Fiscal reform needed when stimulus runs out

Wesfarmers chief Rob Scott has stressed the importance of public confidence in government actions to combat the pandemic.

Wesfarmers CEO Rob Scott Picture: Marie Nirme

Wesfarmers chief executive Rob Scott has stressed the importance of public confidence in government actions to combat the coronavirus pandemic dovetailing with the continuation of some form of economic stimulus after the JobKeeper subsidy ends in September to stop the economy from falling off a cliff.

Mr Scott said policy settings were required to encourage job creation and investment that would take over from the emergency measures put in place in the early days of the health crisis.

“None of us can predict the future but what we do know is that a lot of the stimulus measures that have been put in place are temporary and emergency-based measures, they have been the right things to do, and while you might be able to nitpick certain issues with some of them I think overall they have served us really well as a country,’’ Mr Scott told the AFR Retail Summit on Thursday.

“But at the end of the day the economy is not growing.

“The IMF came out saying they expect the Australian economy to decline by 4.5 per cent this year and unless we do something, unless there is some catalyst, some broader stimulus that is focused on creating jobs, stimulating investment, then I think we need to be concerned.

“We should all be worried about what happens post-September.”

The boss of the Perth-based conglomerate whose portfolio of companies includes Bunnings, Kmart, Target, Officeworks and Catch Group, said new support packages should be targeted to help businesses and people most affected by the health crisis and resulting economic shock.

“There is an opportunity to transition from these temporary emergency stimulus measures to something that is going to sustain growth, but also something that is going to help those people in those businesses most affected,” he said.

“There has got to be some pretty significant fiscal reform that focuses on encouraging job creation and investment, we need something like that.

“But then we also need to remember that in an environment where unemployment is going to go up, and even those people who have a job may not have as many hours of work, then what can we be doing to help those most affected? Does that mean increasing the Newstart allowance? Does it mean increasing the tax-free threshold?

“These are some of the things that I think would need to be part of a broader suite of reforms.’’

Turning to the spike in coronavirus cases in Victoria and a decision to call in the army to help with the health crisis, Mr Scott said it was a “wake-up call” to the seriousness of the pandemic.

“Generally we have been very well served in Australia from the response of the national cabinet and I think confidence has helped us, but the events like we are seeing in Victoria, the way in which the government gets behind that, the way in which the community gets behind resolving that, is going to be critical for confidence going forward.

“We can expect that there will be more outbreaks and I think across the board in Australia we can be very proud of our response, so it is a bit of a wake-up call. The government and community seems to be taking it seriously and I think that is a good thing.’’

Mr Scott called again for major reform in industrial relations, particularly with enterprise bargaining agreements and the rules of the “better off overall” test that can sometimes scupper a good deal for workers and employers.