Incoming Business Council president Tim Reed vows to improve trust in business

After Austrac’s Westpac charges, incoming Business Council president Tim Reed vows to improve trust in business.

Incoming BCA president Tim Reed. Picture: Nikki Short

The Business Council’s incoming president, Tim Reed, has vowed to help business “earn the trust of the community” in his first speech to the council’s annual dinner on Wednesday night.

The comments by the former chief executive of small business software company MYOB, came as Australia’s second largest bank, Westpac, was hit with damaging charges from regulator Austrac over money laundering.

Wednesday night’s annual BCA dinner, held in Sydney, came hours after Austrac announced it was taking Westpac to court alleging that it had contravened anti-money laundering and counter terrorism rules on over 23 million occasions, including failing to properly monitor and report transactions with a known child exploitation risk.

While Westpac chief executive Brian Hartzer said on Wednesday he was “personally disgusted” by the subject matter of some of the transactions, Prime Minister Morrison, who also addressed the BCA dinner, said he was “absolutely appalled” by the allegations and declared that “banks need to lift their game.”

He said the charges showed that more change was needed in the financial services industry.

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In its statement of claim against Westpac, Austrac said there were “systematic failures” in Westpac’s control environment, “indifference by senior management and inadequate oversight by the board.”

It said Westpac was aware of the “heightened child exploitation risks” associated with frequent low value payments to countries in South East Asia since 2013 but did not implement appropriate monitoring systems until June 2018.

In his speech to the dinner, Reed, who ran MYOB for 12 years before stepping down as chief executive this year, said that building community trust would be one of his four main priorities as BCA president.

He said he would move to ensure that “this mindset is reflected in all the work we do.”

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“If we’ve taken anything from the past couple of years, it is that business needs to first make sure the basics work,” he said.

He said this meant “having products and services that are fit for purpose, representing them honestly and clearly, acting with integrity, asking first what we should do, rather than what we could do”.

Mr Reed said the BCA’s commitment to improving the level of trust between business and the community was evident by its supply payment code to pay small business on time.

He said the commitment to pay small business on time had grown to cover all of Australia’s major retailers as well as the companies at the centre of Australia’s largest supply chains, increasing the annual revenue of the small businesses covered by the code by 50 per cent to just over $680bn.

His comments about business needing to regain community trust were also meant to refer to the fallout from the Royal Commission into misconduct in the financial services industry with its revelations, which have marred the image of the banking and wealth management industry.

Comments about business needing to regain community trust were also meant to refer to the fallout from the Royal Commission into misconduct in the financial services. Composite image: AAP

While the financial services industry appeared to be working its way through the public image and regulatory consequences of the commission, the latest charges against Westpac are another blow to the image of the industry.

Mr Reed, who takes over as BCA president from the low key Grant King, made reference to the tough times faced recently by the business community in recent years.

“It would be an understatement to say the past three years has been a challenging time for business,” he said.

But the charges against Westpac will ensure that the new BCA president will have his work cut out for him in handling public sentiment against some of Australia’s big businesses.

In his speech, Mr Reed said the BCA would be working with the government to help deliver on international agreements including Australia’s commitment to the Paris accord on climate change.

“I intend to do my best to ensure that the BCA is a constructive partner,” he said.

The Morrison and the former Turnbull government indicated in the past that they did not feel the BCA had given the government the level of public support it needed to implement major reforms such as business tax cuts.

Mr Reed’s comments indicated the BCA leadership was keen to be seen to be more actively supporting government goals including its commitment to returning the budget to surplus.

“We at the BCA have strongly supported the government’s hard work in returning the budget to surplus,” he said. “We meet on the cusp of this being accomplished.”

He said the BCA members did not “underestimate the difficulty of this challenge nor the importance of this achievement.”

His comments come as Reserve Bank governor Phil Lowe has been advocating for more infrastructure spending by the federal government to help stimulate the economy.

Mr Reed’s speech also reflected his long-time background in the small business sector, declaring that the BCA would be promoting the role of all business, not just big business in Australia.

“Big and small business are an ecosystem,” he said. “Their ability to thrive depends on the success of one another.

“In this role, I will strive to ensure we act as a unified business community.”

Mr Reed said his other goals as BCA president included preparing Australians “with the skills and capabilities” they needed in a world where technology was changing the way people lived and worked.

He said he would also be pursuing tax and regulatory policies to allow Australian business to be competitive on a global basis.

“There are competitive alternatives to investing in Australia, so we must be as competitive as we can and remain an attractive destination to do business.”

Mr Reed’s role as BCA president comes as some major companies have left the organisation, including insurance companies QBE and IAG, and Medibank Private, with other companies believed to be considering following suite.