Government 'handbrake turns' deter investment, UK minister tells Australia
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Version 0 of 1. Increasing uncertainty about business regulation and tax, amid chaotic Senate debates on the budget, may prompt businesses to take investment to more stable countries, Britain’s minister for trade and investment has said in Sydney. One of the most important things for business was “a little bit of certainty”, Lord Livingston told a breakfast for the Australian British Chamber of Commerce on Thursday. “Not complete certainty, but governments doing handbrake turns really does not help,” he said in answer to a question from the host, the ABC’s Leigh Sales. “If they’re going to invest, there are already so many uncertainties in terms of customers, that having a regulation certainty and a taxation certainty is hugely important. One of the problems is political cycles tend to be shorter than investment cycles, particularly if you have elections every three years. “That’s a challenge – trying to create a framework that will actually go beyond the next election so people know if they are actually going to make this investment, that the goalposts won’t change.” Livingston, a former chief executive of British Telecom, is in Australia for the B20 trade ministers talks this weekend, where business leaders will finalise policy recommendations for the G20 in November. The key topics have been driving infrastructure investment, increasing employment, and easing restrictions on trade and labour. Shortly after Livingston’s speech the carbon tax was repealed with the support of crossbench senators following a week of chaos and confused negotiations. Asked how businesses might adapt to such parliamentary uncertainty, Livingston said he thought businesses would move to “put their investments where there is better certainty”. “I think what happens … is that uncertainty creates risk, risk creates the necessity for a higher return. If you have a higher return you invest less – that is what happens. Of course what you do is you probably move to the places and the countries and the industries where there is greater certainty.” Livingston also talked up the UK’s recovery from the global financial crisis, and the importance of trade and investment with international partners such as China, as well as comparing the plight of Australia’s car industry with that of the UK. “The UK is now the second biggest producer of cars in all of Europe. An industry that a decade or two ago was close to dying. It’s a problem I know you’ve got in Australia. Our industry has been reinvented and rebirthed,” he said. He said the UK had set up a clear plan for investment in infrastructure, including the challenge of a sustainable energy policy “at a price that’s affordable for consumers and also businesses”. The UK is aiming to double exports to £1tn by 2020 and attract more inward investment, including in infrastructure projects. The Australian prime minister, Tony Abbott, addressed 400 business representatives at a separate event on Thursday morning. He told the meeting that without enacting stronger measures, G20 member countries were set to fall well short of the goal to lift collective GDP by 2% above what current policies would achieve over the next five years. "The country growth strategies of G20 members are taking shape. They contain several hundred proposed measures – but quantity does not always mean quality," he said. "Current estimates suggest that the proposed growth strategies will deliver about half of the extra growth required to meet the 2% target to create the wealth and jobs that we all seek." |