Cut business costs to spur economy, urges Soul Patts

The Australian, December 10, 2016:

One of the nation’s oldest companies has warned governments must lower the barriers and costs of doing business in Australia after GDP data this week showed the first negative quarterly growth rate in five years.

“I don’t think the economy is doing as well as everybody says it is and you saw that with the data this week,” Washington H. Soul Pattinson chairman Robert Millner said.

“We’ve got this horrific problem in Australia now where the cost of doing business is out of control.”

As Soul Pattinson-controlled coalminer New Hope Coal contemplated layoffs stemming from a lack of approval for its New Acland mine expansion in Queensland, he said delays and expenses caused by excessive bureaucracy, environmentalism and union power were costing jobs.

“It’s not just in coalmining — it affects everything from the building industry and telecommunications through to retailers,” Mr Millner said in an exclusive interview with The Weekend Australian. “Trying to get authorities to give you a tick is sometimes impossible and it needs a whole cultural change.”

New Hope has spent 10 years seeking approval for the planned stage 3 expansion of New Acland. But the Queensland government’s new underground water management legislation last month was expected to cause at least a further 12-month delay.

“We are at significant risk of having to lay off over 300 employees and contractors at New Acland because we will run out of coal to mine there, Mr Millner said.

“Adani’s Carmichael mine was approved because there are four marginal seats around Townsville and Mackay. It’s all political.” While president-election Donald Trump has proposed a sharp reduction in US corporate taxation, as well as deregulation of a range of industries — moves that could pressure Australia to cut its corporate tax rates — Mr Millner said Australia’s problems went well beyond taxation.

“The point is, we’ve had dysfunctional governments in Australia for nearly a decade,” he said.

“We’ve priced ourselves out of a lot of businesses. You can’t be paying the cost structure we’re paying and be competitive when you can bring things in cheaper from overseas. We can’t be paying people time-and-a-half and double time to work weekends.”

In Melbourne, Soul Pattinson-controlled Brickworks pays nearly 50 per cent more per man-hour for employees in its precast concrete plant than it pays at a similar plant in Sydney, purely because of the greater power of the militant Construction Forestry Mining and Energy Union in Victoria. A lower dollar would help the competitiveness of Australian companies but it wouldn’t be enough.

“A lower Australian dollar makes exporters more profitable but it doesn’t fix the underlying problem,” Mr Millner said.

“We never had the clean-out of our cost structure that the rest of the world had after the GFC.

“The reality is that most of our major trading partners have lower interest rates, so it’s hard to see how the high Australian dollar gets fixed in the short-term.

“It’s certainly making us less competitive, but there are other aspects to it.”

While the federal government is obsessing over maintaining the nation’s AAA long-term debt ­rating, better infrastructure is paramount to improving growth and jobs, according to Mr Milner.

“In NSW, we’ve actually spent a bunch of money on infrastructure, opening up land and stimulating the economy, and that’s why it’s doing so well, but we’ve also managed to reduce debt.”

As for the housing market, Mr Millner is positive overall, despite the Reserve Bank’s repeated warnings about a glut of apartments in the capital cities on the eastern seaboard.

“The slowdown is happening a bit in Melbourne and Brisbane in the apartment market, but the apartment market in Sydney is still very strong.

And as far as detached housing goes, virtually from the Sunshine Coast down to Victoria, there’s unprecedented demand.

“If you talk to the builders — particularly in NSW — they have at least two years’ work ahead of them, and areas like Castle Hill, Kellyville, Schofields and Campbelltown, where’s there’s new infrastructure going in, housing demand is very strong.”