be driven by stronger business investment. We have to be competitive in that space. Wages, skills, labour, that’s all part of the picture. One of the big concerns we’ve had in the past couple of years is we’ve seen the level of regulation. When a business wants to employ somebody, whether it’s a casual employee, whether it’s an independent contractor, whoever it might be, that regulation is going up. We’ve got to take the pressure off Small business technology, digitalisation. These are all important things. Regulation, regulatory approvals, streamlining that process we’ve got to address, I think those fundamental challenges, if we are going to really see productivity moving across the board,

Cheng Lei:

Do we need someone like Elon Musk? Do we need some Trump style tax cuts?

Andrew McKellar:

Look, I’m not sure about the individuals or the personalities there. You’re right, the incoming president, President Trump has signaled that he will be looking to cut corporate taxes. Again, that’s important because in Australia we have company tax rate for most businesses, which is at 30%. That is increasingly uncompetitive. If we look across the OECD, the average company tax rate’s closer to about 20%. So if the US is continuing to cut, it really means the tax reform has to be on the agenda, company tax or something around investment allowances, accelerated right off of investment. Those sorts of things have got to be very much on the agenda. So the Australian government will have to look at how we remain competitive

Cheng Lei:

And when it comes to supply constraints, we’re not going to grow immigration numbers and foreign investments a pretty strict area as well.

Andrew McKellar:

Well, what we’ve seen, I think, on things like migration and so on, obviously population growth has been one of the things that’s been spurring the economy along from the demand side point of view. But it is also important from a supply side in terms of critical skills in the labour market. So we’ve got to get that balance right moving forward. We are concerned about some of the aspects of what government is doing in that space at the moment, in particular on international education. I think we’ve got to be careful about getting into a debate where migration is being demonised and we have even greater concerns, I think, about what the opposition has put forward in terms of its targets for net overseas migration. Now, we can’t afford to do without some of those critical skills. We’ve got to remember that international education is our strongest services export. That’s a good thing. We want to promote that. Of course, we have to get the balance right, but I don’t think we want to see a knee jerk reaction from either side of the political spectrum, which goes too far in the wrong direction

Cheng Lei:

For sure. Thanks so much for that. Andrew McKellar, the CEO of the Australian Chamber of Commerce and Industry.