Jennifer Westacott and Michele O’Neil interview with David Lipson, PM, ABC Radio

09 May 2023

Event: Jennifer Westacott and Michele O’Neil interview with David Lipson, PM, ABC Radio
Speakers: David Lipson host, PM, ABC Radio; Jennifer Westacott chief executive, Business Council of Australia; Michele O’Neil president, ACTU
Topics: 2023-2024 budget; business investment; wages growth; Heavy Vehicle Road User Charge; skills; energy


David Lipson host, PM, ABC: Jennifer Westacott from the Business Council of Australia thanks so much for being with us.

Jennifer Westacott chief executive, Business Council of Australia: You're welcome.

David: For nine years under the Coalition, we had budgets giving tax write offs for tradies, help for small business. This budget is very much, it seems, focused on the most vulnerable. What do you make of it?

Jennifer: Look, I think it's a solid budget. We're still seeing an important return to surplus off the back of higher company taxes, higher income tax, which is driven by commodity prices, driven by a strong labour market. But it's good to see the budget in surplus. There are some important growth initiatives in there particularly around energy, a $40 billion energy package, good initiatives around skills. Obviously, stronger migration will drive growth. And then, of course, you've got this very targeted cost of living package, which we're very supportive of and increases to JobSeeker, which we've been calling for, as you know, for years. Very substantial increase to Medicare – rejuvenating the Medicare system. Those are things that Australians really need. Energy efficiency relief. What is the big risk in the budget, though, I think, David is that we've increased some structural spending on a permanent basis off the back of temporary or volatile revenue increases.

David: What are things you're talking about? JobSeeker and those sort of things? 

Jennifer: Well, these things are what Australians need. And as I said, we’ve called for a JobSeeker to go up for years. The challenge is that the economy is set to grow at a dismal 1.5 per cent next year. Then we're going sort of back into the twos. But we've got to be able to increase the rate of growth, because that's what's going to sustain budgets going forward. That's what's going to keep us in surplus. That's what's going to drive productivity. That's what's going to drive wages. So, our message is there's a bit of a missed opportunity to drive investment a bit harder. But I don't think anyone would deny the most vulnerable people in Australia some much needed assistance at this time.

David: I've just been joined as well by Michele O'Neil from the ACTU, of course, the president, thank you so much for being with us. That was perfect timing. I wanted to ask you, and we were just talking about this help for the vulnerable, there's quite a lot of in this budget. There's also a lot for aged care workers. Is there enough for everyday working Australians?

Michele O’Neil president, ACTU of Australia: Well, this budget continues the federal government's commitment in lifting real wages in Australia, they had a mandate at the election to do that. They've taken a number of steps, and tonight's budget takes another important step. Particularly as you said, David, that lift in wages for aged care workers, some of the lowest paid workers doing some of the most important work in the country is significant. But also, of course, the changes and support for cost of living. That will really assist workers that are doing it tough. That historic investment in Medicare and bulk billing, the assistance with energy prices, and of course, making childcare more affordable, are all critical things that working people will see make a difference to them. In an environment where we've seen the highest drop in real wage growth ever in Australia in the last two years. One of the remarkable things about the budget, though, is that it shows that the improvement in the budget bottom line is driven more than anything else, by more workers getting into work, and by wages starting to rise. And that just shows that a healthy economy is good and comes from workers being treated well and having jobs where they're getting better pay.

David: It also, of course, comes from tax increases. There are a few in this budget, none of the major reforms that some economists have been calling for. But Jennifer Westacott, one of them that caught my eye is this Heavy Vehicle Road User Charge – it's been increased. And it's going to bring in $1.1 billion over four years. What's that going to mean for the trucking industry?

Jennifer: Yeah, I think we're a little bit concerned about this. I understand why people have done it and my understanding is it's going to be hypothecated back into road maintenance. The concern is these are very under pressure supply chains at the moment. And you know, these are the vehicles that are taking groceries to supermarkets, they're taking important goods and services around the country, and they're taking things people need. So, we've got to be really careful that in solving one problem, how do you fund road maintenance, we don't create extra costs into the system, more friction, more complexity in some of these supply chains. That are already under a lot of pressure. So, this was decided some time ago, but we are concerned about it. And you know, we've just got to make sure that as a country, we do whatever we can to lower the cost of getting goods to people, of producing goods because they're the things that drive that inflationary pressure.

David: It's such a balance in all budgets but this one seems to be even more of a tightrope than then many others before in terms of managing the budget – making sure we don't go into a recession. Making sure we've got a decent tax take. Michele O'Neil, the government's been very cautious about anything that adds to inflation. But is there room here to have increased wages even more like childcare is that the next cab off the rank do you think?

Michele: There is more work to do on wages, and rather than having an inflationary effect, what we know from wage growth that we've already seen is that in fact, it has the opposite. It's good for the economy and we've had real wages going backwards. And the budget doesn't forecast wages, real wages starting to increase until the beginning of next year. So, we really want to see a lift in wages in the care economy. Early Childhood Educators are critical to that they're another group and more than 90 per cent of them women who do critical work and are low paid and they have real trouble keeping workers in that sector. That's not good for anyone, it's not good for the parents who want their children well cared for and it's definitely not good for those workers who do such fantastic work. But the other things that are needed to get wages moving is the government can do more in terms of public sector wages. They can lead the way by improving wages for their own employees. And of course, the states can do some lifting there as well. And we want to see changes in more legislation. One of the things we're concerned about David, that affects wages is wage theft. And so, the government has made some commitments to do further legislation on wage theft and to deal with arrangements which workers are treated as casuals when they're not really casual. All of that will help grow wages. But our understanding and what this budget shows is that something that we should celebrate. Because workers being able to afford food, being able to pay their rent, be able to participate in the economy actually is good for the economy.

David: Of course, when wages go up it can make things harder for business, particularly small business, Jennifer Westacott, what's your view?

Jennifer: Sure we've got to make sure that those wage increases are matched by productivity, so the businesses can expand and grow. But no one is going to deny a wage increase to people who are doing it tough, to the care sector. We have just got to make sure that we do these things in tandem with lifting our productivity, lifting investment into the economy so that we can continue to grow and make it easier for small business. So, some of the things in the small business package around energy efficiency, around some of the tax write offs, they're all important. We've got to make sure that we see these things in a holistic way. We want people’s wages to go up. The BCA has been calling for people's wages to go up, linked to productivity, linked to investment. What's missing in the budget is that big opportunity to drive investment across the whole economy, there’s great stuff in energy. But we need the whole economy. Because our lunch is going to get eaten by the Americans with their Inflation Reduction Act. They're going to suck investment out of this country. We need those big projects, critical minerals, renewable energy, all of the things around, advanced manufacturing. That needs investment, and we do not have the right incentives to drive it.

David: Jennifer Westacott, the chief executive of the Business Council of Australia and ACTU president, Michele O'Neil, great to speak to you thanks so much.


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