Event: Jennifer Westacott interview with Nadine Blayney and Andrew Geoghegan, Ausbiz
Speakers: Nadine Blayney, host; Andrew Geoghegan, host; Jennifer Westacott, chief executive Business Council of Australia
Date: 12 May 2021
Topics: Budget 2021, skills, women’s participation
Nadine Blayney, host Ausbiz: Jennifer Westacott, the Business Council of Australia CEO live via Skype. Jennifer just picking up on what we what were discussing with Innes Willox from Ai Group, is this a budget that will see business, corporate Australia, willing to invest more and also pay more in wages?
Jennifer Westacott, chief executive Business Council of Australia: Well it certainly sets the foundations for the investment. The instant expensing and the extension of it is really important. Because what companies were saying to us was the timeframe was too short, too uncertain. So I think that will really help. I think there are other things in the budget that are really important such as the skills package which you'd just been talking about, the deregulation package, the infrastructure package. The thing that's missing of course is the big companies. Now there'll be different views about that. But those are the engine rooms as Innes was just saying. They have the very big balance sheets, and we would have liked that expensing measure to apply to them. So I think all the ingredients are there. Then you've got to deal with the confidence point and you've got to deal with the deregulation point. It's still very hard for business to do a lot of these and I think we could do a lot better on that. And then the confidence point is going to come from policy certainty, an end to these snap lockdowns, an end to these state border closures and then gradually, carefully opening up the international economy. In respect of wages which your point goes to and I agree with you, wages come from higher productivity, they come from business investing. And so the idea that companies are simply going to pay more, and business is going to pay more to people when they're not growing and expanding well if they do that then they're simply going to employ less people. So we've got to get that business investment going because it was the missing link in the economy. It was very low, and these measures will go a long way, but we do need to do many other things as well.
Nadine: So is it then a bit of a disappointment then that we are at the top of this V-shaped recovery Jennifer and we haven't had significant reform. We haven't had significant reform in terms of productivity, in terms of workplace relations, tax reform, corporate tax reform. I mean, are wasting this crisis?
Jennifer: Well maybe but to be fair to the government they tried on the IR stuff. I mean they put a very modest, careful package up to the senate who rejected it for reasons that were political, not national interest reasons. So I understand that governments have a reluctance to do some of this. Because first of all we're still in this pandemic and I think people in Australia are forgetting that we're still in the middle of a global pandemic. We're still rolling out a vaccine. Other countries around the world are still in crisis as they respond to it. So no one was expecting this budget would have big tax reform and major structural reform. What we want to see is that we're on the steppingstone to making the economy more competitive, more dynamic, more vibrant. And some of the things are there in the budget - the big digital package, the women's participation package, the skills package is colossal. It's $4 billion for skills, plus the employment services package. $15 billion extra for infrastructure but across the country the level of spending on infrastructure is just enormous. So I don't think we should underestimate the effort that's being made by state and federal governments to push the economy harder. But if we are serious about structural reform then we have to get the senate interested in the national interest. Not in just political interest. Well corporate tax, well you know my views. At some point some government is going to have to terms with out very high corporate tax rate because we are currently seeing more capital leave the country than come into it.
Andrew Geoghegan, host Ausbiz: You mentioned the massive skills package there but of course there's going to be significant lag time to get those certain skilled up workers into the workforce. Meanwhile, we're already seeing tightness in the labour market. That's likely to lead to higher wages despite any improvement in productivity. So how do you address that at least in the short-term?
Jennifer: Well in the short-term that's correct. But the problem will be is it will be patchy. It won't be across the whole economy; it will only be where you've got that more competition for labour. And of course, that will mean in many cases low-income people don't get those wage increases that are driven by wage inflation. So in the short-term this is going to be very, very difficult. That's why we're very supportive of JobTrainer being expanded because it is targeting that short-course, rapid-fire upskilling of people. And in the medium-term, and I mean this year, as we roll out stage two of the vaccine, we have to start thinking about: how do we get international students, how do we get skilled, particularly targeted skilled migration happening and of course returning Australians. And then how do we get those corridors of travel between countries like Singapore and New Zealand obviously. But we can't do it all at once. But we've got to send a signal of the plan. We've got to send the roadmap signal so businesses can start planning for that. We are going to have a lot of problems in some parts of the economy if we don't address that second part of my reopening which is getting some of those highly needed skills into the economy that are going to have to come from somewhere else. Companies say to me all the time, ‘I would do more in Australia if I could get the skilled labour to do it. But I'm going to have to bring some of those people so they can train other people.’
Nadine: Jennifer you're alluding to this border reopening timeframe that's been put out there - mid-2022. Will your constituents be pressuring the government to move faster on that timeline? I mean is that realistic that it's still more than one year away? Yes cognisant of the fact that things change quickly on the health front. But you don't want to see Australia remaining closed for business while the rest of the world opens up?
Jennifer: Totally agree. No one has argued this harder than I have. The point of having the vaccine is that you start opening up the economy. Otherwise what's the point? You vaccinate the country, you remain fortress Australia, and meanwhile other countries are just getting on with stuff. And they're going to come back big. So I agree with you. I think the timetable is too conservative. I understand all the conservativeness around it but the roadmap that we have argued for is that as you finish key milestones in the vaccine rollout like 1b obviously is when you've done all the vulnerable people. At that point, no domestic borders should be allowed to close again. The public health orders need revisiting. And then as you start rolling out the stage two which is obviously the broader population and as you get that risk wading then you start bringing in returning Australians, international students, skilled workers, open up these travel corridors. And to your point, you cannot have a complete risk aversion here. Because other countries, they're thinking big. You watch that speech from Joe Biden the other week. That is a big vision for the country and big amounts of money. They'll be different views about it but anyone who's under any illusion that is not a transformation of America is missing the point. Now we need to be thinking big in Australia. Thinking big about innovation, thinking big about how we drive investment. Because we're going to be up against countries who are thinking big and who are going to open faster than we are. So this idea that we have no risk appetite I think will be very, very dangerous for this country.
Andrew: Jennifer, great to get your views. Thanks for joining us from the Business Council of Australia.
Jennifer: You’re welcome. Thank you very much.