Event: Jennifer Westacott interview with Fiona Parker, ABC Central Victoria
Speakers: Jennifer Westacott, Business Council chief executive; Fiona Parker, host
Date: 17 June 2022
Topics: Strong Australia, wages growth, regional growth
Fiona Parker, host: Someone who knows what business owners are facing is Jennifer Westacott, chief executive of the Business Council of Australia. She's in Bendigo and she's in our studio. Welcome to Central Victoria.
Jennifer Westacott, Business Council chief executive: Thanks very much
Fiona: Good to have you here. Now you're here for a panel discussing the opportunities businesses in the region, or what the opportunities business in the region are facing as we emerge from the impact of pandemic lockdowns. How are business owners coping?
Jennifer: Look, I think it's a mixed story across the economy. I think for small business is really very difficult still because they're facing all of the headwinds. They can't get labour and they can't get skilled labour and they've been saying that for a long time, even before the pandemic. Secondly, now they're hit with this inflation, it's hard to get stuff and it's hard to secure what we call the supply chain. Of course, certainly in sort of small CBDs and even in Melbourne CBD, you haven't got them back to full capacity, if people look at the numbers of people coming in, they go, "well, really you know something? It's not worth me opening." I think small business is doing it tough but I think even big and medium businesses now are really facing the pressure of inflation, of trying to get staff, of contracts that were signed under different circumstances with fixed prices, we're now seeing that. Obviously now a minimum wage decision, which I personally support but I think it's going to put a lot of pressure on small businesses. I think we've got to do some reforms if we have that kind of minimum wage, which is important and good, it’s very important for low-income workers to get more money, but we've then got to do the work on making ourselves more productive, on making ourselves more efficient. I'm here today to listen to people, to listen to what people in Central Victoria need, what are the kinds of things that are going to get stuff going and how do we actually get regions like this, which have got so much potential, absolutely cracking because that will help the country. If we could get places like Central Victorian and obviously here in Bendigo, if we could get them absolutely firing on all fronts, the country would be firing on all fronts.
Fiona: In terms of the minimum wage though one of the big stories of the week, of course rising 5.2%, some small business owners are saying they can't afford the increase, that it'll send them to the wall?
Jennifer: Yeah. Look, I think for many small businesses, it is going to be very tough to meet that and that's why we've got to do a couple of things. The first thing to say about the Fair Work Commission is that they did defer that increase for hospitality and for aviation. I think that was really important. I know there are different views about that, but I think they know that that sector is just doing it so tough. It will put pressure on those small businesses, I guess what's the alternative? The alternative is to keep paying the lowest paid people the lowest wages. We've got to get wages up in this country, but it's got to be more than just one decision by the Fair Work Commission. It's got to be a raft of things to drive investment, to increase our presence in regions that we're in with this huge middle class in Asia, to get modern manufacturing going again, to get new jobs, to get better jobs. And most importantly, to get people skilled so they can do those higher paid jobs, get our skills system working properly. If we're going to have a minimum wage that high, we better do a few other things to make sure that businesses can thrive and survive and not go under..
Fiona: But your view is if it picks some people up out of poverty, it can only be a good thing for the country in the long run?
Jennifer: In the long run but if you don't do the reforms with it, I think it creates this kind of inflation of wages at a temporary level. If we don't help businesses adjust to what's going on with supply chains, with labour shortages, with skills needs, then over the long run, it causes them a lot of difficulty to meet that extra wage claim. Low-income people have really done it tough for so long, struggling for so long, who are now meeting the cost of living problems, who can't pay their power bills. We really need to give that community a leg up, we've just got to do some other stuff as well.
Fiona: There are many in the business community who aren't saying that though. The former government didn't support a wage increase for the minimum wage earners that high. There are some in the business community who still don't.
Jennifer: Look, I think there are different views about it, but if you're sitting at home and you're earning the lowest wage and you're working really hard and you're trying to pay your bills and you're trying to pay your rent or your mortgage or you're trying to put your kids through school, boy, it means a lot to you. Business has got to think about the whole community. We're going to take the whole community on this journey because it's very tough out there for people and I feel tremendous empathy for people who are just struggling to get through every week. But as I said, if we don't do the other things, then that's going to be very tough on business.
Fiona: Well, let's talk about productivity then, which you mentioned. How do we increase productivity?
Jennifer: Well, there's a few things we've got to do. The first thing is we've got to get our skills system working properly. The skills system, I was meeting with some local business representatives last night, they all made this point to me: "we can't get labour," number one, and "we can't get skilled labour," number two. And, we've got to get people into this country, we've got to increase our migration. We've got to increase that in a permanent way, as well as some of the short-term stuff. But why wouldn't we for example look at regional hubs like this and have a regional temporary or permanent migration programs, so that we ramp up the skills that people need? Because what's happening is that we're going to actually own goal our capacity to recover by not having people here and then skilling up. We’ve got to do something really quickly about processing visas more quickly, getting people into the country, skilling them up. And why can't we look at places like Bendigo, Ballarat and say, you're going to be part of our regional skills initiative. We're going to get people in, we're going to skill them up. The second thing we need to do is skill people better, it takes too long. A lot of jobs are changing. They're not being taken out of the system, you see the unemployment data yesterday, more jobs created, but jobs are changing. We want to make sure that people can stay in those jobs. They can advance in those jobs, they can get higher wages. That means skilling them better. The system is too complicated. People don't want to study for three years if they've been working. They need to do these things called micro credentials, so they can skill up in a particular area. The next thing we need to do is get businesses investing. Investment in this country is as low as it was in 1994 when we were in a recession. So, we have to make sure that business are investing. That's about getting rid of red tape, that is about the competitiveness of the tax system, because we're competing with places with a tax rate of 21% for businesses and we've got 30%. We've got to make it easier to do business and we've got to make sure that we get rid of all of this red tape. And then we've got to do a final thing, We've got to start to think about industries of the future. So here I am in Bendigo, you've got this incredible opportunity in gold, incredible opportunity in agribusiness, incredible opportunity in this kind of very niche manufacturing. We've got to create those regional hubs or do what the British do, they have these centres where they really power up a particular region and get particular industries growing and grow those industries at scale. So, there's a whole lot of things there. It's a long answer to your question but it's not one single thing.
Fiona: Jennifer Westacott is with us in the studio this morning. She's chief executive of the Business Council of Australia. The tax rate for businesses, I might park that one. It's big issue that we don't need to get into this morning. But Donna Frog in Eaglehawk has texted in. "Hi, Fiona. Could you please ask Jennifer Westacott if she has any ideas how Bendigo could stimulate the central business area to stop the increasing number of shops closing?"
Jennifer: Yeah. It's a great question. There's a few things, and people are looking at this all around the country now. Even in Sydney, there are lots of little businesses that have just gone. I see them and I think, I used to buy my sandwich there and they're not there anymore. So, I think there's a few things. First of all, we've got to get people back into the centers and I know the government is setting up a government hub in Bendigo. So that's going to bring quite a few people, but we also need businesses here too. What I would do in Bendigo is create an advanced manufacturing facility in the centre linked to La Trobe. I run one of these in Western Sydney and it's going to have a huge impact in bringing small businesses and big businesses together to make sure that we sort of start to kind of take advantage of some of the skills, some of the niche things that are here already.
Fiona: So what? You do that manufacturing in the CBD area or close to town?
Jennifer: You've got to have a hub and spoke model where you've got sort of people locating their offices here and then you have their manufacturing facilities obviously in places that are more suitable to it. But you've got to get a really concerted effort to get people back into the CBDs. Now in Sydney, the Premier made public transport free for a while, that was hugely important because you've got to reactivate the life of the city. You've got to negotiate with some of the landlords about just cutting people some slack for a while, so that they can keep their businesses going while people come back in. You need a really concerted effort on many fronts to get people back in and you've got to have activity. Bendigo Bank is obviously has a huge impact, positive impact, on the CBD and having a government hub will be a big impact…
Fiona: The gov hub, yes, but also the law courts.
Jennifer: The law courts. So, we’ve just got to stay the course. This is my point that sometimes government does stuff and it's good, but then they don't stay the course. We've got to stay the course for the long term. I think obviously having the Commonwealth Games is going to have a big impact but what I think my question would be, what are the permanent, lasting facilities that are going to have a lasting effect post the Commonwealth Games? High quality hotels, high quality venues, high quality facilities. That mean that after the games, there's a legacy there, that actually then means those flights that Qantas are doing to Bendigo stay because people say, "now I'm going to go to Bendigo for a weekend," because there's lots to see.
Fiona: Well, sometimes those facilities become white elephants, don't they?
Jennifer: That's right. And we've got to make sure that doesn't happen.
Fiona: Interesting to talk with you. You are going to be talking on a panel at the All Seasons tomorrow.
Jennifer: No. It's today.
Fiona: Oh, today?
Fiona: Pardon me. Got that one wrong. That one is today. You're right, it is the 17th of June. Thank you for the clarification there. So that's a lunch and I'm sure you're looking forward to meeting and talking with some other business leaders around Bendigo. Rob Stephenson from Be.Bendigo is on that panel as well, Christian Bennett from Woolies, the chief reputation officer of Woolworth, will be an interesting one to hear from, Marnie Baker, of course we know is the CEO and managing director of Bendigo and Adelaide Bank and you’re on the panel as well. So, a really interesting one too for the business community to get along to and hear from.
Jennifer: Yeah. Absolutely. We'll be talking on the panel but there'll be a lot of people in the audience and I'd encourage anyone who wants to come to come. I want to hear from people from a cross-section of the community, what's working, what's not? And I'm a practical person, so what are the practical things that could be done? And then I can sort of go and advocate that amongst corporate Australia. I can say to some businesses, why don't you think about Bendigo? If you've got to think about that particular thing that you want to set up somewhere, why wouldn't you think about a location like Bendigo, which has now got a more upgraded airport, you've got these flights direct to Sydney? Why wouldn't you think about that? And then in my advocacy role for government saying to both state and federal governments, well, here's some things you could do. But it also helps me continue my quest in life, if you will Fiona, that we have got to get regional Australia cracking and we have got to, in my view, pick 20 or 30 places around the country and just absolutely concentrate on them and get them really working.
Fiona: And you think Bendigo should be one of them?
Fiona: It is 26 past 7:00. Thank you for joining us this morning.
Jennifer: You're very welcome. Thank you.