CEO optimists on the rise

WA chief executives are hoping a federal election year and a new direction from Malcolm Turnbull will ignite reforms needed to get the state moving again, according to the latest CEO survey by Business News.

The good news is that more chief executives are optimistic about the year ahead than not, with 45 per cent saying it would be a good year for their business, the survey found.

That was up from 39 per cent in the previous survey in 2015.

This year’s 44 survey respondents were also less negative or pessimistic about 2016 (from 26 per cent to 18 per cent) although a further 16 per cent said the year would be much the same for them as last year – whether good or bad.

About 20 per cent were unclear about their prospects.

Leaders were clearer on the property market – tipping it would be better for buyers as Perth prices continued to underperform Sydney and Melbourne, and interest rates remained at record lows.

They believed the question of the market turning upwards would be a matter of when, not if.

For resources players, a round of mergers and acquisitions activity was flagged for mining contractors.

Respondents also indicated the need for diversification in the state’s industries.

CEOs of not-for-profit groups and charities were concerned about reduced revenue streams just as demand for their services began to increase. 

Private health providers expected demand for their services to remain steady.

Leaders were very receptive to the federal government’s taxation reforms and its new innovation agenda.

A number of chief executives were keen to see Prime Minister Malcolm Turnbull continue to push innovation, after the release late last year of the innovation white paper.

That package was worth about $1 billion, including cash for commercialisation of projects and loosening of regulations.

Election wishes

There were no shortage of opinions on tax reform, which is widely tipped to be a major election issue 2016 and, for the most part, business leaders had similar views on the way forward.

Demands for a company tax cut were strongest, with a substantial number of chief executives saying it should be included in any reform.

They cited a need for international competitiveness, with places such as Ireland and the UK reducing tax rates in recent years.

One chief executive highlighted the UK’s patent box innovation scheme, which had a lower tax rate for income earned from patents, as a worthwhile measure.

Inefficient state taxes such as stamp duty and payroll tax were in focus again, as they were last year.

Income tax cuts were also high on the agenda. There was also some consensus over the need to shift from direct to indirect taxation through the GST.

However, the chiefs were split on whether that would best be achieved by an increase in the rate of GST, broadening of the base, or both.

It was generally accepted such a reform would be necessary, but there were a handful of dissenters.

They advocated closing loopholes for large multinationals and for changes to superannuation tax laws, which are currently charged at flat rates across all income earners.

Many called for a fairer distribution of GST revenue to WA, echoing similar calls by the state government for most of the past decade.

Many of the respondents wanted changes to the industrial relations system at the election.

Improved flexibility or red-tape reduction were the most frequent responses, followed by a need to modernise penalty rates and awards.

Other issues raised included limiting union power, particularly in the construction sector, with the proposed return of the Australian Building Construction Commission.

CEOs called on federal opposition leader Bill Shorten to support the reintroduction of the Howard-era commission, currently blocked in the Senate.

Debt disapproval

When asked what business leaders would say to Premier Colin Barnett, the biggest charge levied was that he should reduce spending and tackle the state’s debt and deficit. Others spoke of the need for asset sales and divestment to both reduce debt and improve service levels, with one example being in social housing.

State taxes were highlighted again, with payroll tax topping the list.

Some of the leaders said infrastructure, including a potential light rail network, which had been delayed numerous times, was important.

A handful cited the controversial rollout of the NBN as an urgent issue.

Bill Beament
Managing director
Northern Star Resources
1) Very tough for the wider resources sector but has been very positive for gold.
2) Getting tougher for the resources sector but stable for gold.
3) Continuing to optimise and grow my business.
4) To have a vibrant, mutli-sector economy that is world class. Use the downturn in the resources sector to restructure our economy for the better times ahead.
5) GST reform.
6) Remove the antiquated penalty rates for the retail and hospitality sectors. Give companies some flexibility in the workplace to deal with employees individually.
7a) Keep working to make government departments more efficient.
b) Need to get on the front foot in terms of workplace relations.
c) Pick up the pace of reform, don’t wait until the next election. Time is money and Australia is running out fast.
d) Same as b)

Peter Mott
Chief executive
Hollywood Private Hospital
1) The healthcare industry is generally more resilient to economic fluctuation than other industries and we’ve seen that in 2015 with continued strong demand.
2) With an ageing population, continued advancement in medical technology and innovation, as well as some exciting breakthroughs in clinical research, I am very optimistic that private healthcare will continue to prosper.
3) I expect 2016 will be a year of consolidation across the public and private healthcare sectors in WA. At Hollywood, we will be planning further growth on our campus.
4) We desperately need bold, long-term investment decisions around all modes of public transport.
5) The long-term commitment to providing appropriate incentives for people to maintain their private health insurance and therefore not become a drain on the public hospital system.
6) In a business ... that operates on a (24-7) basis, flexibility to adjust staffing levels to fit the peaks and troughs of the business is vital.
7a) Continue to support investment by the private sector in healthcare in WA and better utilise the expertise of the private sector in the delivery of public health sector services.
b) As above.
c) Maintain and improve incentives for people to maintain their private health insurance.
d) Acknowledge the important role that the private sector has in the provision of public services.

Reg Howard-Smith
Chief executive
Chamber of Minerals and Energy of Western Australia
1) The resources sector has had a challenging year underpinned by falling commodity prices.
2) CME continues to advocate strongly on a number of issues, including safety, energy, exploration and environmental matters. Our team is also very busy working with communities, regulation, land access, government fees and charges and skilling issues.
4) My vision for WA is that we live in a dynamic land where the fabric of society is underpinned by a diverse economy and strong resources sector.
5) CME supports the focus on tax reform being guided by core objectives that improve the competiveness of Australia’s tax system and the nation’s growth potential, as well as establishing a more sustainable and stable revenue base. Overall, taxation is too high in Australia. This needs to be a key focus of government.
6) Foster innovation and employment opportunities, ensure confidence for prospective investors in new projects, provide clarity and certainty for all parties, and reflect the current and future needs of the economy.
7a) Reduce state government debt.
b) In light of the Paris Climate Change Conference, isn’t it time to remove the ALP’s policy prohibiting uranium mining?
c) Reduce federal government debt.
d) In the short term, to pass the environment one-stop-shop legislation and to support government to reform the industrial relations system.

Deidre Willmott
Chief executive
Chamber of Commerce and Industry of WA
3) There are plenty of reasons to be optimistic. Western Australia is in pole position to access the Asian growth markets in 2016 and beyond – with multiple free trade agreements coming into play, business should be looking to international trade.
5) It’s critical there are no increases in Australia’s tax burden. Australia must address its reliance on direct taxation while creating a system that is internationally competitive and rewards innovation.
6) CCI would like an industrial relations system that encourages direct engagement between employers and employees. On a practical level, that starts with modern awards that address the challenges many businesses face, such as penalty rates and industrial action.
7a) Increase the pace and urgency of your reform process to make the WA economy more competitive.
b) Communicate Labor’s economic agenda ahead of the election and guarantee it will deliver.
c) Now it is time for action on innovation, tax reform and the Harper review. Federal governments have been good talkers in recent times; we want doers.
d) Labor’s response to the Trade Union Royal Commission is critical if the party wants to lead this country.

Danny Psaros
Chief executive
Psaros
1) Business conditions were challenging in 2016. This can be attributed to an increasing number of developers entering the market, and compounded by the large amount of negative sentiment published in the mainstream media.
2) The Perth (housing) market has been stagnant for three years … one thing we know about capital values is that when the market turns, they rebound very quickly, which has the potential to catch some prospective buyers by surprise. Sydney has typically been a lead indicator and Perth by comparison is undervalued. Sydney may taper off slightly but there is plenty of growth to come in Perth property.
4) Better infrastructure. The public transport system needs to be improved in order to reduce congestion on the roads, and the light rail initiative needs to be put back on the agenda. More density. Inner-city development needs to make better use of the existing infrastructure, and councils need to adopt the broader vision of the WA Planning Commission to achieve the population and dwelling targets of the Directions 2050 document.
7a) Relief on stamp duty on off-the-plan sales, which requires stamp duty to be paid on improvement (being the completed apartment), and a reduction in payroll tax will greatly improve business prospects.
c) Inject Commonwealth funds immediately into transport projects like light rail.

Gerard Moody
Chief executive
BDO
4) A WA that has a diverse long-term sustainable economy and vibrant culture supported by public infrastructure and policy. This will drive innovation, further development and global recognition of industry expertise, as well as attracting and retaining great people. A vibrant culture in the community is being led by many organisations across the arts, sport, research, and community contribution.
5) Reform and action. Pretty simple. I would like Australia to improve productivity, be globally competitive as well as provide everyone the opportunity to improve the standard of living. A balance should be sought between ensuring a safety net and minimum standards aside those measures that will improve productivity in a world where the global economy will continue to reach into our incumbent retail and industrial practices.
7a) Ensure you consult appropriately and early, implement well and prioritise any new projects against the long-term vision.
b) Be bold by stating your policies and position early so we understand what our options are.
c) Ensure you consult early in policy selection and design, prioritise any new projects against the long-term vision and implement well.

Marion Fulker
Chief executive
Committee for Perth
4) A place that is diverse, prosperous and vibrant. We have a great quality of life but there are challenges ahead that could erode that. We (government, business and community leaders) need to be focused on how to realise the many opportunities and mitigate the risks.
5) A fairer share of GST coming to WA.

Garry Ellender
Chief executive
Access Housing Australia
7a) Put in place a 10-year public housing divestment plan to move management responsibility for public housing assets to large-scale NFP housing providers (we do it better, save the taxpayer millions of dollars, and are able to use the cash flows to build more stock). The state is able to reduce its annual public housing rental management losses, reduce its staff and related overheads.

Nigel Satterley
Founder, chief executive
Satterley Property Group
2) Rising unemployment will hit 7.5 per cent. Population growth will slow further to around 28,000, businesses will become more competitive and we will need to improve efficiency and delivery.
5) We would like to see the governmen reduce employees’ PAYE tax and company tax, increase the GST up to 12.5 per cent, and take a sensible approach to revisiting industrial relations conditions.

Cliff Rocke
Managing partner
KordaMentha
2) M&A activity will increase, coupled with a consolidation if not recalibration of certain sectors, such as mining services.
5) Corporate rates reduced. Broadening the base of GST and increasing the rate, with a per capita benefit to the states. Reduction of state taxes for increased share of GST. Payroll tax for example should well and truly be abolished.

See Peng Yeo
Chief executive
Swan Taxis
2) Demand will be weak, competition will be tough and the environment will be uncertain.
5) Uber to start paying tax, and Uber drivers to pay GST.
7a) Stop supporting the illegal UberX.

Alan Brien
Chief executive
Scitech
2) The Turnbull innovation and science agenda is shaping 2016 to be a critical year for aligning our STEM (science, tech, engineering, maths) education programs to Australia’s economic prosperity and future workforce requirements. A year of STEM will focus discussion on preparing our young people to have the skills and capability to respond to and handle the future. Teachers and parents will be seeking more help and direction about digital literacy and the impact of technology on the development of young people.
7c) Will you be investing in maths education as part of your innovation and science policy?

Michael McNulty
Office managing partner
Deloitte
4) It is important to look through the ups and downs of the economic cycle, and remember that ours is a state of great prosperity and opportunity. The investments that have been made into both private and public infrastructure in the past decade have expanded the economic, financial and social capital of WA, and it’s up to business to find ways to put it to good use. With the federal government’s recent innovation statement, and WA’s history of entrepreneurship and ideas-based culture, we need to position ourselves to not only be a generator of ideas but develop competency at commercialising ideas to create value-adding businesses for the state. It’s not about copying Silicon Valley but playing to our existing strengths and creating our own identify in the developing knowledge economy.

Kim Tyrer
Chief executive
Galafrey
1) A slow but steady year. Both domestic sales and export sales (were) down. It is unusual to have both areas down at the same time. The dollar being lower and free trade agreements have not stimulated growth. There has been strong growth in tourism in Albany and the Great Southern this year, which has been excellent. Website sales and social media marketing with increased tourism continues to drive strong direct sales and brand marketing.

Geoff Rasmussen
Managing director
Azure Capital
6) We need to address the penalty rate system, which is causing employers to close their doors or operate at a loss on weekends and public holidays. It is hurting consumers (through lack of choice on weekends) and is unfair to small business. Ultimately it hurts employees as there are fewer jobs, given businesses can’t afford to open their doors on weekends.
7) a) Please give us a mandate to sell something for you.

Sally Langer
Partner
Derwent Executive
3) Stabilisation of commodity prices, however I think this is slightly unrealistic. We would also like to see more of the innovation discussion converting into outcomes.
7a & b) Make industry diversity in this state the number one election issue.
c) Keep pushing the innovation agenda, please.

Michael McLean
Executive director
Master Builders Association
3) More innovation in building, meaningful tax reform, a courageous infrastructure budget, and an overhaul of the state’s housing indemnity insurance scheme.
6) Reintroduction of the Australian Building Construction Commission, streamline so-called modern awards, and allow individual workplace agreements underpinned by statutory minimum conditions for those who wish to be covered by such arrangements.

Irina Cattalini
Chief executive
WA Council of Social Service
3) Working with the broader aspects of civil society to progress our response to the UN Sustainable Development Goals, especially as part of the WACOSS 2016 Conference.

Charlie Gunningham
Chief executive
Business News
2) I’m not seeing much change, really. Things might go sideways for a while, but hard work is always rewarded. A recent economic outlook said there would definitely be no recession and that things were better than people thought; I’d go with that.
3) Bringing out some more new products and ideas, and being part of the continuing evolution of media in a digital age; it’s a constant fascination.
5) GST (in my opinion) should always have been on a wider set of goods and services. Someone said recently, ‘I want low taxes, but on more things – spread the load thinly but broadly’. I agree with this view. Direct taxation is too high, as a general rule, and more emphasis should be on indirect taxation.
6) More flexibility in the labour force is going to be key into the future; we have to be smarter and more nimble. The workplace is changing, the nature of ‘a job’ is changing; this brings challenges but enormous opportunities if we get it right.
7a) Get serious about innovation and helping early-stage startups, following on from Malcolm Turnbull’s lead. Light rail and other ideas to keep our crowded city from getting log jammed. People still need to move around.

Mike Calneggia
Owner
Calneggia Family Vineyards
3) Continued low interest rates and growth in export markets.
4) Infrastructure spending, infill of larger blocks close to the city, deregulated shopping hours.
5) Lower company tax, lower high threshold personal tax.
6) Greater accountability for union management and executive.
7a) Repeal the land tax rates and refund payers.
c) Geniune tax reform, GST review, stability.
d) Leave politics.

Kelvin Ryan
Chief executive
BGC Residential
2) Opportunities, particularly for disruptive technologies and businesses.
5) Increased incentives to small business and free-market thinkers. A redress of the GST to restore some balance.
7c) To continue with the innovation agenda and the associated ‘ideas boom’.
d) Support a national construction code of conduct.

Simon Creek
Managing director
HHG Legal Group
1) Unpredictable, but positive overall. Workflow differed from month to month as WA started to come to terms with its weakened economic position. Insolvency, employment law disputes, construction litigation, tax litigation, complex family law and high-level estate and succession planning have all been busy.
3) Moderate, careful growth in our West Perth and Mandurah offices. We will continue to invest in innovation, business development, back-end efficiencies and blue chip employees. We will be launching a bespoke, upmarket migration law practice in February.
4) We must get rid of stamp duty on property purchases, slash the company tax rate and remove payroll tax. Our government needs to do whatever it takes to ease the red-tape burden on small business at the same time as slashing costs in line with revenue reductions. Our lifestyle as a state simply may not be sustainable if the next few years prove we have paid for it all on credit that is no longer available.

Olwyn Williams
Chief executive
Fremantle Chamber of Commerce
1) For many in the Fremantle region, 2015 averaged out as a challenging plateau with a few sparks of potential.
4) Invest/facilitate in new industries to create a state economy not reliant on a boom cycle from one sector. Stop the metro spread with more medium-density residential developments across the board, and make it compulsory at public transport nodes. Invest more in our cultural sector.
5) Just a few simple things. Multinational trading and service providers paying/collecting appropriate taxes (eg GST) for Australian operations. More consistent and representative GST funds flowing to WA.
7a) Commit to a government workforce to be delivered into the heart of Fremantle and develop/not sell the south wharf.

Paul Sadleir
Managing director
Cedar Woods Properties
2) I expect subdued conditions in the WA economy, with Victoria and Queensland to continue to grow.
4) More innovation, more infrastructure.
5) Remove inefficient taxes, broaden the base.

Graham O'Hehir
Managing director
GMO Business Sales
1) Exciting for business valuations, challenging for business sales.
4) WA needs a game changing tourism breakthrough; we should move the Navy to Albany, then plan and build an integrated resort on Garden Island. Relocating the naval base to Albany would be a winner for decentralisation, having five resort hotels and a casino annexe at Garden Island would be a magnificent tourism opportunity, plus a massive infrastructure and employment project for our construction sector; and it would make sense for long-term security planning as it is not advisable to have a targetable naval base in a large city. Government has neglected both.

Frank Marra
Chief executive
LandCorp
4) Following the flurry that was the resources expansion, which effectively positioned WA on the world stage, ongoing growth is consistent with more normalised markets. The resources sector is firmly in its operational phase, so 2016 should allow our other sectors some time to shine. There is so much opportunity for an uplift in the education, tourism, agribusiness, health and hospitality sectors. Continued transformation of our regional centres will ensure WA doesn’t become capital city centric, but rather a state rich in choice and diversity. Urban infill will continue to deliver the increase in accommodation we need to become a truly developed state.

Tony Lofthouse
Chief executive
Thundelarra
1) Last year was very challenging for the players in the junior exploration sector.
2) Despite the parlous state of global commodity prices, there do appear to be some signs of green shoots. I think explorers that continue to be active and to put money into the ground will see some rewards for their persistence.
3) The long-awaited recovery for the resources sector. However, I suspect that at least the first half of 2016 will see a broad continuation of the 2015 conditions.
4) WA was built on hard and soft commodities. Our future depends on not allowing short-term profit criteria to compromise long-term strategic development of these sectors; we need to encourage active mineral exploration hand-in-hand with well-planned farming growth strategies.
5) Repeal stamp duty. Reduce the current number of separate taxes and levies and simplify the taxation structure. Continue the currently active program of reducing the plethora of bureaucratic processes that delay exploration activity and so delay the spending of exploration dollars into the local regional economies. Further incentives for entrepreneurial initiatives and innovation in exploration and agricultural activities.

Jay Watson
State general manager
Westpac
3) The WA business community gaining confidence that we are in a cycle and that there are opportunities to grow.
4) We need to utilise our global positioning and look to work with Asia to grow and prosper by supporting their needs rather than our wants.

David Johnson
Chief executive
Asthma Foundation WA
1) From both a human resource and revenue perspective, it will be considered the worst year we have experienced in six years.
3) Renewed economic enthusiasm from our political leaders and commentators, clear direction from our state government, and the Western Force to make the finals.
4) We cannot ignore the drug and addiction issue facing all Western Australians. Our children, and ultimately their (children), need us to deal with this now. Health and education has had billions spent to raise the standard of care and guidance. Infrastructure spend has been outstanding and the vibe around WA is positive. Let’s not waste this opportunity to address the very thing that places unnecessary pain and stress on our fantastic police, nurses and prison system. The cost, both financially and in life, is worth far more than any building project ever undertaken.