He supports Prime Minister Anthony Albanese’s idea of a jobs summit, but says there are links between wage growth and tax reform.
“There would be a very simple way to ensure strong wage growth, and that would be by getting rid of payroll taxes,” he says.
“We pay a 5-6% payroll tax to state governments. Payroll tax, stamp duty and insurance taxes are very inefficient taxes.
Scott says the two biggest weaknesses of the tax system are the heavy reliance on bracket creep and personal and corporate taxes to fund future spending.
But he warned that any changes to the Goods and Services Tax should be made in a way that “vulnerable people are not worse off”.
During a question-and-answer session at strategy day, attended by about 100 fund managers and analysts, Scott was asked about his attitude towards salary growth.
“We would like to see real wages increase because we think real wage growth is good — it’s good for our team and good for consumer spending,” he says.
“But you can only deliver sustainable real wage growth if there are improvements in productivity.”
Scott says each of the Wesfarmers portfolio companies has initiatives to increase productivity, such as robots in distribution centers, automation of supply chains and data analytics to encourage greater efficiency.
But he lamented the structural impediments to productivity growth caused by company-level bargaining agreements.
Scott says Wesfarmers has about 12 to 15 different EBAs across its retail businesses, which include Kmart, Target, Officeworks and Bunnings.
He says the original idea of EBAs – that pay raises were given in response to changed work practices, leading to a more competitive company – no longer works.
“We hope there will be opportunities through the proposed jobs summit to reset provisions and drive change that can lead to higher wages,” he says.
It is fascinating that Scott is one of many business leaders seeking a collaborative relationship with the federal government at a time when Opposition Leader Peter Dutton is shunning big business and focusing on the small business sector.