Interview with James Daggar-Nickson

Thursday, 22 January 2015

Subjects: World economies, Australian government, Business Council of Australia, small business, young and upcoming sports stars.

JAMES DAGGAR-NICKSON: So the ECB meeting tonight, very much the focus of markets and yet I suppose, another piece of the uncertainty, the uncertain puzzle that is the global economy at the moment. Joining us to discuss a little bit more about that, and some of the other things dominating at the moment, Alex Malley the CEO of CPA Australia. Alex, brilliant to have you on the program.

ALEX MALLEY: Thanks James.

DAGGAR-NICKSON: The world economy. Where are we at? We’ve had the Chinese prime minister in Davos overnight saying look, things are going great, don’t worry. We’ve got Obama, state of union address, talking up the economic fundamentals of the US and then you’ve got the, I don’t even know how you describe Europe at the moment, it’s all over the place.

MALLEY: A basket. Look, in many ways we’ve seen the cycles of normal periods for countries. So in the US, it is time for them to come back and I think it’s legitimate that Obama is talking about that happening, job creation has been strong, so all of a sudden the US is starting to prop itself back up again, which in the scheme of things is good for us in many ways. I think China is managing the China 380 jet, just to bring it down a bit. So I think they’re going to manage it down which isn’t perfect for Australia. Then you’ve got Europe which is a hotch potch at the best of times, but Greece is the one we’re all looking at. The elections, the anti-austerity looking like it might get through and whether they’re in the Union and all of those things. So they cause the normal chaos. But at home we’re at 6.1 per cent unemployment, but oil prices are down and that may actually be the saviour for the government for the first quarter.

DAGGAR-NICKSON: For businesses that are trying to manage their day-to-day, month-to-month, year-to-year, be it small, medium sized enterprise or larger and seeing all the headlines about all the uncertainty, market volatility, what do you say to them? Is it a vote of confidence, say listen, fundamentally things are good or look, you need to be aware and you need to be looking after any potential downside?

MALLEY: The downside of it is that when you feel that level of uncertainty, you become micro in your thinking. So everything becomes, have we got too many staff? Could we cut back a few staff and get the same job done? Let’s not look at growth this year, let’s just manage through the year. So, when people are uncertain at macro, they naturally become micro and they look inside rather than outside and when you’ve got the individual entities looking in, rather than out, you’ve got a problem for the economy and we have a problem and ironically, we had all the running in 2008 when the US was on its knees and now it’s back and we’re sort of faltering.

DAGGAR-NICKSON: Can we take the idea of when things are macro, people look inwards, to a government level? You’ve got a government at the moment, I mean, you would have seen this morning, I think it was 3AW, with the prime minister and an angry liberal caller saying that he’s a liberal supporter but he’s the worst salesman he’s ever seen, you’ve got question marks over whether or not he’ll lead the government to the next election, I mean, it’s quite incredible how quickly this has come about.

MALLEY: Well it wasn’t that long ago we were speaking about the dysfunctions of the labour party.

DAGGAR-NICKSON: That’s exactly right.

MALLEY: And no one would have thought 12 months in that there would be this level of complexity that’s been created but again if you don’t have a clarity of vision, if you presume that the only way out is to cut costs, and here I am as an accountant saying, it’s only half of the equation. If you’ve got issues and you need to restructure then you’ve got to up your revenues and incentivise your revenue and may be mildly look at costs until your revenue starts to sustain themselves. But they’ve got in saying, the other team was really bad, so we’re here to help you by cutting and burning everything and not many new governments win by popularity, they win by protest and I think the presumption that they won by popularity has defined the way in which they’ve gone about year one. So it’s now or never, this a turning point year for the coalition.

DAGGAR-NICKSON: Has it been disappointing do you think from the business realm’s perspective, there was an awful lot of good feelings I suppose, have been built up in the lead up to the coalition win, has that been eroded?

MALLEY: I think there’s no doubt about it and I think part of that erosion is, and I have colleagues in the BCA and I have a great respect for the BCA, but I think that early alignment with the BCA on almost anything that mattered in business, when you’re premise was that you were going to be very strong with small business, has created a bit of a divide and you’re  now seeing elements the BCA talking about what the government needs to do and should have done, which is not where it was 12 months ago. So I think there’s this constant in both parties that we talk about small business as being the backbone of Australia and the reason we have the country we have today and yet every government seems to cuddle up to the large corporates, who yes of course have merit and add value, but fundamentally, on an employment basis, small business and free enterprise is the future of any good economy.

DAGGAR-NICKSON: If you were advising the prime minister, if you were advising the treasurer, who let’s be honest has had a difficult…

MALLEY: He’s had a tough run.

DAGGAR-NICKSON: … difficult run, what would be number one? What would be the number one piece of advice to try and get things back on track?

MALLEY: Stop listening to the multiple immature voices around you that are seeking your popularity and sustainability at an electoral level and go back to the core of why you went into politics, what you logically know the economy needs and don’t worry about losing an election, think about losing an election in a glorified way where you’ve really set the tone for the future of the country and you’re unlikely to lose if you take that option.

DAGGAR-NICKSON: Completely different topic but look, lots of pressure on politicians, just as much, some might argue even more pressure on sports stars particularly those earmarked to be the next big thing. A couple of good examples Stephen Smith, of course now till Michael Clarke comes back and who knows maybe even post then the Australian cricket captain and the young tennis player taking Australians by storm, my goodness, one foot wrong or if they come across as too brash, you’ve seen the headlines this morning, they are absolutely hammered.

MALLEY: Well, we forget, and I can say this, we forget they’re kids.


MALLEY: And Nick Kyrgios last year set the world on fire and of course the normal thing happened, he got a couple of injuries, all the press was on him and he’s almost got to win the Australian Open to meet the demands of what happened last year. Steve Smith came in very young. He didn’t do particularly well early on, the pressure was on, they turned him into a leg spinner and realised that was the wrong move and now he’s come out as this mature young man and it’s interesting that the other Australian boy, whose name just leaves me, who didn’t do that well last year, has come through this year and is doing very well. So there’s this pattern that if you’re managing a young person in a high life in sport, you’ve got to in the early phase prepare them for this onslaught from the media, accept that you’re going to lose that battle for the first year or two, walk away and take some time to just reflect on why you wanted to play tennis or why you wanted to play cricket, focus on the core of that and remembering Steve Smith lost a very good friend in the midst of all that, he’s shown enormous courage in the last few months.

DAGGAR-NICKSON: Yes, he’s been very very impressive. Look, Alex, as always, really good to get your insights. Thank you very much.

MALLEY: Thank you James.