Event: Jennifer Westacott interview with Tom Connell, AM Agenda
Speakers: Tom Connell, host AM Agenda; Jennifer Westacott chief executive, Business Council of Australia
Topics: Inflation; migration; labour shortages; skills; regulation
Tom Connell, host AM Agenda: Joining us now Business Council of Australia CEO, Jennifer Westacott, thanks very much for your time. We have got a pretty good preview of what Jim Chalmers is going to say. It seems to be the government sort of outlining some very tough economic conditions, and also saying we can't do a lot about it, can't spend our way out, the budget is limited. And that would add to inflation anyway, is it just a bit of an old fashioned ‘tough time, we'll get through it' for Australians?
Jennifer Westacott chief executive, Business Council of Australia: A little bit, I think clearly we're going through a difficult time. And we're not alone in that around the world. Obviously, you know, these are numbers on a page, but they're much more than that. They're real impacts on families, people today thinking about, ‘do I trade off my school fees, for doing more around food’ and things like that. So, we’ve got to always remember who is at the end of these numbers. But I think the good news, I think, Tom, is that we are in a better position than most other countries, many of our headline indicators are better. There's also a sense in which this will get worse, but then it will get better. The challenge is what do we do? What are the levers we can pull? What are the things we can control for? There are micro economic reform levers, regulation, skills. What are the big resets we need at the summit? Migration, skills. How do we drive new industries? How do we make the economy more competitive? How do we get the industrial relations system working so that we do get wages up, but in a way, that's about lifting productivity and lifting the kind of activity of the economy. That's the long-term challenge, the short term is how do we take the kind of hand breaks off the labour market. How do we stop the fact that people can't get their businesses up and running. How do we stop the fact people aren't tendering for jobs because they can't staff them up. Those are things we can control for, and we should pull every single lever possible.
Tom: There's a lot in there, the levers that the government, perhaps to start with this, can pull in a short-term sense. So, things they can do over these next few tough months, what are they? How much of that could be spending? I mean fuel excise is one that you mentioned, because it cuts down on transport. It's not something you generally use more of if it's cheaper, you drive to work the same way, so it doesn't necessarily surge demand. What are your thoughts on that? Or other short-term levers?
Jennifer: I think the kind of your point earlier, there's not a lot you can do from a kind of spending point of view, because it has these unintended consequences. I think there are things though, that you can pull. So, the biggest one at the moment is labour shortages. Because whilst people might argue, well, it's putting pressure on wages, but it's wage inflation, it's not sustainable wage increases, because what we know is that many businesses aren't operating at their full capacity, they're putting off doing projects, they're not tendering for work.
Tom: Aren’t some of them are shutting because they can't find the workers?
Jennifer: Exactly, you go to a cafe or something and they're open three or four hours.
Tom: Right, limited hours and this is going on, partly because of COVID. But even in areas where there's sort of COVID, it's not just COVID, right? It's actually just finding workers, which I think it is unprecedented in Australia.
Jennifer: Well, you think about the numbers, we used to take 230,000 people a year, that's a whole lot of temporary, permanent migration, students etcetera. We lost 90,000 people during COVID, so we are about 300,000 people short. Now, the real implication of that is the stuff we've been talking about, that people can't get going. Now, the longer that goes on, the more difficult that becomes because people are actually delaying big projects, or they're pricing in huge costs for projects. So those are some things we could control for fast tracking visas, giving people four-year visas rather than two-year visas, to be an attractive place.
Tom: So, is enough happening in this area? Because the thing is allowing people here, who already are here, to work more hours, removing penalties for older Australians?
Jennifer: Exactly all of those things. You know, we're putting out a report today about some of this.
Tom: There is movement here, right?
Jennifer: Yeah, I mean, there's stuff you can do here, like we used to have the old ‘Ten Pound Pom’ thing. I mean, do we say to backpackers, you know, we’ll pay your airfare? I mean, are there things that sound sort of, I don't know, you wouldn't have done them two or three years ago. But you know, let's not take anything off the table, we need people working in this country. At the same time, we need to be making sure that everyone who can participate is participating. That's about skills packages for people, that's about obviously making it easy for women to work and all the things that we need to talk about. But there are lots of things we could do on regulatory stuff. For example, one in five trucks are off the road. Well, what if we just changed some of the standards in truck driving and brought them into line with the international experience. Is that a way of getting…
Tom: People say, hang on, is this a safety compromise? What would you change specifically there?
Jennifer: Well, you know, I think it's quite complicated the way we kind of progress truck drivers through different stages of trucks. And obviously, you don't want 18-year old’s driving B-Doubles. But you do want to be in line with international standards. Do we need a big initiative to get women who normally wouldn't do that sort of occupation, that's pretty tough job being a truck driver. You know, to do that. Do we do we need to sort of look at these really practical things. There's stuff we can do in shipping and exports and some of this friction that's in the system. There's lots of things.
Tom: The sort of reform we sort of spoke about doing during COVID and the coalition you know, everyone was saying, ‘once in a generation opportunity, all ideas are good ideas,’ and then nothing really happened?
Jennifer: Lots of things did get done actually, for example, one of the first things that got done was to remove the curfews on supermarket deliveries. Now New South Wales has made that a permanent feature. We think that’s a really good idea, bring it across the whole of the country. Lots of regulations were stopped, lots of things that wouldn’t normally be allowed to happen were done under the former government. That allowed companies to work together around supply chains. Normally you wouldn't be able to do that. So, I wouldn't be too harsh. The challenge is, what do you permanently do to the economy to make it more investable, to make it more attractive?
Tom: Are you confident we're going to avoid a recession? And the importance of that? Because it's two successive quarters a technical recession, that's fine. But once that's mentioned, it's the self-fulfilling nature of it right?
Jennifer: Absolutely. Look, you know, it is a technical concept. And we'll see what the American figures, the U.S figures, that come out tonight. But again, I think it's very important to be realistic with Australians to tell them what's going on. I think the Treasurer is doing a really good job of that, he's been very honest with people about what we face. And at the same time, making sure that we paint a picture for people that we will find a way out of this, that this is going to get better, that we do have a better starting position than most other countries, that there are levers we can pull. And then show people that we're leaving them. And then the summit I think is the big reset, migration, skills, industrial relations, industries of the future, I think Australians want to see that big reset.
Tom: Wages of course, we don't have time to get into that today, because it would take a little while I suspect, some very different views being put compared to business and unions at the moment. We'll get into that on another day. Jennifer Westacott, thanks for your time today.
Jennifer: Thank you.