Politics with Michelle Grattan: Business chief urges government to use more means testing

This week, mortgage holders were hit with more bad news as the Reserve Bank raised interest rates for the fifth time this year. Businesses too are feeling the pinch, from increasing costs, high rates, and low consumer confidence. Critics of the government call for policy changes, notably that public spending should be reined in to help fight inflation. CEO of the Australian Chamber of Commerce and Industry, Andrew McKellar, joined us on the podcast to discuss ACCI’s prescriptions for the country’s economic ills, some of it very strong and unpalatable medicine. McKellar says first and foremost the government should set out strong fiscal rules: We need to say that we need to balance the budget on average over the course of the economic cycle. We need to pay down net debt more than we are currently projected to do. Now is as good a time as any for the government to send a clear signal to say, we heard the message, we understand that change is necessary, if that means we got it wrong in the past, we accept that we got it wrong, and we are going to change direction, we are going to set some really firm guidelines about this, and we are going to get the budget back into balance on average over the course of the economic cycle. McKellar says reform is needed on industrial relations, where some of the government’s changes have added to the burden on business: We’ve had a succession of different changes, whether it’s casual employment or labour hire, or whether it is payday super, or whether it’s youth wages, all coming at businesses, particularly small businesses, which just hold them back at the moment. He suggests what he says would be a small but useful change: I do think it’s just a simple thing, like adopting a consistent definition to small business in the Workplace Relations Act, in the Fair Work Act. Now, I don’t think that’s philosophical. I don’t think that’s something that the ACTU, if it really put its mind to it, could disagree with. So I think those sorts of things should be on the table. To improve the budget, the government should be going through line by line: With government spending hitting almost 27% of GDP, we need to pull that back. We need to pull it back to probably something closer to 25% of the GDP. You can go through the budget line by line and there will be savings that can be found. No one’s saying that it’s an easy thing to do. [We support] more targeted means testing for a range of different initiatives. […] People have talked about things like the EV subsidies. We have very broad childcare subsidies. There is some means testing of that, but we can, I think, still save significant amounts of money. In contrast to the opposition, ACCI supports the European Union free trade deal, and is lobbying senators to have parliament pass it. McKellar says it is not a “perfect deal” but it’s “unequivocally in the national interest”. Well it is a good deal, it’s not a perfect deal, I think that point is conceded but if you look at this around 98% of all tariff lines would be liberalised. It’s a huge opportunity for Australian exporters in a market of 450 million people, 27 economies. It’s a market that we’ve really struggled to get access to now for decades. We think it’s unequivocally in the national interest and if you go to the opposition, the Coalition, traditionally they have been supporters of market liberalisation and freer trade. One way or another we’re hopeful that there’ll be nine senators [the number required beyond Labor] who see that it is clearly in the national interest. […] We’re gonng to talk to every member of the [Joint Standing Committee on Treaties]. We’re going to talk to the crossbench, we’re going to talk to the Greens, so we’re going talk to the opposition as well.