Event: Jennifer Westacott interview with Laura Jayes, AM Agenda, Sky News
Speakers: Laura Jayes host, AM Agenda; Jennifer Westacott chief executive, Business Council of Australia
Topics: Business Council 2023-24 budget submission; migration; energy; labour and skills shortages
Laura Jayes host, AM Agenda: Business Council of Australia CEO Jennifer Westacott. Jennifer, thanks so much for your time. First of all, are you worried about the level of market intervention we've seen from this government so far?
Jennifer Westacott, Business Council chief executive: Yeah, look, I think we know what works and what doesn't work. I will come back to talking about the essay more broadly later. But we know that capping prices doesn't work, it deters investment, and we need investment for things like the clean energy transition. We know that government monopolies historically have not worked, and they've not served customers well. So, we know the sort of government intervention that doesn't work. We have been concerned obviously about the industrial relations reform and about the energy market intervention. What we say in our budget submission is you must get the macroeconomic settings right to drive investment, you must get the engine on growth going, because it's growth that gives you wages, its growth that gives you a stronger budget position, its growth that gives you better living standards, and you need to drive investment, you need to remove the shackles on investment. So, we're calling for an investment allowance. You need to encourage more people to work at their full potential: skills, women's participation, you need to continue on with the infrastructure work, we need to make sure that we are setting some fiscal rules to signal to the market that we've got the budget under control, and we need to reform government spending. So that is our overarching message, but our core message, to your point, is grow the economy faster by unleashing the private sector.
Laura: Okay, unleash the private sector, that message from you this morning couldn't be clearer, actually. So how does that marry with the essay you've read from Jim Chalmers?
Jennifer: Well, look, I think we would agree with the Treasurer on, the kind of, where do we want to end as a country in terms of the destination. We want Australians to have higher wages, we want people to have better living standards. We want to be a frontier economy. We want to be a dynamic economy. We want to be a society that cares for people and make sure that people get the best opportunities, and he's right to call out the issues that are going to define Australia's future. Can we make the clean energy transition? Can we digitise the economy? Can we really adopt technology? Can we embrace new industries like critical minerals? Our pathway, though, is the private sector pathway. And I think he acknowledged and confirmed yesterday pretty clearly that he does see an absolutely crucial role for business. Our argument is you don't need to reinvent the system, you need to reinvigorate the system, because we've not done the work that we should have done for the last decade. We didn't do the tax work that Ken Henry asked for, we’ve really made a mess of energy policy. We haven't done the migration work about how does migration drive productivity, we fiddled around with the skill system, but not really comprehensively changed it. And it's that that needed to be done. So, our kind of question is, well, what would be different in what he's talking about? And obviously, we're keen to work with him. But the bottom line is this Laura, that a market economy that was reformed in the 1990s delivered Australia doubling of incomes, some of the highest living standards in the world. So let's be careful about what we're throwing out here. Reinvigorate, don't reinvent is my message.
Laura: What concerns you about, if anything, what concerns you about the kind of manifesto that Jim Chalmers has put forward?
Jennifer: Well, I think we would be concerned about the idea – and I don't think to be fair he's proposing this and he clarified it in Financial Review yesterday – that somehow government has to do all this. Our argument is: get the macroeconomic settings right so that companies invest, they take risks, they put money at risk, global companies want to come to Australia, and at the moment those settings are not very good. Companies say to me all the time we can't get projects to stack up in our global boards who are allocating money, because we can't compete with other countries. So get those settings right first, and then the private sector will do the heavy lifting. Then there are areas that government is going to have to co-invest if we want to get new industries working. Now the Clean Energy Finance Corporation, which he used as an example in his essay, I agree with him about that. We needed that. But where this works in other countries, Germany, the UK is where government does something and then withdraws, so it's not a subsidy model. So, we'd be concerned about intervention that was subsidies or price caps or massive regulation, which actually deters investment, we've got to get investment going. That's about getting those macro settings right that we call for in the budget submission.
Laura: The Coalition has also signaled that they will block their safeguard mechanism, doesn't matter it's still going to get through the parliament with the help of Independents or the Greens, but it does show that major parties or two major parties are still wildly at odds on emissions policy. Does that concern you?
Jennifer: Yeah, it does, because we need a certain policy architecture because that's what will drive investment. The amount of investment that's needed in the clean energy transition is huge and it's that policy certainty that is going to drive that. Now we have been strong supporters of the safeguard mechanism. Let's remember this is actually a policy of the former government. I want to sit down and understand what the objection is. I think you've always got to understand where people are coming from. But I think business really wanted that policy certainty. I think the government has taken a careful approach with the safeguard mechanism, it's going to be hard to do. But it's kind of doable, with a fair bit of effort. What we need now is just to get on with it, what I think we don't need is major reversals. I'm going to sit down with the Coalition and try to understand what their concerns are about the design of the mechanism.
Laura: Well, it's this three-letter word, tax, that has worked so well politically for them in the past. But we will see. Before we let you go, Jennifer Westacott, I'm going back to this ‘unleash the private sector’ line that you've used this morning, it's a good one. As we've all been on holidays, hopefully over Christmas, there are still massive problems for businesses big and small when it comes to worker shortages. Is there any sign of that improving this year?
Jennifer: Well, you're absolutely spot on. I think anyone who was in the tourism side of the economy over Christmas could see restaurants and hotels struggling with labour shortages. What we're hearing from companies is that this is across the whole of the economy, from engineers to ICT to hospitality workers. Look, I think this is just going to be this kind of grinding process of increasing that intake, fast tracking those applications. We are hearing good reports around the numbers of international student visas that are processed. Tat's good, because they're often playing a really crucial role in the hospitality side of the economy, backpackers coming back. But it's the slow, hard grind that we've just got to stay the course on. We're calling in our budget submission, that we play a bit of catch up over the next 12 months and move that intake up to 220,000. We're also saying, let's look at who's here, humanitarian visas people on temporary visas, let's see if we can get those into permanent pathways. And we've really got to - and I congratulate the government for conducting this review into migration - we've really got to ask ourselves how do we make sure that migration plays this hugely positive role in the country's prosperity, aligned with a better functioning skills and education system. So that we're skilling Australians, but we're bringing in that talent and we're filling those workforce shortages as we need them.
Laura: There's a bit to do Jennifer Westacott. Thanks so much for your time. We'll speak soon.
Jennifer: You're very welcome. Thank you.