Event: Jennifer Westacott interview with Brooke Corte, Money News
Speakers: Brooke Corte, host; Jennifer Westacott, chief executive Business Council of Australia
Topics: Budget 2021
Brooke Corte, host 2GB Money News: Now Jennifer Westacott is the CEO of the Business Council of Australia whose members, really you have to say, whose members will do the heavy lifting on this big hiring spree we're hoping for. So Jennifer Westacott, welcome to Money News.
Jennifer Westacott, chief executive Business Council of Australia: Thanks very much.
Brooke: I guess you've got to spend money to make money right? CEOs and business leaders seem pretty happy with this budget.
Jennifer: Look I think it's a really good budget. I think it shows the benefit of what happens when you get growth back, when you get employment going again and it does strike a good balance between those things that drive the private sector economy. Things like tax incentives, infrastructure, a big skills package, participation and big digital. But then the flip side of that Brooke is the big social dividend that's in this budget. The unprecedented spending on aged care. The big hits of money into mental health, disabilities. All of these things I think showed that it's a balanced budget, it's a very thoughtful budget. My only worry about it is the low growth numbers in the outer years of the budget. Now that's obviously based on population growth and our lagging productivity. And we've got to have a bigger ambition there. We've got to aim for growth that's above 2.5 per cent because that's what's going to drive wage growth.
Brooke: So you're saying we need to bring back people from overseas in order to maximise our growth potential?
Jennifer: We need to do a number of things. Obviously, we need a careful, staged approach to opening our international borders. And that's got to be done in line with the vaccine. It's got to be done based on medical advice. But we do think that as you start rolling out, particularly stage two of the vaccine which is to the broader population, that we should prioritise international students that are worth enormous amounts of money to the economy. Obviously returning Australians but also some of those highly targeted skilled migrants that we need to power up our industries. Companies are telling me that they can't get workers. Farmers are telling me they can't get people to pick their crops. That's the first thing. The second thing is we've got to continue to drive business investment. The stuff in the budget is great. Particularly in extending the expensing arrangements which would be great for powering up business investment. We'd like to see that applied to the bigger companies because they've got the big balance sheets to get the big projects going. And we've got to continue with the skills path to drive innovation and to drive productivity. And of course, we've got to keep vigilant on competitiveness. Get red tape out of the system, continue to make it easier to do business and continue to drive digitisation. All those things have to be done to try and grow that 2.5 per cent to have a three in front of it. Because the reality is that big population growth will not be back for quite some time.
Brooke: Yeah it seems it's almost quite simple to understand what puts a lid on our potential and it is the rollout of the vaccine. If we had to say it's one thing it's that, isn't it? And the budget last night assumes that most of the country is vaccinated by the end of the year. That's about 150,000 jabs every day until New Year's Eve. I mean we're not actually working off that ambitious timeframe are we?
Jennifer: Well we need to be because other countries are moving very fast with the vaccine. Look at the pace and scale of what's going on in the US. The pace and scale of what's going on in the UK.
Brooke: Exactly. We're watching with interest, aren't we?
Jennifer: Absolutely. And they're going to power up their economies. They're going to start opening up their borders. They're going to start driving international tourism again. You would have seen the tourism sector today were very disappointed with some of those forecasts in the budget. But nobody is calling for irresponsible opening up. We're calling for very targeted, very careful and staged approach. But we need to send those signals to business. Think about Qantas and Virgin. They run their schedules on a six-monthly basis. And you would have seen Qantas yesterday, I think it was announcing that they were going to put back their international routes. I mean that means they're putting back putting somebody on. That means they're putting back buying something to get the catering going.
Brooke: It seems like every effort of this entire country needs to be on our vaccination rollout. Anything else is a distraction.
Jennifer: Absolutely. But also making sure that as you do that you're opening things up. The first priority of course is the domestic economy. As we get to what's called staged 1b where you've done vulnerable people. You know Brooke, there's just no excuse for having state borders shut again. There's no excuse for these lockdowns that seem to be triggered by one case. Because all of these hurt business confidence but they really hurt small business. You think about a restaurant that gears up, buys inventory, puts on a whole lot of casuals and it's told, ‘oh we're shutting down this weekend.’ All that stuff gets destroyed. They have to lay people off. Each time that happens to a small business it's harder, harder and harder to find the balance sheet to come back. So there's a lot to be done. And I think the budget is very ambitious and I think we've always got to remind people, to your point, that we're not out of this pandemic. We have a long way to go on this. But we do have to fire up on quite a few fronts.
Brooke: Yeah and if anything I think that for my listeners it became quite clear early on last night, they're concerned that this budget assumes that everything goes right from here although we can all see that it's going to be a much bumpier ride. I see Gerry Harvey today saying, ‘look they've thrown money at us. I've never seen money thrown around like that.’ That was the quote. I think there's more office furniture and technology to be bought up in Harvey Norman stores. But I see plenty of other CEOs agreeing. And then I look at the budget forecast for wage growth last night. So this is what workers take home in their pay packet. Paid for by businesses, by your members. And it's showing slower wages growth than ever before. Nothing over 2.5 per cent until the year 2025. So is this a budget only for big business?
Jennifer: Not at all. In fact, big business doesn't get that expensing allowance. And we would argue that they should because they've got the big balance sheets that bring in those big projects that drive job generation. So it's great that people are buying utes, it's great that they're putting on extra machinery, it's great they're doing stuff but that's not necessarily creating lots and lots of jobs that get pulled through. So we would like to see that. But I don't this is about big business. I think the first thing about getting wages growth up is to make sure that we get businesses back on track and that we get unemployment down. That will put a natural pressure on wages. And the second thing you've just got to drive productivity. I mean we have been asleep on the job on this for a decade. And you look historically, productivity and wage growth used to tag together. We've had very, very low productivity and we've got to keep powering that up. And that's about driving investment, it's about the skills agenda, it's about creating the environment for businesses to do more - expand, put more machinery on, drive their digitisation. That drives productivity and then finally, and this is why I was so frustrated and disappointed that the IR stuff didn't go through the senate, we've got to get the enterprise agreement system working better. Because it's that system that actually has driven higher wages. So there's a lot to do on wages and look I agree I think Australians want and need wage rises. But you've got to get all the conditions working so that you can sustain that over a long period of time.
Brooke: Jennifer Westacott, CEO of the Business Council of Australia. Thank you for your time on Money News.