Event: Jennifer Westacott and Sam Dighton, interview with Ross Greenwood, Afternoon Agenda, Sky News
Speakers: Ross Greenwood host, Afternoon Agenda, Sky News; Jennifer Westacott chief executive, Business Council of Australia; Sam Dighton chief executive, Committee for Adelaide
Topics: AUKUS; clean economy; skills shortage; Same Job, Same Pay; industrial relations; taxation; housing supply; South Australian budget

E&OE

Ross Greenwood host, Afternoon Agenda, Sky News: The Business Council of Australia's Strong Australia series in conjunction with Sky News today is in Adelaide. With me now the chief executive of the Business Council of Australia, Jennifer Westacott. Also, the chief executive of the Committee for Adelaide, Sam Dighton is with me as well. Jennifer, today we heard about the opportunities in South Australia, new government, really sort of if you like an aggressive Premier, wanting to get more growth out of South Australia. But the areas of the growth it's whether its ambitions are capable of being fulfilled right now, what did you take away from what you heard?

Jennifer Westacott chief executive, Business Council of Australia: I thought the ambition is fantastic. I thought his sense of direction, his sense of the scale that can be done and you listen to the Premier and you think this is kind of what we have to do with the country. We have to pick the things that we can scale up, we have to go hard on things like skilling our people, developing our capabilities. We've got to go hard at removing the red tape and regulation that stops things getting done. So, I was really heartened by his discussion today. And off the back of that he's actually getting stuff done. This huge desalination plant, this incredible work that he's doing around the universities here, the work around AUKUS, introducing the first Hydrogen Act. But the thing that really tells me something about the opportunity in this state is that he resisted putting extra taxes into a budget. He knows that that for the state to succeed and do all that ambition, you've got to have business investing. He had a budget last week that was sensible and careful, didn't have all these taxes, these ad hoc payroll taxes, that sends a message to business. In my view business should look at South Australia pretty optimistically, and say, well why wouldn't we relocate there?

Ross: So, Sam you're here trying to advocate for Adelaide and the reality is a lot of people think it's about festivals and wineries. That's the truth. But what it really is now it's about medical science, it's about AUKUS and what comes from that, the nuclear industry that will come. It's also about the space industry that's coming plus also some of the big resource projects that will be here in future.

Sam Dighton chief executive, Committee for Adelaide: Look absolutely Ross. We're at that great moment in time where there's an opportunity with a bold and ambitious government with, with opportunities in defence, as you say. But also a really strong and growing innovation hub at Lot Fourteen to really make a step change.

Ross: So, for those who don't understand, explain Lot Fourteen.

Sam:  Lot Fourteen is exactly that, an innovation hub. But it also sees a lot of the high tech companies that have invested to create opportunity there. We've got the likes of Amazon Web Services, Microsoft, Google Cloud, we've got a range of amazing global companies.

Ross: The space industry?

Sam: And our space industry. So really a fantastic place in Adelaide, right in the CBD. So, we've got this great moment where we can really see Adelaide make a step change, and we're going to accelerate the way we think about it, we’ve got to accelerate our decision making. We need government to accelerate the removal of impediments to capital being invested here. We've got great companies, what they need is capital investment to really make a step change in their capacity and their capability to become that supply chain into defence.

Ross: What they also need is people now. And right now, with Australia getting one and a half million extra people in the next five years, South Australia’s share of that according to the population stats is about one hundred thousand. It doesn't seem like South Australia is attracting enough population, especially with the crisis of skills shortages in South Australia.

Sam: Look, I think that may be true. But I think one of the things that the Committee for Adelaide is strongly advocating for the government to do is to think about how we unlock migration and the opportunities for migrants to come into the state. We know that a highly skilled migrant can come in and not be able to use their skills that they have been using in other countries because we don't recognise those skills here in Australia.

Ross: You mean the propensity taxi drivers in Adelaide as Doctors or Engineers?

Sam: It's probably more than that. There's certainly a cultural element that we need to overcome. But I think it's unlocking that and harnessing the skills that do exist there. And we know that if we can create a welcoming and inclusive community, that those highly skilled migrants who do come into our state, who bring families, who participate in communities will be more likely to stay. And that's such an important aspect of talking about growing our population is that it's as much about preventing people leaving our state as it is about attracting them in.

Ross: So, Jennifer this skill shortage. It's a nationwide thing, it adds to the price of wages, potentially inflation and interest rates. And of course, it's all very well to throw more people at a problem, but that's not improving the productivity. That's one of the issues not just for South Australia, but for the whole nation right now.

Jennifer: Absolutely. Well, first of all, we've got to really get our migration settings right, we've got to look at these big projects across the country, we've got to think about the spatial distribution of that increased population. We've got to get our housing systems working more effectively, with our planning systems working more effectively. But particularly, we've got to get our skills and education system working more effectively because that's an absolute key to unlocking our productivity. More skilled people attracts investment, attracts the kind of extra things that companies and businesses want to do, that makes us a more productive nation. The thing that's missing, though, that we talked about today as you know, is that some of the national fundamentals aren't right. So, the national fundamentals on our competitiveness, our tax system, our regulatory system, the fact that you can't get some of your skills recognised, even though you've got comparable skills. The federal government's doing a terrific job, really starting to unpack the skill system, but we've got to go faster. So, we've got to get our national settings right and then places like South Australia can really get going. And I don't think we can solve our productivity challenge until we're willing as a country to face into our lack of competitiveness on tax and the fact that we are just so over regulated, and it is so hard to do business. And the more friction that's in this system, the less investment, the less new machinery, the less new training, the less new projects, that's the productivity killer.

Ross: Well, even today, Mike Henry the chief executive of BHP said that even the massive expansion of Olympic Dam in South Australia after having paid ten billion dollars for OZ Minerals. Well, he wouldn't commit as to whether they would do that expansion, largely because he says, well, things are so slow to actually happen in Australia. And maybe that could actually tip the balance in favour of another project somewhere else in the world. That is something that should send an alarm bell to people around the world, around Australia.

Jennifer: Absolutely, and we do have the levers, we can't compete with all the Americans are doing on that Inflation Reduction Act, we just don't have that kind of capital. But there are other things we can do. Like our planning and permitting system, it's too slow. Our skill system is too slow. You can't say to these big companies who want to rapidly skill up people for AUKUS or for cyber send people for a three-year degree, that is not going to work. We have to say how do we quickly assemble these micro credentials, these skills, that get people the competencies that can do that work? We just have to face into the fact that we are not competitive, and I think Mike's point today was we've got to get those fundamentals right for these projects to go ahead. And we've got to get out of the way of getting things done. The planning and permitting system to me is something when I look at countries elsewhere in the world - and I'm not talking about countries that sacrificed the environment at all, what the opposite - just get things done really fast.

Ross: Yeah and see that's one of the issues, Adelaide is in a unique position right now for massive expansion, economic expansion. You get a sense from the state government and the Premier, the new Premier wants to go there. but kind of gets held back sometimes at the federal level.

Sam: Well, I think that's right, and the Premier has expressed his frustrations in that regard and I think that's then incumbent upon organisations like the Committee for Adelaide, and the Business Council of Australia to really advocate at a national level for opportunities to be unlocked in places like Adelaide. So, the Committee for Adelaide, we are always looking to find ways to further what is best for Adelaide, that's the lens that we look through when we're thinking about issues. And so, in order for us to partner with the Business Council of Australia to pursue opportunities, to understand and unlock those national issues, that's where we're going to put effort.

Ross: Okay, so one other aspect, if you were able to get this massive chunk of population through the door for the skill shortages, for the big projects that are coming, AUKUS is one very classic example of that. Where are they going to live?

Sam: It is exactly the question and the right one to be asking Ross. The housing crisis is real and that's right now before we have this massive influx of people to work in these big projects. The government has, and we applaud the government for in the recent budget providing some land tax relief for build to rent models. We think the government could do go further to unlock that as an opportunity, to de risk the financial model for build to rent. Because we know that the construction of rental properties on existing infrastructure corridors, located close to hospitals and schools and shops will grow our population. Will create that housing supply that we so desperately need if we're going to attract and keep the migrants in South Australia.

Ross: So, Jennifer, I've got also ask you about the current issue of the legislation that government’s seeking to push through the parliament, Same Job, Same Pay they call it euphemistically. That in many ways suggests that it wants to kill off labour hire which even Mike Henry, the Chief Executive of BHP, today says has real implications for the projects that they will undertake in Australia in the future. Do you sense that the government, the federal government, has a genuine understanding of what the implications are of that legislation?

Jennifer: Based on what we've seen, I don't think so. Because you saw BHP today talk about the cost implications of this one piece of legislation.

Ross: 1.3 billion

Jennifer: $1.3 billion, now that's a lot of money and that's going to like, do I do this project? Or do I allow that project? Well, $1.3 billion even for a big company like BHP, that's going to mean something doesn't get done. So, let's go back to basics here. The government does not want labour hire to be used and I don't understand that because labour hire is a legitimate form of getting things done. And we've been talking today about these massive projects: AUKUS, this big desalination plant, the Olympic Dam itself, they require labour to come and go in peaks and troughs, and you need to manage a very flexible workforce. But effectively what the government is proposing is that for every single worker, irrespective of whether they are two days, two weeks, two months in a host employer, they're going to have to be paid exactly the same conditions and terms as people working at that site. How is that going to work in practice? I mean, if I'm an engineer in BHP and I've been there for 15 years, I'm doing this highly specialised piece of work. I've negotiated an enterprise agreement, I've got bonuses, I’ve got training, I've got potentially childcare allowances. Then someone comes along and they're going to work for two months and they’re going to get exactly the same thing as me, how fair is that? Or from the labour hire firm, I've done this work with my employees, many of these people are incredibly well paid, I've got an EBA. Now, whenever my workers go onto a site they've got to be paid what the host employer pays and that's just not going to be practical Ross. A part of it is it’s going to kill flexibility in the economy and then small business suddenly has to work out well are you doing exactly the same job as me? Someone coming into BHP who's an engineer is that the same as the 15 year engineer? I just don't know what we're trying to solve for. I really don't. And I just feel at this time in our national trajectory, where productivity has flatlined, when the economy's got a one in front of its growth number. Why would you make it harder to do things?

Ross: It's so true, it's interesting also in the South Australian perspective, because there are so many big projects coming into the future that you've got to get these skilled people. In many cases they're going to be short term workers not longer term workers as well. So, this is all part of the education, the skills training, but then also the attraction of talent. One thing from the Premier today that I got, was really, he is prepared to compete against other state premiers to try and get their talent, to try and get their projects, to try and get even their events.

Sam: Yeah and it's a really good point. Because if you look at the range of projects going on around the country, that draw of skills, and the dilution of skills, as projects are going on and competing with each other. Whether that's in Western Sydney, or in Adelaide, or indeed, as part of our energy utility, energy grid transition, there is such a draw for people to be pulled and make choices about where they want to live and where they want to locate their family. I think we need to think about it in the context of, of a whole ecosystem of skills though, because it's not just about nuclear physicists joining the AUKUS program. It's also about how bricklayers and carpenters and electricians and lighting assistants at Adelaide’s fantastic festivals. And it's also doctors and nurses and as we look in a futuristic way at the future industries of Adelaide and South Australia as our population grows older and the care industry requires an upskilling of people. We're going to need to really upskill quickly to be able to cope with these future industries, let alone the advanced manufacturing, the cybersecurity, the high-tech industries that we are really focusing on developing in Adelaide which will be wealth creators for the state.

Ross: Sam Dighton from the Committee for Adelaide and also Jennifer Westacott from the Business Council of Australia. Many thanks for your time.