Australia’s premier business lobby, the Business Council of Australia, has routinely adopted extreme economic positions repudiated by the majority of voters and readily abandons positions to serve the interests of the Liberal Party, an analysis of the lobby group shows.
The BCA has been savaged in recent days by a range of senior Liberal and business figures amid a board split over its role. It heads to Canberra this week to lobby the new Senate crossbench to implement the government’s tax agenda of corporate tax cuts for the world’s biggest companies. The BCA is primarily composed of large companies and multinational corporations, including some of the world’s and Australia’s biggest tax avoiders, such as Microsoft, Google and News Corp, and the major global accounting and auditing firms, which facilitate multinational tax avoidance.
The Turnbull government’s 25% company tax cut proposal reflects the cut found in the BCA’s 2013 major economic policy document, Action Plan for Enduring Prosperity (Action 1.6). Like other advocates of a corporate tax cut, the BCA was unable to furnish actual evidence to back up its claim that lower company taxes encourage investment, employment, productivity or economic growth. The corporate tax cut, according to polling by Essential Research, is opposed by 45% of voters, with 28% supporting it, primarily Coalition voters — but only 4% say it should be a priority for the government.
However, it is unusual for BCA proposals to garner that much support. To pay for the company tax cut, the BCA proposed in its Action Plan lifting the GST — something opposed by 66% of voters. The BCA is also opposed to effective action on multinational tax avoidance, saying in its Action Plan (Action 1.7) that “Australia should not seek to be a world leader in combating base erosion and profit shifting”, the two main vehicles for multinational tax avoidance. Voters fundamentally disagree: 86% of voters want action to stop companies using legal loopholes in minimise tax payments by sending funds offshore; 80% want to force multinational companies to pay a minimum tax rate on Australian earnings. And as Australia’s best company tax journalist Michael West revealed, the BCA didn’t even bother to file its own financial statements on time eight times in the last 16 years.
In fact, in contrast to its urgings for deregulation and less red tape across the rest of the economy (except for intellectual property laws), there’s an area where the BCA wants to impose more red tape — on the Tax Office. Action 5.5 proposed imposing “a new performance and accountability code for major regulators – such as the Australian Taxation Office – which is enshrined in law.” An “Inspector-General of Regulation” would be created to provide “additional oversight of regulators”, performance audits and acting on issues “identified by regulated parties” — that is, a business-run permanent Inspector-General vetting and second-guessing the actions of the Tax Office.
The BCA also supports “further deregulating the fees paid by university students” (Action 4.6), which was disastrously put forward by the Abbott government in 2014, prompting a backlash over the prospect of $100,000 university degrees. University fee deregulation was backed by 22% of voters and opposed by 63% in the aftermath of the 2014 budget. The BCA also wants unlimited 457 visas and no market testing requirement for them (Action 2.3), enabling businesses to bring in foreign workers without restriction. Voters backed the Gillard government’s restrictions on 457 visas in 2013 58%-24%, with even Liberal voters strongly supporting the changes.
On industrial relations, the BCA continues to insist that the Fair Work Act is in need of a fundamental overhaul, even though since June 2013 the average quarterly level of industrial disputes has been 2.1 working days lost per 1000 workers, lower than any quarter since the early 1980s except one (Dec 2007) — and around half the level during Workchoices; Australia’s productivity growth has been the highest in the OECD in that period and even business groups admit that wages growth has been historically weak. The BCA is particularly opposed to penalty rates and the minimum wage, and on both issues is badly at odds with public opinion. Eighty-one per cent of voters support penalty rates and 54% of voters oppose any reduction at all in penalty rates. And the BCA’s opposition to the minimum wage has little support: 61% of voters in fact think the minimum wage is too low.
The BCA’s approach to IR reform illustrates how uninterested it is in evidence: its Action Plan called on the Treasurer to commission the Productivity Commission to conduct an inquiry into the workplace relations system, targeting productivity and competitiveness, the minimum wage and penalty rates (Action 4.16). The Abbott government promptly did exactly that, and the PC produced its report a year ago, finding that “Australia’s labour market performance and flexibility is relatively good by global standards” and that there was no evidence the minimum wage affected employment. Having called for the PC to review IR, the BCA then spat the dummy, attacking the PC (even though it recommended reducing Sunday penalty rates to Saturday levels) as having “fallen short of addressing what is required … they haven’t properly addressed the fact there are a range of matters in agreements which go far beyond the workplace relationship … Even if the commission’s final report was fully implemented we would still have a rigid system not suited to the modern world of work.”
A similar process played out on its call for a national competition policy review (Action 5.6): when the Abbott government established a review by Professor Ian Harper, the BCA (which shares key personnel with Coles owner Wesfarmers) rejected his recommendation that competition law be amended to include an “effects test”, desperately lobbying the government and Labor to block it despite the support of small business and the Australian Competition and Consumer Commission.
In the BCA’s world, independent reviews are great, until they produce outcomes it disagrees with.
Renewable energy is another area where the BCA has been both inconsistent and entirely out of touch with voters. The Council is obsessed with “business certainty” — the phrase is used literally hundreds of times in its documents, media releases and speeches — but it showed little interest in certainty as the Abbott government set out to destroy the renewable energy industry in Australia in an attack that saw large-scale renewable energy investment fall nearly 90%. Indeed, the BCA had specifically called for a reduction in the Renewable Energy Target: Action 8.2 called for “a true 20 per cent Renewable Energy Target that adjusts with demand.” This is directly at odds with what voters want: just 8% agreed with the BCA and the Coalition that the RET was too high; in fact a third of voters wanted it to be higher. Indeed, when Labor committed to a 50% RET for 2030, 65% of voters backed it.
As the Council’s lobbyists descend on Canberra to try to convince crossbenchers of the merit of their agenda, it’s worth looking at the whole picture of the economy the BCA wants: a tax system in which the world’s biggest companies would pay even less tax than now, with low and middle-income Australians picking up the difference, a Tax Office hobbled by red tape and overseers run by business, an IR system without a minimum wage or penalty rates and business given carte blanche to bring in foreign workers without restriction, young Australians forced to take on six-figure university degree debt, less investment in renewables and big business allowed to run roughshod over smaller businesses. It’s an extreme agenda that is consistently and strongly opposed by the electorate.
Next: How the BCA changes its tune to suit the Liberal Party.
We can reasonably expect that anyone in charge of a large amount of capital should be expecting certainty in a critical input like energy. It affects all of us too. If we want a steady job at the aluminium smelter and come home to a warm house, we also want a reliable supply of energy. Plenty of it, baseload, and carbon-free.
A steadily rising carbon tax would provide certainty too. As climatic disasters mount, bipartisan support will become inevitable, so both sides of Parliament should be supporting decarbonisation as if each had invented it. If RE can’t achieve 100% decarbonisation, then both sides should be supporting nuclear too. At the same time, alternative, non-carbon energy must be supplied fast enough to replace all coal-and gas-fuelled power stations in time to meet the 2100 deadline for “net zero emissions”.
The BCA does not need to make a rational case. It is calling in favours owed by the Liberal Party.
Whistling for the dog !
The apparent stress in the Action Plan for Enduring Profitability on “business certainty” reminds me of the old dry NZ Treasury who phrased a budget announcement in the late 90s (I think) along the lines of (and I paraphrase from a dodgy memory), “the automobile assembly industry in NZ has sought greater certainty over its future. Consequently, as of tomorrow morning, all tariffs on imported autos will be abolished.” It was certainty, but perhaps not of the sort they sought! The industry was gone within a year or two, much to the benefit of NZers.
Better yet – NZers can buy second-hand imported cars – which our “thoroughly Liberal” government declines to allow Australians to do, to the benefit of the car retail industry.
Excellent Bernard, you see there is a difference between neo-liberal economic policy and rational economics. Now, apply that same logic to selling off critical infrastructure, regulation of industry, free trade agreements that give away the farm and national sovereignty for no gain, private sector taking over TAFE, Medicare, outsourcing for outsourcing sake, foreign investment (there is both good and bad foreign investment entirely to be judged on a case by case basis).
But yes, well put, and the BCA is extreme in its policy and perspective, largely driven by the ultimate neo-liberal lie that anything that is good for huge corporations must by definition be good for the proles.
Well said DB. I noticed that BK has taken to replying to some of the commentary but not yours… he probably thinks that you’re confusing the wonders of neo-liberalism ( you know …”30 yrs of prosperity blah blah” ) with the horrors of crony-capitalism , no correlation between the two BK might say.
A commenter in the SMH (of all places) was leaning towards that old labour tactic of last resort to be used when the Oppression meter goes off the dial – kill the rich in their beds
Im getting there