Event: Jennifer Westacott interview with Peter Stefanovic, First Edition
Speakers: Peter Stefanovic, host; Jennifer Westacott, chief executive Business Council of Australia
Date: 12 May 2021
Topics: Budget 2021
Peter Stefanovic, host Sky News: Live now is Jennifer Westacott the chief executive of the Business Council of Australia. Jennifer good to see you bright and early. Does this budget go far enough?
Jennifer Westacott, chief executive Business Council of Australia: Look I think it's a really good budget. A very strong budget. It shows what a growing and strong economy does. It strikes the right balance between driving the private sector through tax incentives, through a huge skills package, through digital, through infrastructure, through participation, particularly women's participation. And then it pays the social dividend. An unprecedented investment in aged care. Big spend in mental health, disability. I think if I've got an anxiety about the budget it's the low growth in the outer years. And that's obviously driven by low population, that's driven obviously by our low productivity and we've got to address that. Because we need to start thinking big as a country. Because the problem is if we think small that lower growth number in those outer years, that's not how we're going to get wages up. We need to think big about investment. We need to think big about driving expansion, about driving innovation, about driving skills, about ultimately getting companies to relocate to Australia. Because it's that bigger growth that gets you higher wages that gets you better living standards. But on balance this is a budget about getting people back to work and it's a very, very good one.
Peter: Are you talking migration there as well?
Jennifer: Yeah. Look clearly the lower growth in those outer years is driven off, in part, those lower migration levels. But we have to compensate for that by driving higher productivity, which is driving higher levels of investment, driving further deregulation of the economy to encourage investment. Obviously continuing on the skills front. Because if we don't do that I just can't see how we drive stronger wage growth over a sustained period of time.
Peter: The tourism industry, it has already got problems with what's going on at the moment with those borders remaining shut until at least the middle of next year. Is there much certainty as far as you can tell for that particular industry?
Jennifer: No there's not. But let's go back to basics here. The first thing we've got to prioritise is keeping our domestic economy going. And so we've said when vulnerable are done in the vaccine rollout - that's 1b as the government calls it. There is no basis at that point to shut domestic borders. And we should be lifting those public health orders. Because 52 per cent of people, Peter, are not travelling because they're worried about not getting home. They're not worried about getting the virus, they're worried about getting stuck. So that should help a little bit. But we do need to set that timetable that as we vaccinate the population, as we lower the risk, that we do start targeting exposure to international borders. So that's got to begin obviously with returning Australians, international students, highly skilled workers which we need because companies tell me Jennifer we can't get the people we need to start expanding and growing which of course gives you that higher growth rate. And then those very targeted corridors, if you will, of countries like Singapore, New Zealand where you've got comparable low infection rates, high vaccination rates. We are going to have to do this in a staged and careful way.
Peter: Do you think that this energises the argument to build quarantine facilities now? Not just for returned travellers but also for migrants, for international students as well?
Jennifer: Well certainly the universities have already offered up that they would take a different approach to quarantine using their big accommodation services on their campuses. Look I think the first priority is clearly to get quarantine right. I mean we're still seeing breaches of quarantine.
Peter: A new one too.
Jennifer: And building new things which is going to take a long time. I mean there's so many existing facilities we could use. That's not an immediate priority. The immediate priority is to actually get quarantine working properly and of course to continue the vigilance of tracking and tracing. Because we are going to have to live with this for a long time. But we do need that roadmap so that industry can see well at this point in the vaccine rollout we're going to be able to do this and this, and they can plan for it.
Peter: You did refer to wage growth there. What does this mean for everyone out there watching? Are we not going to get a pay rise for a while? Is that what that means?
Jennifer: Well wage growth is forecast to be quite low and as if GDP in the outer years. But that's a productivity issue. We can actually control some of this. So that's about getting companies to invest more. Now there's great investment incentives in the budget which we've been strongly supportive. We'd like to see those expanded to the bigger companies who've got those big balance sheets that can unleash much bigger projects. We've got to keep our foot on the pedal on making it easier to do business. We've got to drive skills harder. We've got to focus really hard on things like modern manufacturing, on things like getting commercialisation. That's why things like the patent box is such a great idea in the budget. Getting Australian companies to invent new products and services so that we can get them developed here in Australia, get the jobs and industries off the back of that. We're just going to have to work harder to get the domestic economy really continuing to fire on all fronts so that we get that wages growth. And of course, it does bring us back to industrial relations as well. We were very disappointed that one of the things that didn't get up in that IR reform was the fixing of the enterprise bargaining system. We've got to stay focused on that because people on an EBA on average get $100 a day more than people on an award. So there are some things within our control on wages and we should really take all of the levers and pull them hard.
Peter: Are you concerned at all looking long term about inflation and our economy perhaps overheating in the way that a lot of people are worried about what's happening in the US at the moment?
Jennifer: I think the Reserve Bank is quite sober on that. And I think they have a pretty good appreciation of that. And obviously, they've been very strong at managing those levers to make sure the economy doesn't overheat. Housing is an area that is a constant watch area. So there's some great stuff in the budget on housing. But we've got to make sure that we temper that on the supply side. We've got to have the states continuing to release land, get those planning approvals done, get the supply side done, particularly when migration comes back. Because what we don't want to see is big price spikes again that are often driven by increased demand but particularly driven by lack of supply. So we've got to keep our foot on that pedal. But I think people are not particularly anxious about those asset bubbles or those big overheating issues. The RBA is very cautious about that but it's something that we've got to keep watching.
Peter: Okay Jennifer Westacott from the Business Council of Australia appreciate your time as always.