Tax certainty needs to be part of reform path: Ashurst CEO

Paul Jenkins who heads up the global law firm, believes tax reform needs to be built around simplification and predictability.

Paul Jenkins, Global CEO, Ashurst, at the lawfirm’s offices in Sydney. Picture: Britta Campion

CEO SURVEY: 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?

The Australian economy is growing too slowly on a relative basis, and we need to do more to lift productivity. However, there are some positive signs as well, with the most recent data showing lending to businesses is at decent levels and consumer spending is growing, albeit slowly. Corporate balance sheets are in good shape and there is plenty of capital available to invest when conditions are right. I’m cautiously optimistic about the broader economy, despite pockets of weakness and the obvious challenges many people are facing with cost of living pressures.

Inflation has an impact on a number of our clients’ operations and of course our own business is not immune from cost pressures. However, there are promising signs for a pick-up in M&A transactions and private equity activity more generally and any future interest rate cuts would help consolidate that shift in sentiment. Overall, I’m optimistic about the prospects of a significantly more buoyant market in the year ahead, particularly in the second half.

Outlook

What excites you heading into 2025? Are you likely to increase, hold steady, or trim your investment spend?

There should be a further pick-up in economic activity in the United States, which is an important market for Ashurst and for many of our clients, and that will likely generate some positive spillovers to the broader global economy. I expect a bump in US business investment, and there is likely to be some good opportunities in sectors including energy, resources, technology and defence. In addition, the incoming Trump administration’s focus on reducing red tape and taxes should create a boost to economic activity.

For Ashurst, we are experiencing strong growth in Australia and globally, giving us confidence to maintain investment and boost it in ways that reflect demand in the market. For example, our fast-growing Risk Advisory business has invested heavily in areas like financial regulation, workforce issues, infrastructure, privacy and data, and cybersecurity. We’ve tapped a real niche in the market by providing clients with legal-led risk advice and tech-based solutions that help them to embed legal advice into their business operations, and I don’t think the demand for these services is going to slow down any time soon. In fact, we’ve recently made a number of new hires in our Risk Advisory business and we have expanded our Risk Advisory offering to the Middle East.

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.

It would be great to see comprehensive tax reform and the removal of regulatory hurdles to development, both of which would encourage productivity-enhancing investment and help drive economic recovery.

Tax reform is not a new debate — we’ve had reports like the Ken Henry review which was published in 2010 — and yet there still hasn’t been real, comprehensive efforts made to reform a system that is increasingly unfit for purpose. I would like to see the tax system simplified and with a greater emphasis on predictable outcomes. Our clients tell us that tax certainty is extremely important when allocating capital and we currently have too much uncertainty in the system. Simplification and greater certainty would make us much more competitive as a country by reducing the risk of investment. This is increasingly important now that incoming President Trump has signalled a cut to corporate tax rates to potentially as low as 15% for domestic manufacturers, among other tax measures.

I would also add that Australia can continue to benefit from the energy transition here at home, but feedback from the market suggests that there is still too much unnecessary or overly-complicated regulation. While work is being done to streamline and more closely co-ordinate certain environment and planning pathways, the current regulatory approach can be a handbrake on investment and it’s important we get the balance right.

There may be increased opportunities for Australia to attract investment in renewables and new technologies as the US looks to wind down incentives under their Inflation Reduction Act, but a concerted effort to harmonise state and federal regulations related to the energy transition and pathways to commercialise new technologies would improve our competitive position and lead to an increase in foreign direct investment into Australia. There’s a great deal of capital available globally and looking to invest in the energy transition — Australia has an opportunity to capitalise on that provided we have the right regulatory settings.

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?

In my role, I spend a lot of time in the US, the UK and Europe. There is certainly renewed optimism in the US that the incoming Trump administration will be pro-business and help to stimulate economic activity. Our US clients and many other business leaders I have spoken to in the States are upbeat about the year ahead. This sentiment will feed into our business and those of many of our clients globally.

Of course, there will be some uncertainty for open trading economies and certain industries until there is greater clarity around US economic and trade policies under the new administration. But once the policy direction becomes clearer next year, I’m sure businesses will prove to be quite adept at pivoting to take advantage of new opportunities that will arise.

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?

Ashurst has a flexible, hybrid model of working and it hasn’t changed in 2024. It’s working well for us, in Australia and globally, supporting high levels of both productivity and satisfaction among our people, and I don’t see that changing in 2025. But every business is unique and needs to decide what works best in the context of its own operations.

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?

I’m proud to say that Ashurst was the first global law firm to roll out Harvey, a legal-focused generative AI platform, to all of the offices and all of the people in the firm – over 4000 people globally.

The take-up by our people has proven to be extensive and Harvey is being used to add value in a wide range of areas with appropriate safeguards. We are very conscious of the need to use generative AI responsibly, and with due verification of outputs by our lawyers and other users. Generative AI has offered us significant efficiencies, particularly in high volume and data-driven work, and there is significant potential in tasks such as content analysis, drafting, summarising, translating and research. AI is like a new personal assistant for every lawyer in our firm – the skill comes with how to use it and verify its output.