The Business Council of Australia (BCA) — the oligopolists responsible for high inflation, low investment, low productivity and low wages growth — has a vision for Australia: a nation in which business pays even less tax than currently, you pay more tax, workers have lower wages and worse conditions, and businesses get to do what they like regardless of the damage they inflict on the community.
This vision runs for 220 pages and the media, be it The Sydney Morning Herald, News Corp or the business shills at The Australian Financial Review, not only won’t tell you what garbage it is, they’re lauding it as a significant contribution to economic policy that will make us all richer.
For years, Crikey has been pointing out that the agenda of “economic reform” from the BCA consists of demanding company tax cuts and industrial relations deregulation (sometimes “streamlining”, sometimes “flexibility”) so that businesses can impose even bigger real wage cuts on workers than they’ve managed in the past decade.
We’ve had plenty of opportunities to say this because, despite the attention lavished on the latest report, the BCA constantly churns out this drivel. If today’s “Seize the Moment” doesn’t float your boat, how about “Living on Borrowed Time” from 2021? Or “A Plan for a Stronger Australia” in 2019? “Realising our full potential“, anyone? How about an “Action Plan for Enduring Prosperity“?
Despite journalists covering each one as if it’s some revelation of divine wisdom, they all literally say the same thing, often word for word: cut company taxes, lift the GST, strip away industrial relations protections.
The only thing that changes is that over time the evidence mounts for why these ideas are so bad.
Take cutting company taxes. In today’s iteration, the justification is that a cut is needed to stimulate investment. Except we’ve seen what happens when a developed economy cuts company taxes. Former US president Donald Trump did it in 2017 in the US. What happened? There was no detectable impact on investment. In fact, it fell. Even the arch-neoliberals of the International Monetary Fund found no impact on investment. And what about productivity, which the BCA says will also be improved by lower company taxes? No joy there, either.
Now, funnily enough, what has changed in today’s iteration of the “cut company tax” spiel is there’s something missing. Back when the Turnbull government was considering tax reforms and wanted to give tens of billions in company tax cuts to big corporations, the BCA insisted company tax cuts would increase wages. Curiously, the BCA now says nothing about how wages will increase as a result of company tax cuts. Why might that be? Perhaps because since then the clear evidence from the US has been that the Trump company tax cuts did nothing to affect wages growth.
As always, the BCA wants to pay for a company tax cut by increasing the GST, shifting the tax burden from shareholders — including foreign shareholders — to the poorest Australians, who devote the largest proportion of their incomes to goods and services subject to the GST. And, as always, the BCA wants to strip the industrial relations system of worker protections, imposing individual agreements and reducing the role of the Fair Work Commission to maintaining a “safety net”.
Except, over the past decade while the BCA has been making the same demand over and over like a malfunctioning automaton, the existing industrial relations system has been delivering big real wage cuts to workers and big increases in profits for business, sending the wage share of national income to historic lows. The existing system isn’t standing in the way of surging business profits — it’s standing in the way of workers maintaining their purchasing power, let alone increasing it.
Wages growth must come from productivity growth, the BCA repeats endlessly — except that, over the decade that the BCA has been chanting it, we’ve seen wages growth significantly lag productivity growth, meaning business has taken the bulk of the productivity gains and kept the benefits. That’s the problem with repeating the same garbage over and over — eventually the evidence accumulates that it’s just that, garbage.
Another strange absence from today’s drivel is any mention of inflation. In fact, the Biden administration’s Inflation Reduction Act gets mentioned more often than inflation, currently the most pressing issue in the Australian economy. Why? Might it be because it’s the BCA’s members who are primarily responsible for inflation to increase their profits? Like Shell? Origin Energy? BP? Shell? Qantas? Coles? Woolworths?
Why so coy on the economic topic du jour?
That’s related to another issue on which the BCA’s lecture is curiously silent: competition. Let’s go back to that IMF paper on why the Trump tax cuts didn’t lead to more investment: it concludes that an important reason is the market power that large firms hold in concentrated markets. There’s a well-established connection between market dominance and under-investment, including in the US.
Arguably the biggest contributor to inflation in Australia is overly concentrated markets and dominant firms exploiting their pricing power under the cover of supply-side inflation shocks. It’s certainly the case in the energy and airline industries, and probably in the grocery sector as well. It also increases the power of employers vis-à-vis workers and, as we know, reduces investment and thus productivity.
If one were going to seize the moment in the Australian economy, or realise our full potential, or we really were living on borrowed time, if you really wanted to lift investment, and productivity, and wages, and reduce inflation to boot, you wouldn’t cut company taxes, or deregulate industrial relations, or increase the GST, or any of the other demands listed by the BCA.
No, you’d get serious about breaking up oligopolies and reducing market concentration. You’d force the breakup, or ferociously regulate the pricing power of, Origin and AGL and Energy Australia and Qantas and the big four banks who are also BCA members, and the big four audit firms, who are also members, and Optus and Telstra, who are also members.
It’s not surprising that the BCA is utterly silent on the real reform needed in the Australian economy. But it’s disappointing that the journalists providing such slavish coverage of the drivel emanating from big business are equally silent.
This article by Alan Kohler in The New Daily yesterday is worth reading.
https://thenewdaily.com.au/finance/2023/08/14/alan-kohler-tax-productivity-problem/?utm_campaign=Sunday%20Best%20-%2020230820&utm_medium=email&utm_source=Adestra&lr_hash=0743206a83e0845ce165790888f04da2
The article also includes useful statistics about the relationship between wages, productivity, CEO salaries and levels of taxation.
He suggests that workers don’t care any more because their wages keep going backwards.
He points out that rising CEO salaries have been accompanied by less investment in R&D and it made me think that perhaps it’s not the workers who don’t care about productivity any more, it is the CEOs.
Why should they care about growing revenue and business through productivity when their salaries have increased regardless, and so exponentially? Add to that the price gouging they get away with because of lack of competition (banks, energy companies, retail and groceries), what is the incentive to try harder or take a punt on RD?
Most CEOs seem to go into a new posting with Two ideas. The first leads to the second.
The first is lowering Business costs, with this being achieved by either cutting their workforce and those left having to work harder, or by ensuring wages do not rise as much as they should have according to CPI etc.
The second is only possible if the first is achieved, and that is receivning any possible Bonuses, and signing up for more in the next financial year.
And a beautiful side effect of sacking some low-paid workers and increasing the pay of the CEO is that the average wage has gone up! So the figures we see of (average) wage increases across the economy are inflated fiction because of a statistical ruse.
Exactly. Easier to pay for membership to the busyness council who’ll roll out a drip like Westacott to bang on about it as if they do (care about ‘productivity’ let alone R&D). What a charade.
Like the marriage of CEO salaries and resultant lack of funding on R and D.
Westacott – from under the present imbalance of employer weighted ‘regime’ of stagnant, “lower wages growth and lower living standards” that benefit business so much, at cost to the employed :-
What sort of ‘productivity upgrade’ have executives been on, that ‘justified’ their increased remuneration for the last decade or so : while profits sored and investors prospered, along with executives in that wake – and wages for the working poor were stuck on the ground?
Teachers, nurses, ‘fireys’, police and other essential services? How are they supposed to “increase” productivity – to justify wage increases?
… “Journalists”?
“Record low business investment” ….. while proceeds from sales go to profits?
What portion of “cost/unit production” goes straight to price at point of sale, and then to profit margins : rather than “economies of productivity scale”?
The retention of Jobkeeper payments from the tax-payer, kept to feed profits – that weren’t “invested” in the business in receipt of those funds? Where executives kept getting ‘bonus’ increases way out of all proportion to what they paid employees?
What about those, her business ‘union’ members’ productivity?
…. The economy’s been going so swimmingly since her union/lobbyist/mob’s had such a lion’s share in dictating how it’s run?
its mind blowing how dumb these neo lib dullards have rorted the country via myopia, ignorance and greed without fainess
As they seem to think is their privileged right?
What’s mind blowing is how much attention Albo, Chalmers et al pay to them.
Albanese has been a huge disappointment to me. Far too timid and beholden to the likes of the BCA.
‘Dumb’ might be being a bit charitable to the BCA. Your later words ‘greed without fairness’ are closer to the truth, I think. The BCA and their ilk are not dumb; they’re quite smart – at manipulating the political system and journalists. And greedy, cynical, self-serving, self-entitled…the list continues. I might reserve ‘dumb’ for their stenographers in various ‘news’ organisations.
It got Westacott a cameo on 7:30 tonight to spruik her patter.
Who did this latest ‘report’ for them? …. IPA?
Don’t be silly! Surely it was PwC?
Well, you get what you paid for – and this one’s so transparent….
What’d they use? Hand-spun & Woven Synthetic BS?
I know how we could easily fix workers’ wages. Cut CEO’s bloated salaries by $1.5m each and distribute it among the workers. Increase company tax and get rid of the franking credits scam and other costly gifts to the wealthy.
Yes, a great, if overdue expose of a horrible, selfish organisation with no credibility whatsoever. In spite of all the evidence, the BCA just bangs on with the same Neo-liberal spiel year after year. Of course their claims are rarely challenged or scrutinised. The BCA epitomises the massive problems we now face in Australia, and yet it has no solutions or ideas!! It is vile AND useless!
How much does Westacott get for doing damn all all year except put out the same text as she did the year before, and the year before that and…
Why does she need to bother doing otherwise when the government is supine before her? If only the government would download a bit of courage and nous, they’d have them running.
I’m unsure of my sources on this, perhaps I read it in Crikey, but i recall that labour productivity went down when the Howard Govt introduced Workchoices, it went up when the Rudd Govt repealed Workchoices and wnet down again when the Abbot Govt came along. Happy to syand corrected on this, but it’s so contradictory of the BCA narrative.
On another sub topic, we hear a lot from small business (ie not the BCA cartel) about how hard it is to find workers. With unemployment below 4%, that is not surprising. However, perhaps if the BCA and the small business lobby were to advocate for, and actually pay, higher wages, maybe they could find the workers they need. Supply and demand, isn’t that how economics works?
If we want to do something about a shortage of workers, it’s going to take more than higher pay. Education and training might help… Abolish HECS and fund TAFE.
And bring back quotas on vocational training. Letting the kids study whatever they want regardless of whether there’s a job for them at the end of it while charging them massively inflated fees for the pleasure has been a disaster. That, you may recall, was started by John Brumby, whom I’m so glad is Chancellor at La Trobe University. It’s a purely ceremonial position, so he can’t do any more harm.
Dunno about Brumby down Mexico way but the damage was done federally by Jack “the Artless Dodger” Dawkins with his whizzo concept of “tertiary education as an export earner which will help pay for domestic students“.
Of course PJK fell for it like a ton of bricks.
Are they totally stupid or just complete hypocrites?? Both!!
Businesses large and small resent having to pay higher wages. They would rather lower their work level. I have seen and experienced them doing this. Even good ones. Ones I had working on my home. This is such a loss of potential.
As unionist said to the boss who was proud that a new machine would make twice as many widgets as an empolyee – “How many widgets will it buy?”
Think it suggest or says more about how suboptimal this headline productivity figure is….through averaging….
Your memory is correct.
https://uat.crikey.com.au/2022/07/25/abcc-disaster-productivity-coalition/?utm_campaign=Daily&utm_medium=email&utm_source=newsletter
Productivity is a measure of the ratio of input to output.
Productivity goes up when you get more output per unit of input.
Sustained high wages lead to improved productivity as businesses must seek increased output through greater efficiency.
This combination of higher wages and higher productivity is where increased living standards come from.
Suppressed wages lead to lower productivity (because there is relatively little incentive to improve efficiency when labour is cheap) and decreasing living standards.
What is it with the Australia media bias ; an obsession with the economic affects for the big boys ; the powerful ? where is the voices of the population as stakeholder in the media conglomerate
Ch 7 owner – sexist, racist war-mongering 80yo white male billionaire with huge fossil fuel investments
News Ltd owner – sexist, racist war-mongering 80yo white male billionaire with huge fossil fuel investments
Ch 9 / Ffx chair – Peter Costello
ABC chair – Ita Buttrose, worked for Kerry Packer for years printing shite for women to swallow
Re: the last bit…God ain’t that the truth. Female orgasms in minute, medical detail. Rubbish fashion and other household consumerist rubbish to make women feel inferior about themselves.
Off-topic: I’m reminded of Kerry pulling Doug Mulray’s Naughtiest Home Videos only minutes after it started. James Packer is now funding some outfit called ADH TV which has Alan Jones, because of course it does. He evidently hasn’t inherited the old man’s judgment.
Why are Australians still falling for neoliberal lies after 4 decades? We’re still voting for governments that are serving their big donors. Nothing will change until the voters wake up and stop voting for parties that accept corporate donations.
“But me dad always voted , and his dad did too…”
Well Fairfax and Channel 9 are run by the Liberal Party, the Murdoch media is run by, well, Murdoch, the ABC is cowed and underfunded, Kerry Stokes helps to run WA. There’s Crikey and Schwarz media but they aren’t part of the mainstream . . .
Vote Green. Not beholden to corporate interests. I feel they are the only pollies with the public at the forefront of their policies.
The big problem for the Greens is the self-interest of an conomically-illiterate population (which explains the ‘down vote’ you received).
Higher taxes are politically toxic, as Labor found out in 2017.
Study the Modern Money course online, at Torrens Uni, to understand the solution to this impasse.
MMT will require tax increases. Money flows upward and into assets.
How can anyone down-vote these factual comments?
Indeed Leandra. When the GFC smashed the economy and caused so much misery, I thought at least now that the fig-leaf justifying neoliberalism (that it made the capitalist economy work better) has fallen off, ordinary people will see it in all its ugly glory and rise up. Unfortunately, it’s become even more entrenched since.
Because too many of the electorally dominant ‘above median age vote’, especially ageing regions, are no longer in the workforce, but who can be both catered to and duped by RW media messaging…. they no longer have skin in the game, even if they have children and grandchildren of working age; ditto Brexit, Trump, Orban, Putin et al.; collective narcissism and pensioner populism.
My original comment and an edited version are waiting for approval for reasons no sentient human could understand. I’ll break it down into sentences to find the offending word.
They only talk to the “big boys” – they’re the people who pay for lunch.
We’ll get 5 opinions supporting the business groups before Sally McManus manages to force her way in to some limited audience corner. .
That is so true – and usually a 10 second grab. Meanwhile that creep Innes Willox gets as much time as he likes to spout the usual lies!!
The hair dye says it all.
He’s a creep. He’s a weirdo.
Fair crack of the WHIP M G. No need to drop standards.
Innes Willox, former Age scribbler and Downer’s former Chief of Staff.
… ‘Woodside Bugging ‘R Us’?
Thanks for that- I did not know buy should have guessed. Of course that is never mentioned by journalists or pundits!
Censorship by omission….
I posted a comment commending Bernard on the article and expanding a little on his theme, using the headline and it’s just disappeared. Are they censoring their own headlines now ?
Think treading on eggshells in fear of external hard right attacks against their and others’ ‘freedom of speech’……
We’ll get 5 opinions supporting the business groups before anyone from the ACTU manages to force their way in to some limited audience corner. .
Ok -I have identifed the offending word. It is the name of the woman who is the Secretary of the ACTU.
Is Crikey facing a lawsuit from them too?
Just to explain, I had four goes at getting around the algorithm before I discovered it was Sally McManus causing the problem. As you can see, she has now been approved.
The series of comments above were put on the AA list because they mentioned the ACTU Secretary by name. That was the reason the original comment was on AA. I complained by email to Sophie Black, and now the comment mentioning the ACTU secretary by name has been approved. But when I tried to explain all this in another comment, I mentioned the ACTU Secretary by name again, and that comment has gone to AA.
Crikey’s comments section do such a disservice to their subscribers.
Look on the bright side, DF – at least they haven’t (yet) done a Grundle on you!
Agree, there are constant daily reminders on inflation, cost of living, unemployment etc. to almost induce a sense of (existential) crisis and reinforce in ageing voters’ minds, whether it’s substantiated or not, but sows the ground for tax cuts, etc.
Rupert says NO!