E&OE

Michelle Grattan, host: Jennifer Westacott, what would be businesses two top priorities in this budget?

Jennifer Westacott, Business Council chief executive: The two top priorities would be that this is a budget for growth. And the second top priority, is that we start to deal with our labour market issues. That we start to deal with our skills, that we start to deal with our re-skilling of the population, that we start to deal with labour market access, female participation. They would be the top two I would name Michelle. There are other really important ones, but this has got to be a budget for growth that does send the signals that we are going to have this private sector recovery, and that the incentives are there and the package is there for that private sector recovery.

Michelle: We're told it'll be a woman-friendly budget apart from childcare, which we know about, what should it contain for women?

Jennifer: Well, I think one of the things that's being talked about is the superannuation package. And that will be very important for women. Women have been very, very disadvantaged in that superannuation system. They are retiring with very small savings. How do we get the incentives right? How do we make it easier for women to get good super when they retire? But I wouldn't underestimate the importance of the childcare package. It's a lot of money. It's a very targeted, thoughtful package.

Michelle: And a long way off though?

Jennifer: Well, I think some of that is about the systems changes that have got to be made. And we would encourage that the sooner that can happen the better.

Michelle: Does it take a year?

Jennifer: Well, I think that's a legitimate question and we're asking, can we bring that forward, because we really need women participating as soon as possible. We've got the lowest population growth since World War Two. It's crucial if we can bring that forward, we should bring it forward. But it's a very thoughtful, careful, targeted package. And I think those things, the superannuation and the childcare, go hand in hand because we know that the reason many women don't have super or adequate super, is because they've taken big stints out of work and they haven't built that savings nest egg. So those two things should be seen in tandem. Clearly, what we're expecting to see quite a big package in aged care. That's very important for women. It will be good to see that that's not just more places, but that looks at things like workforce and the quality of workforce and the quality of service. They would be a couple of the things and obviously the skills packages. Many women have been dislocated from COVID, helping people who've got low skill levels, many of whom are women, getting back into work through micro-credentials or short courses. Those are very important things to do as part of a comprehensive women's budget. I mean, we would like to see a women's statement restored in the budget. We think that's an important signal and it does allow people to see the aggregation of effect and how that impacts on women.

Michelle: At one level, obviously it's welcomed to see measures, to encourage people to work more hours as opposed to getting into jobs in the first place. But does this also raise questions of that work-family balance that we used to hear a lot of?

Jennifer:  Yeah, it does. And that's one of the reasons we've pushed for a different approach to paid parental leave, which would kind of see it going to 26 weeks, but allow more flexible sharing between both carers because, you know, the modern family does want to see greater flexibility in how they look after their children.

Michelle: That's only for a brief period though, around the birth of the child?

Jennifer: Yeah. Well, I think ours is a bit more flexible now without going into all the detail, but look, I think we've got to find ways that we get both participation and family friendly environments. A lot of that Michelle, comes down to the workplace. I mean, governments can't be expected to do all the heavy lifting there. Employers have got to make their workplaces very family friendly. And we've learned through COVID that you can do that. People have worked for long periods of time at home. A lot of people obviously coming back into their offices now, but I think if you're not sort of sitting down with your teams now and saying, how do we make our workplace, given that we've got this incredible technology, more flexible, more family friendly then you're not really, I think doing your employees the right service. And I think government can't be expected to do everything here.

Michelle: Now, let's talk about the labour market. We've got unemployment now at around 5.6%, but employers are complaining they can't get workers, especially in the regions, but not only in the regions. Now you've mentioned skills and skill packages, but on my memory, we've had skills packages for years and years, decades even. So the answer is not just surely a skills package. What are the answers other to this labour market problem, which seems to be getting worse?

Jennifer: Yeah, that's a really good question. So, the first thing is that you do need some skills packages. One of the things we called for is a foundation skills guarantee. So that people, particularly people who have been in low skilled jobs, are able to upskill and access a broader set of jobs in the labour market. You do need that targeted, micro-credentialing so you fast track people into upgrading their skills. So I wouldn't discount it. It is very important and yes, we've done lots of things, but it's the biggest area of change in our labour market and in our economy. The rapid change of tasks as technology and digitization take hold in the way we produce and do things.

Michelle: But there is more to it than this surely, this labour market shortage?

Jennifer: Absolutely, so a couple of things I think are really important. The first thing is that we do have to, as the vaccine rolls out, and this was a key part of our budget submission, we do have to find a pathway to reopening our international borders for targeted groups of people. So, we've said that as the vaccine rolls out, as the risk weighting reduces, we have to target international students, high skilled and skilled workers where we've got labour shortages, particularly in areas like ICT, where companies tell me they are all taking the same people now, and of course that has a wage inflation effect. And of course, returning Australians. So that's one thing we've got to do. We've got to make sure that we don't take so long to do that, that those highly skilled and skilled workers are basically snaffled up by other countries. So that's one important thing.

Michelle: When do you want to see the border open by?

Jennifer: Let's be clear, we don't want to just see the borders open tomorrow. It's not going to work like that. It's got to be open for certain people under certain circumstances in certain timeframes. So we released a report a couple of months ago that said when you're starting at what's called 2a and 2b, which is the broad population rollout, that you're starting to set a timetable for international students for setting up these, what we call vaccine corridors, with countries with comparable vaccine rates and low rates of infection. That you'd allow a greater movement between those countries. You've seen this stuff happening in New Zealand already. And that you're targeting at that point, skilled workers and obviously returning Australians. No one is suggesting that there's just a day where you say the borders open. What we're proposing is a highly targeted approach, based on the rollout of the vaccine. The third thing we need to do on skills is stop shutting state borders. Because if I'm thinking about going to work say in Queensland for maybe a temporary period, I'm not going to do that if I think I can't get home. And so, one of the things we've said is that, as you know, we've never supported these arbitrary state border shutdowns. But when we get to 1b, which is all vulnerable Australians have been vaccinated or offered the vaccine, there is just no excuse to shut state borders again, and that would allow a lot of predictability and a lot of predictability for labour access. And the final thing we need to do on skills and I've been calling on this for years. And the government's done bits of this, both the state government and the federal government, we've just got to make it easy for people to go and live in regional Australia, where there are a lot of jobs. That's where I hear a lot of employers saying that they can't get workers. Have we got enough land supply? Have we got enough housing supply? Have we got the support services around people? Can we make it easy for people? Should we have more fast tracking to get permanent residency if you're willing to go to a region, and to make that a really attractive proposition. So to me, it's a whole package to solve this problem. It's not one thing, to your point. It's a multitude of things and we need to stay on it.

Michelle: Now Josh Frydenberg is aiming to drive unemployment below 5 per cent. At what level does unemployment have to be to put pressure on wages to get wage increases?

Jennifer: Look, I think that's the unknown to be honest. The Reserve Bank has obviously made some comments about this. But I think there's two issues here on wages. The first is the one you've highlighted, and it's important. The second issue though, is that our productivity has just been terrible for a long period of time. And unless we are willing to tackle some of that productivity set of issues around regulation, industrial system, and so on, just having demand and supply issues resolved is not going to put that long-term sustainable wage growth. And of course the other point is that it will be very patchy in the economy. You'll get wage inflation in some of these areas we've talked about where you've got skill shortages. What you want to see is sustained wage growth across the whole economy. And that's a productivity discussion. We've got to be willing, as a medium-term strategy, to start talking openly about how to fix that. The other point that I think is missed and I really welcomed with the Treasurer speech last week, a million people out of work is not a good thing. A lot of people out of work for a long period of time is not a good thing. We should do better as a society on that because unemployment is a moral issue, I think, as well as an economic one. And we ought to do better with our job services networks, with our skills, which I’ve talked about, making sure that we don't leave whole cohorts of people where they're in and out of work, in sort of quite an insecure fashion or they're unemployed for a long period of time.

Michelle: Now, just finally, the Treasurer has indicated that fiscal repair and the repayment of debt is still on hold. Do you agree with that strategy or should we be moving faster on those fronts?

Jennifer: I agree with the Treasurer on this. This was the central point in our budget submission. The key to getting debt under control is growth, and the key to getting a strong budget position. And I think we'll see this; you're starting to see some reports that the budget is going to be in a much better position. That's because the growth has rebounded, that's because the economy has come back faster. That is the best way to get a sustainable and effective return to a balanced budget over a long period of time, or a strong budget position than a capacity to start dealing with debt. Now is not the time for austerity, but it is the time for prudence. And that's why we were supporting the government in removing JobKeeper, because you've got to get the budget off life support. You've got to get that private sector recovery. So our comment is this, ‘every dollar that we spend now has to be a dollar that creates a job, returns a job, and is a dollar that positions the economy for that long-term deep, sustainable growth’.

Michelle: Jennifer Westacott. Thank you very much for talking with us today.

Jennifer: You're very welcome. Thank you.