Jennifer Westacott - 6PR

Event: Jennifer Westacott interview with Gareth Parker, 6PR
Speaker: Jennifer Westacott
Date: 3 November 2017
Topics: Economy, politicians’ citizenship, business confidence, NAB, and education and training

Gareth Parker, host: Jennifer Westacott, the CEO of the Business Council of Australia. Jennifer good morning.

Jennifer Westacott, Business Council chief executive: Thanks very much, good morning.

Gareth Parker: Thanks for coming in as well. You are a pretty regular visitor to Perth as you were just explaining to me.

Jennifer Westacott: Yeah I am, yeah, I sit on the Wesfarmers board which is a great company and I come over here once a month. And Perth is an amazing part of Australia, it's driven the economy for a long time, Western Australia and now obviously we are falling off the back of that boom and, you know, we need governments to pull out all stops to kind of get this economy going again because it has big flow through effects to the rest of the country.

Gareth Parker: Yeah, we were for a long time the leaders, that's not the case now, but do you get a sense from your members that things may be beginning to turn?

Jennifer Westacott:  Yeah a little bit. But it won't happen without governments getting their act together. You know, we've got to bring forward that next wave of investment into the big resources projects. So that's one of the reasons we're banging on about reducing the corporate tax rate, because you've got to get that big investment and you have got to make it worth a company, who can do business somewhere else, to do that in Australia. And you've got to get the kind of flexibility, you've got to cut some of this regulation and red tape so that you can get those projects happening again. And that's not just for people in Western Australia, it's for the whole of the country because we all benefit. If this state does well, the country does well.

Gareth Parker: You're really in this morning to talk about training and education and the linkages between training and education and good jobs and we will talk about that in a moment, but just hearing your comments about saying the governments need to get their acts together. Can I ask you from a business point of view, how business views what's currently going on in our federal political scene with this sort of almost daily new revelation or speculation about the citizenship status, of all things, of federal MPs. I mean, I've been saying this week I think it’s overdue and it's time for an audit of everyone to just try and get this issue off the table. But, how does business regard what has been happening in Canberra?

Jennifer Westacott: Well, I think it creates uncertainty. There is a story running in The Australian this morning about a report from Treasury that business is finding it very uncertain because what companies need is they need to know what the settings are. They will get on do stuff, I mean, they will make it all happen, but if they don't know the tax system, if they don't know the energy policy, if they don't think anything can get done, then they get investment shy. When they get investment shy, that's not good. So, I don't think this is very helpful. I don't know what the right solution is but gee we need to sort it out don't we, because we can't have this running story every day about person X, person Y, it all creates an environment of uncertainty. But let's not forget we have that for a long time in this country. I mean -

Gareth Parker: Well it's probably been a decade really, hasn't it?

Jennifer Westacott: Exactly, and that's not to say governments haven't done good things. You know, this government has introduced some important reforms, the previous government did some important reforms like NDIS. But if I said to you a company changed its CEO every 18 months, changed its chairmen, recycled its non-executive directors, the people who sit on the board, changed all the management team, what do you reckon would happen to the share price of that company? It would be in trouble.

And, I think, you know, everyone accepts politics is politics, things happen, but we do need some clarity so we can get stuff done. Because, meanwhile back at the ranch, the rest of the world is catching up. They have been in a recession. They have had to make some big and tough changes. We have had 26 years of uninterrupted growth, we've got a little bit complacent I think. We need to make sure that we get stability and get some stuff done.

Gareth Parker: Okay, is what is good for big business good for the great mass of people who are employed by business?

Jennifer Westacott:  Absolutely. I mean, it's interesting, we've got a relationship -

Gareth Parker: Because not everyone believes that -

Jennifer Westacott: That's absolutely right, they don't. But there's no big business without small business and no small business without big business. And, you know, there is $550 billion of interchange between big and small businesses. But you think about it, you know, the people who supply stuff to Coles and Woolworths, the people who make the small parts for manufacturing companies. There is a company in Queensland, Ferra, who makes a particular thing for Boeing. That creates jobs in local communities and that is off the back of big companies investing.

So, we live in a complex kind of world where there are big things, big supply chains, complex supply chains. If you don't have the big companies at the front of that, taking the risk, borrowing the money, making the investments, small business has its activities restricted. So, there is a big relationship. I hear what people are saying. One of the things we have done recently is get a memorandum of understanding, a sort of structured relationship with the Council of Small Business and we've said to our big companies, you have got to improve your relationship with small business.

Gareth Parker: Yep.

Jennifer Westacott:  You've got to pay them in 30 days. And that's what we are asking our companies to do: pay them in 30 days, pay them on time, and help them set up their invoicing properly.

Gareth Parker: I hope that every big business in the country signs on to that. It has been a big issue in this state, in the mining sector in particular.

Jennifer Westacott:  Yep, well the big mining companies have been the first to sign. They have all been fantastic on this.

Gareth Parker: And they needed to.

Jennifer Westacott:  Yep.

Gareth Parker: Because they were really driving smaller businesses pretty hard and in some cases to the wall. The only constant in society is change. It seems as though the pace of the change is accelerating. I think a lot of people feel that quite instinctively and that relates to the workplace and to the future of jobs as well. And that is really the point that you want to make today about our education system. Is our education system preparing, not just young Australians, because I think that you are probably going to tell us that this is something for all workers throughout their career.

Jennifer Westacott:  Absolutely. Yep.

Gareth Parker: Is the education system preparing people for that change and for the jobs of the present and of the future?

Jennifer Westacott:  Absolutely not. And you know, let's take schools and I want to mostly talk about the training system and the VET system. But let's just take schools. You know, we have spent a lot of money in schools, a lot more money than we used to, 40 per cent more by commonwealth and state governments and our results are going backwards.

Gareth Parker: That's bizarre, isn’t it?

Jennifer Westacott:  It's amazing. It's really appalling this.

Gareth Parker:  I do, and I think most people do, support extra resources for schools but it has got to at some point be linked to an outcome.

Jennifer Westacott:  Correct. And one of the things that it's got to be linked to is improving the quality of teachers. Now teachers are fantastic – we have all had our lives changed by a great teacher – but one of the things that we are suggesting is that we get a set of national standards and that maybe we think about paying people according to those standards. Because what happens now, is that if someone wants to earn more money they try and be a principal but that means the best teachers don't stay teaching, so we want them to stay teaching. The second thing we need to do in schools, is not every kid is suited to an academic style – a kind of classroom model, stand up, rote learning, learn the formula, and move on. A lot of kids need interactive learning, they need a different way of learning – inquiry-based it's called in the technical language. And we need to kind of embrace those things so kids learn at their own pace, particularly on things like maths where people learn at different paces. So that's in schools.

But I will tell you where there is the real failure, and that's in the post-secondary school system, in the training system, in vocational education, TAFEs, private colleges and universities. And here is the problem: we have a system where both the culture and the financial incentives push too many people to university and the kind of world we are going to be in is going to require people with technical skills and people who need to up-gain quickly to get a technical qualification. They don't need to go back and do an undergraduate degree - they need to go back when they are 50 or 52 and get a module of training and that will probably be in a vocational provider, a TAFE or a private provider.

We can't have everyone going to university. There was a report out a couple of weeks ago, heaps of young people are graduating, can't get a job, certainly can't get a job in the area that they've studied in. So what we are saying is, first of all, we want to introduce this idea of a Lifelong Learning Account, where, you know, if you are studying, you can access that account for the whole of your life.

Gareth Parker: OK.

Jennifer Westacott: So if you can see that your job is going to change, you can go back and you can acquire a module here, a module there, and you can assemble your qualification. The second thing that we have said is that the commonwealth and the states have to upgrade the status of the vocational system. It's a second-class citizen. I've said in my speech recently, not one more dollar should be cut out of the VET system until we've worked out what we are doing with it.

And the third thing is to give young people better information. You know, it would be amazing, I think to you to know that there is one thousand job categories, I couldn’t name more than 100 to be frank. But, you know, how do you pick if you’re a young person?

Gareth Parker: Yep.

Jennifer Westacott:  You need better information. What kind of course, how much will it cost me, what kind of income will I get when I finish? And the final thing we need to do is to fix our broken apprenticeship system. We have had a halving of apprentices.

Gareth Parker: Yep.

Jennifer Westacott:  And that means, particularly, in a place like Western Australia, we are going to need those technical people for the next wave of the resources boom, what are we going to be doing again? We are going to be trying to bring people in from overseas. That's crazy. We should be bolstering up the apprenticeships system.

Gareth Parker: That is music to my ears to hear you say that. We have talked about this issue quite a lot this year on the program and my fear is that we’re about to hopefully enter an upswing phase of the economy. I don’t think it’s going to be like what it was between 2005 and 2010, I don’t think those days are coming back, but my fear is that we’re going to enter into a new period where things grow and, guess what, we’ve got another skills shortage.

Jennifer Westacott: Yep.

Gareth Parker: Because at this point the training pipeline has evaporated, the apprentices haven’t been trained.

Jennifer Westacott: Yep.

Gareth Parker: That’s what we’re hearing from listeners to the program -

Jennifer Westacott: Yep.

Gareth Parker: - who say my son or daughter can’t get an apprenticeship -

Jennifer Westacott: Yep.

Gareth Parker: - surely we’re not going to repeat the same mistakes?

Jennifer Westacott: Absolutely. And also we’re going to have, you think about sort of artificial intelligence and robotics. Now all of the super-experts in the United States say it’s the vocational system that will matter because people will have to work with machines. Now that doesn’t mean people will have to go and do a robotics degree at university -

Gareth Parker: Sure.

Jennifer Westacott: - but it may mean they have to go back and do a module of something. So we want them to be able to assemble that themselves, choose their provider -

Gareth Parker: Yep.

Jennifer Westacott: - kind of get their own qualifications up to date. And we just can’t let the apprenticeship system fail in this country. It would be an absolute disaster to do that. It would be a disgrace actually.

Gareth Parker: I want to ask you a bit more about VET and TAFE in a minute. Before we do that, John has called through to the program. Good morning, John.

Caller John: Yeah, g’day Gareth. Jennifer, touching on the NAB situation yesterday or the other day where they reported a $6 billion profit and on that announcement 6000 jobs have got to go. And those people were integral in contributing to that $6 billion profit. And I’m assuming that the executives, I’m assuming their bonuses are intact. How do you quantify that situation when a corporation like that makes a massive profit and sheds 6000 staff who were integral in contributing to that huge profit?

Gareth Parker: Good question John, and I think John’s question will be one that is shared by a lot of listeners who look at that and go something doesn’t add up there.

Jennifer Westacott: Yeah and I understand that, and I guess there are a couple of points to make. The first is, where do profits go? They go to the shareholders who are often mums and dads, investors, self-funded retirees, they go to your superannuation, they go to my superannuation, they go to John’s superannuation. So we’ve got to be careful about where do profits go. And of course they go back into reinvesting in things, strengthening customer service.

Look, the 6000 jobs is a big issue for not just NAB but for all of the banks because as customers want things online, as people use different technology, you know that displaces jobs. Now what banks have to do, what we have to do with them, is manage that transition. We have to own that, we can’t just leave those people to flounder, we have to look after them, and this is why I am obsessed with trying to get a better system that would allow someone now in NAB to go and start to reskill, with the bank’s help of course, so they can go and get employed in other places because there will be other sectors of the economy that grow – some of the new technology sectors, advanced manufacturing.

We’ve got to manage this and we’ve got to manage it with government. But pretending it’s not going to happen is very dishonest as well, so at least the bank yesterday has been honest about what’s going to happen as they go into a different sort of technology. But they have to manage it, we have to manage it as business, we have to manage it with government. We cannot leave people floundering – we have to look after them.

Gareth Parker: The question has to be: what happens to those 6000 people and their families?

Jennifer Westacott: Well this, as I understand it from the bank’s announcement, this is going to happen over the next three to five years. So what the bank will need to do is to actually come up with a plan for those people to actually help them re-train, re-skill, either be relocated within the bank or in other sectors. Now when I’ve spoken to all the banks, they know this is a problem and they know they have to do that. So this is one of these really difficult areas and there’s no point pretending these things aren’t going to happen. They are. It’s how we manage it, but gee I wish we had a better skills system to do it.

Gareth Parker: Which takes me to my final question. I know you’ve got to run, but I do just want to ask you this: it seems to me we used to have a very good technical and trades system. It was a previous era in a different economy, so I accept that –

Jennifer Westacott: Sure.

Gareth Parker: - a much less flexible economy, so it was state-based, TAFE-based, TAFE was a very strong brand –

Jennifer Westacott: Yep.

Gareth Parker: - and it did a very good job. There has been deregulation. I don’t have a problem with deregulation at all, but there are private providers who come in. We’ve just talked about one on the program this morning -

Jennifer Westacott: Yeah, I heard you.

Gareth Parker: - who don’t do the right thing. So is the state-based TAFE system being gutted for ideological reasons? Has that been a detriment to trades-based training?

Jennifer Westacott: Yeah look, I think the state-based TAFE systems have just been left to flounder. We haven’t had a clear direction for them. So one of the things I’m calling for is that we’re clear about TAFE – we’re clear about giving it a role, we’re clear about giving a proper way it can compete with private providers, and we can get rid of rogue providers. We sack them, we cancel their contracts, we don’t give them government money, and we get rid of them. And we need a better kind of regulatory system to do that.

But I tell you the best thing to do is put the money in the hands of the learner and give them the information to choose because at the moment they don’t have it. But we should not tolerate these rogue providers – we should chuck them out, we should take the money away from them, and we should get a plan for TAFE. Because the one thing that really depresses me about the loss of the TAFE system is that once upon a time it was the second chance for somebody – someone whose life went not the right way and they didn’t finish their HSC, or things just weren’t good or they weren’t good at school, or whatever – they could go back to TAFE and get a second chance back to life. I want them to have a second chance and we allow the TAFE system to just flounder and fall away we will be doing a shocking disservice to Australians.

Gareth Parker: Jennifer Westacott, a great pleasure to have you.