Event: Jennifer Westacott interview with Brooke Corte, Money News, 2GB
Speakers: Brooke Corte, host; Jennifer Westacott, Business Council chief executive
Topics: 2020 Federal Budget
Brooke Corte, host Money News: Jennifer Westacott is the boss of the Business Council of Australia and she's with us on Money News this evening. Jennifer Westacott good evening.
Jennifer Westacott, chief executive Business Council of Australia: Thanks very much.
Brooke: And it was a very business friendly budget. One of the big headlines, around 99 per cent of businesses now have the option to write off the full cost of any new equipment they purchase, so about $30 billion has been set aside to pay for that. The Treasurer reckons it's a game changer. Is it?
Jennifer: Absolutely, it's a game changer, because a couple of things will happen. First of all, it's important to remember that business investment was low before COVID, and we needed to get it going again. But what will change from this? Companies, businesses, large, medium, small, they'll start doing stuff. They'll start upgrading their plant and equipment, they'll start bringing those work orders forward. That creates work for somebody else in the supply chain, a smaller business. That creates a job for someone, and bit by bit, dollar by dollar, investment by investment, we'll get those million jobs back that have been lost as part of COVID. I think it is a game changer Brooke. I think it's the thing we've been asking for, which is how do we get businesses investment going again? How do we get confidence back again? And I think this is a really, really important initiative, and a big initiative. As you said, $30 billion to get companies, businesses, large and small, investing again.
Brooke: Then again, you've got this backdrop of, and it was in the budget papers, the budget papers assume a COVID vaccination programme fully in place by late 2021. But that essentially means 18 months of businesses stuck in the slow lane, there'll be various restrictions, we got no international tourists, we don't even know if internal borders are going to be opening. It looks like that got a setback even today with the three cases in New South Wales, meaning we're locked out of Queensland for a while yet. If we're not operating at full capacity, especially key sectors like education and tourism, businesses have no assurances about the demand picture, so are they going to go out and invest and hire in those circumstances?
Jennifer: We know that when we open the economy up, that things get going again. So we take New South Wales an example, where they've really got local lockdowns sorted. And local containment sorted. 360,000 jobs that were lost are back. We know that when we carefully, in a COVID safe way, open the economy up, jobs come back. Now what the government has done in the budget is give that another kick along by saying, let's give wage subsidies for those high-risk people, particularly young people, who are at very high risk of having lost their jobs in the first place, and then potentially not getting back into the labour market. Let's give a wage subsidy to encourage people to take them on. Then this investment that we've just been talking about, this capacity to fully expense a major expenditure that you have. Then you've got the income tax cuts, which is going to put permanent money in people's pockets. And so people will go on those holidays, they'll spend in retail, because it's money that they know is going to be there week after week. So I think against the backdrop of a very uncertain world, this budget does really do the heavy lifting of getting the economy back up and running again. And obviously, we need that vaccine, we need to start opening up the economy. Everyone knows my views; I do not agree with state border closures. I think they are pointless. I think they are job killers. I think we've got to focus on that local containment, which New South Wales is showing the way, that you can do it. And in doing it, you reopen the economy, and you create jobs.
Brooke: Yes. I'm glad you said that, because as much as we can talk about these great plans and reopening, it's all in the hands of state premiers at the moment, unfortunately. Now the JobMaker hiring incentive, that's an interesting one. So the government forecasted it'll create a million jobs in the next four years. It's cash subsidies to hire young and out of work Australians. It's really smart policy. We don't want unemployment exploding. The last thing we want to see is young people entrenched in unemployment. But we have a concern amongst some of our listeners that it means employing older Australians comes with no kickbacks with cash, and it actually works as a disincentive to hire mature workers. How do you think it plays out practically?
Jennifer: It's a really good question. So I think a couple of things, the first thing we know is that the people who've been hardest hit are young people, because they are in those industries like retail, like hospitality, like tourism, and they've been very, very heavily hit by COVID. And so what the government is trying to do is to make sure that they are really targeting that wage subsidy to the people who are hardest hit. And the people who we know, to your point, if a young person is just floundering in unemployment benefits for years, that is just a terrible disaster. I think as a society we shouldn't let that happen. So I think that's the right way to do it. I think crucially, for people who are over 35, what we've got to do is make sure that they get access to those skills programmes. So there's 50,000 places yesterday announced for short courses, and we've been agitating for this for a while, so that people can upskill and retrain. But the most important thing to get people over 35 back into work is to open up the economy again, is to get things going again, to get businesses investing again, to get people skilled and retrained. You've always got to, if you're a government, make judgements about how you target things. I think this was the right judgement, to target this to the people at the highest risk. The other thing that the Treasurer I think really explained really well today, is that they're putting quite a lot of safeguards in it to make sure that there's not an incentive to get rid of an older worker and employ a couple of young casuals. So I think we'll be looking at those measures to make sure that it's implemented properly, but I think in terms of making a decision to get people who are at the highest risk of long-term unemployment back into the workforce, I think it's a really, really good initiative.
Brooke: Although I'm looking at some analysis from Citi today, and they reckon these hiring credits reduce the wage liabilities for teenage workers by two thirds. And they reckon the biggest beneficiaries of these new wage subsidy for young people will be supermarkets and fast-food giants. So they work out, if you get a $200 a week subsidy to hire a worker aged 16 to 29, a retail and fast food business recruiting an 18 year old on a minimum of 20 hours a week reduces their wage bill from $15 an hour to $5 an hour. So you can hire someone who's 18 for five bucks an hour, you're not going to hire someone who's 45, are you? And is that what we need? Cash handouts for supermarkets and fast-food giants? Is that the key to this revolution?
Jennifer: We need people to get back to work. There's a million people out of work, and many of those are young people, and many of the opportunities are going to be in supermarkets, in retail, in fast-food, and we've got to make sure that we get those young people back into work. And we've got to make sure, to your point, that the safeguards are there. If you take something like Bunnings right, where there's a really clear strategy to hire older workers, because they want those old ex tradies working there, giving advice to people. I don't think that's going to profoundly change the hiring practises of those retailers. I think that you do need to give that extra bit of incentive, take that young person who doesn't have that work experience, who needs that job, who needs that history of working, and many of those people, as you know, started out in a supermarket. They started out at Maccas and we've got to make sure that those young people are not left behind. So I think it's a really good idea. We've got to make sure the safeguards are in place, to your point. I agree with you about that, but gee, we don't want to see young people spending years on the dole queue, do we?
Brooke: No, as we've talked about I think we're all in agreement on that, the job is the best way for them to get their lives together. Thank you so much. We appreciate your time. You've had a very busy time as well, so Jennifer Westacott from the BCA, have a good evening.
Jennifer: You too, thanks so much.