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.