Soul Patts CEO Todd Barlow: Lower government spending would support rate cut

Todd Barlow says we really need to see lower expenditure and lower employment growth from the government to reduce interest rates.

Washington H. Soul Pattinson managing director Tod Barlow. Picture: John Feder/The Australian.

CEO SURVEY 2025: FULL COVERAGE

Economy

How would you rate the momentum of the Australian economy as we head

into 2025? Official forecasts have Australia trimming interest rates from the first half of

calendar 2025, is that consistent with your view? What are you seeing around inflation

in your own business?

One of the major drivers of inflation is government spending across the world. Australia is

spending at record levels, and we really need to see lower expenditure and lower

employment growth from the government to reduce interest rates.

Despite the growing government expenditure, GDP per capita has now been negative for

seven consecutive quarters. The weakening economy should support the forecast rate cuts

in 2025, however, we see greater risk to higher inflation and higher interest rates than

consensus forecasts.

Outlook

What excites you heading into 2025? Are you likely to increase, hold steady,

or trim your investment spend?

We believe all that all environments create investment opportunities and necessitate

portfolio adjustments. While we continue to see strong deal flow and opportunities, the rate

of deployment has slowed due to unpredictable markets and high asset prices that do not

reflect the underlying uncertainty.

Reform

As we move into an election year, in your mind, what’s the single biggest lever

that can/should be used to lift Australia’s competitiveness or productivity? This could

be across any area from labour market, tax reform, training or other areas to encourage

investment.

The single biggest lever to lift Australia’s competitiveness and productivity is to encourage

more business investment. This can be achieved by creating an environment and

implementing direct policies that facilitate investment in automation, digital technologies,

and workforce upskilling. These measures will yield productivity dividends over time.

Additionally, we need industrial relations policies that support, rather than hinder,

productivity, enabling economic growth that benefits everyone.

Geopolitics

Will a Donald Trump presidency have a potential impact on your

business or sector (tariffs or streamlined regulation)? Does geopolitics drive a bigger

part of your decision-making?

A Trump administration will promote business investment and lower business regulation in

the US. That appears to be good for the US economy and, to some extent, the global

economy. Additionally, continued innovation in the US could drive productivity gains across

the world.

The issue is whether the “America First” policy impacts on global trade and reduces demand

for Australian products from our major trading partners. We have already had a term of

President Trump where many of the risks the market feared did not eventuate.

While geopolitical risks are a factor in our investment decisions, we are generally looking at

long term themes that we can back and support businesses to grow and be resilient through

economic cycles.

People

Has your organisation’s approach to flexible working – including working from

home – evolved during the year. Is this likely to change further into 2025?

At Soul Patts, we have always valued flexibility in our working arrangements. However, given the nature of our business our employees work from the oPice five days a week. This ensures the necessary face-to-face interactions, collaborations and career development. Our recent employee engagement survey highlighted that our team appreciates this balance. We scored 6 per cent above the industry benchmark on the question, “I am able to arrange time out from work when I need to”. This indicates that while we maintain a structured oPice presence, we also support our employees’ needs for flexibility. Our goal is to ensure that we maintain a productive and collaborative work environment while also supporting the development, wellbeing and personal needs of our employees.

Technology

Where is your organisation along the AI journey – is it in the developmental stage, or are you now using the technology at scale across your business? If so, are benefits matching the promise?

We are only at the beginning of using AI in our direct operations but see a future role for AI in aggregating and analysing large amounts of data and using agents for investment filtering. We do believe that humans will be required for the foreseeable future to apply experience and intuition and react to complex risks and opportunities. In our investee companies AI has an evolving role in enhancing the productivity of our many teams.