Event: Jennifer Westacott interview with Jane Norman, Capital Hill, ABC News
Speakers: Jane Norman, host, Capital Hill, ABC News; Jennifer Westacott chief executive, Business Council of Australia
Topics: 2022 federal budget; wage growth; productivity; cost of living; federal election
Jane Norman, host, Capital Hill: Jennifer Westacott, welcome to the program.
Jennifer Westacott, chief executive, Business Council of Australia: Thanks very much.
Jane: If you were advising Josh Frydenberg, in terms of tonight's budget, what would you tell him that needs to be done?
Jennifer: Well, I think the first thing is, we obviously want to see momentum in the economy, and obviously the figures that have been released today show that the economy is going to bounce back. Unemployment has got a three in front of it. We want to see that momentum maintained, and we want to see the policy settings that maintain that momentum. The second thing is clearly cost of living expenses and governments have to respond to that. Those costs of living pressures are real for families, and there's no way of avoiding that and it's important the budget addresses that. The thing that we're really looking forward to seeing, though, is have we set the foundations for a private sector-led recovery? Both sides of politics say the private sector now has to take over the recovery, we agree with that completely, but are the tools there to do that? Is the investment environment right? Are the settings to really drive skills? Are we going to get those labour shortages solved? Are we going to continue with the productivity measures around regulation, skills development, infrastructure? Those are the things we'll be looking for in the budget, and those are the things in our pre-budget submission we made a very strong point about.
Jane: Okay. If we just go back to maintaining the momentum for the recovery, what are the specifics that will help maintain the momentum with your recovery we've had so far?
Jennifer: Well, the first thing is labour shortages. If I speak to businesses, small, medium, large, they all say, ‘I just can't get enough people.’ Whilst this has a temporary effect on wages in that respect, it's not a solution to our problems. Because what we're seeing is that, as that goes on projects will get delayed, restaurants or services that were going to open five days a week, only open three. So, it's not a solution to our wages problem, which is a real problem, we have to fix it. So, I think the first thing is sorting out those labour shortages. The second thing is really making sure that Australia remains open, that we avoid going back into lockdown, that we avoid the stop-start approach we've seen over the last two years, but we stay open to the world. We finalise those free trade agreements, that we stay an open, trading nation. The final thing is that we start to address these productivity problems we've had, which are caused by a lack of investment. We've still got investment as low as it was in the 1990s. We've got to make the country more attractive to invest. That's about, obviously, our competitive tax system. But it's also about regulation, it's also about how long it takes to get things done, and it's also about our skills system. We need to be able to get the skills that are going to be a magnet for investment. That's about some of the stuff that governments are doing, about short courses, micro credentials, but we really need a big push on that.
Jane: In terms of labour shortages, will having an open border address some of the labour shortages at least? With skilled migrants coming back, students, holiday makers?
Jennifer: Yeah, it will. But it's got to happen at a rate, and pace, and scale, and, that's why we called for a temporary increase to the skilled migration cap to 222,000. But re-weighting it towards the skills end.
Jane: Has there been any kind of positive signs?
Jennifer: Well, we'll see in the budget what the migration figures are. But that's one solution. But we've also got to do some very targeted measures. We've really got to look at making sure that we are trying to make it as easy as possible for small and big businesses to get the labour they need. So, the agriculture visa that has been talked about, and obviously being implemented, working holiday arrangements, we've got to get that full suite of the labour market into Australia. We want to see some movement on that in the budget.
Jane: What's making it hard for small and medium businesses to employ now?
Jennifer: Well, they just can't get people. People say to me, ‘I just can't get people.’ There's two issues. They just can't get people, or they can't get the skilled people that they need. I think this is the myth about migration and skilled migration. Quite often, you need a person with quite specialised skills in order to then do a transfer of those skills to other people, which means a project can get up. So, people have got particular types of skills, you bring them into Australia on a two-year, or four-year visa, they transfer that knowledge to workers, they train other people. Particularly in these new technologies, advanced manufacturing, composite printing. We don't have all of those skill sets in Australia. We need to bring people in from other countries. That will then create the skill mix that a major company says, ‘well, now I'm going to put that project in Australia.’ That's the sort of thing we're looking for, is that dynamic labour market where you've got that transfer of skills. But, at the entry level, people just say to me, ‘I can't get anyone.’ Whether it's in country towns, whether it's in big cities, ‘I'm opening my restaurant three days a week, Jennifer, because I can't get people to do any work.’
Jane: Well, it is an incredibly competitive and tight labour market right now. We're expecting the jobless rate to hit lows we haven't seen since the 1970s, we've got a high participation rate. Does that mean that wages will rise?
Jennifer: Well, I think there's an inevitability about wage inflation in that environment. The question we always ask is, is that sustainable wage rises? We want people to get paid more. But, unless we're doing the hard yards of making our companies and businesses more successful, getting into new markets, expanding on what people are doing, getting our enterprise agreement system back on track working again, what I worry about is that what we see is temporary wage spikes, which have the potential downside that you actually stop things from happening, versus the sustained effort we need to make to lift our productivity, to lift our competitiveness, to lift the success of the private sector, and to get our enterprise system working again, so that people share in the benefits of that. That's real wage growth, as opposed to a temporary wage inflation.
Jane: The government has tried. It moved to try and speak to the unions, business groups, and reform, in some ways, enterprise bargaining. It didn't work. Do you have any optimism that there might be some changes in this space, regardless of who wins the next election?
Jennifer: Well, I hope there are. I think there have to be. Because this was the system, remember, that Labor introduced that basically said, we want workers and their employers sitting down together, working out how an enterprise can be more successful, new technology, better ways of doing things, and then sharing those benefits. We absolutely are committed to the sharing benefit side of that. It can't be a one way. It's got to be a shared benefit exercise, where workers are better off. I think it's a very sad thing that that system that has repeatedly paid people more is in a state of freefall. I think both sides of politics, whoever wins the election, has got to save that from just falling apart.
Jane: As we enter the next election, we're in an unusual space, because the economic policies between the two major parties don't differ wildly. Certainly not as much as they did back in 2019. So, the Treasurer Josh Frydenberg has today said, ‘don't risk a change of government, because that could risk the progress we've made economically.’ Do you believe, really, that a change in government would risk the gains we've made since the end of the worst of the pandemic?
Jennifer: I think, the result of the election will be up to the Australian people. What we want to see is both sides of politics confront the reality of the situation we find ourselves in. A very strong economy and maintaining that momentum I've talked about. But also doing the hard yards on the things that are going to set us up for the next 30 years of economic growth. Because it's that growth that put more money into people's pockets, it's that growth that's allowed to us to run the services that are the envy of the world. We want to see those policy settings around skills, around a competitiveness agenda, around attracting investment, around addressing inequality, around addressing our regional potential, and really making sure that we get regions operating to their full potential. We want to see that agenda. I think that's the message that we've given both sides of politics for a long time now. It's up to the Australian people who actually wins the election. But make no mistake, the issues that both political parties will inherit are those same issues and they require the sort of responses that we've talked about.
Jane: And, just finally bringing it back to the budget, we are expecting a multi-billion-dollar cost of living package, one-off payments, as well as this temporary cut and fuel excise. Is this a sensible approach to address the pressure right now?
Jennifer: I think it is. It's very difficult if you're in government to not address those issues. They're real for people, they're hurting families. The crucial thing, of course, is getting that to be one-off and temporary, not baking big, extra spend in the budget. Then buying the time on the fuel tax excise to start doing the thinking, that the government has flagged, about road-user charging, the nationally consistent model, particularly one that starts to address the fact that we'll have a lot of electric vehicles coming into the market. I think it's important that we are seen to address those costs of living pressures, because, for a family, the sort of money that's being talked about, $250, that's a lot to people. That means a lot to them. I think we've got to address those cost of living pressures, but at the same time, we've got to make sure that we do the structural work that sees the economy growing stronger, because it's that growth that puts, ultimately, more money into the coffers of government, and more money into people's pockets through higher wages.
Jane: All right. Jennifer Westacott, thanks for your time.
Jennifer: Thank you very much.