Event Jennifer Westacott interview with Will Goodings and David Penberthy, FIVEaa Adelaide
Speaker Jennifer Westacott, Will Goodings, David Penberthy
Date Thursday, 11 April 2019
Topics A plan for a Stronger Australia, wages, economic growth
David: Jennifer Westacott from the Business Council of Australia is in town to talk about their plan for a stronger Australia. Jennifer, good morning to you.
Jennifer: Thanks very much. Good morning.
David: Thanks for joining us here in the studio Jennifer. Now, I've got the statement that accompanies your plan that's being released today. You're talking about a plan for a more resilient Australia, with better jobs, more jobs, higher wages. Can I ask you specifically about the wages component? Because that is something that, you know, this text line here that I'm pointing at. So many of our listeners, particularly people on the lower end of the income scale, they feel like the gravy train hasn't ended for the big of town, yet they have been stiffed for years, in terms of their own take home pay. Looking at the document, you talk about maintaining and strengthening the existing enterprise bargaining system and rejecting the straitjacket of industry-wide bargaining. For those listeners, that sounds like more of the same, doesn't it?
Jennifer: Not at all. So let's really talk about the wages stuff because, you know, we've been calling this out for years, that people's wages weren't going up fast enough. The question is what you do about it that actually is going to work. Now, if you think about what is it really take to drive wages. I'll come to the profits issue because it's very important. What it takes to drive wage growth is to lift productivity. By that I mean, companies investing, doing things more efficiently, using new equipment, exporting more, expanding - that is what, kind of, creates conditions for higher wages. The enterprise agreement system has served the country very well. On average, people who are on an enterprise agreement get wage rises of about 3.2 per cent or just over 3 whereas the wage price index is around 2.3. So that says the EBA process is the better process for getting higher wages. But we want to see that system retained. We want to see it strengthened, so that there is a very clear opportunity for employers to sit down with their employees at an enterprise level. What are we doing? How do we do things more efficiently? But most importantly, making sure that workers benefit from that through higher wages and better conditions. And that was the EBA promise. Now, I'm very sympathetic to the view that some people have not benefited from that system, and that's particularly low paid people and the non-government sector. So let's fix that. I totally agree that we should.
Will: Does that mean you'd support a living wage case?
Jennifer: What we've said about the living wage, of which I think very few people have been able to define, to be frank. Is why don't we go back to what the Productivity Commission said about the minimum wage, which applies to about 190,000 people, and get the Fair Work Commission to be much more specific in it's instruction or it's giving more specific instructions about looking at the conditions of low paid workers and looking at the capacity of the economy to absorb it. And then what Labor has announced, which we agree with, is to limit that from flowing through to all of the awards which has that inflationary effect - which of course has the risk for less jobs. So the wages thing, I guess this is the simple point - you cannot get wages to go up if the economy is sluggish. You know, the economy is at 2.3 per cent GDP growth. That's it's annual rate of growth. We're used to an economy over the last 40 years that grows at plus threes. We cannot get wages to grow.
Will: We've also an unemployment figure that's below five and technically that's been a driver of wage growth. There doesn't seem to be that connection at the moment.
Jennifer: The Reserve Bank has said that will start flowing through. We hope that's the case. You cannot get wages to go up though if unemployment starts to go up. You can't. It's just, you know, impossible. You can't get wages to grow if you don't increase the productivity. You can't get wages to go up if you don't deal with skills, which in our plan we have a huge package on skills. But on this profits mix, now I understand people's frustration here. But I always say to people, be very careful about tying profits and wages. Because during the global financial crisis, wages went up by three, profits went down by eight. So, I think you know, when people say that to me, I think 'oh be careful what you wish for.' And then in the recent data, in the non-mining sector, the wages bill grew faster than the profits bill. So it's a complex issue. Now, I know it's taken me a long time to answer that question but I do really understand people's frustration.
David: I think it's worth honing in on it though.
Jennifer: It's really important David, because I think the other point to make is, you also want to get people's cost of living down - get their power bills down, get their taxes down.
David: Well you're quite critical in your statement about the lack of clarity around energy policy which is more of an issue on the conservative side than the Labor side.
Jennifer: The whole country has. We have really made a mess of this, for a long time. And of course now we are reaping the consequences of 10 years of indecision, of false starts. So what we've done is to divide this into three sections. The first is what could we immediately do to get people's power bills down and the Competition Commission basically had a pretty good checklist. You do something about these green schemes where we're still subsidising solar and things like that which, you know, are now able to stand on their own. You look at the way the bills are set which actually allows customers to pick better and choose a better product. Then of course in the medium-term we need to get investment back in different types, particularly baseload power. You've got an interconnector proposition here in South Australia, which would be hugely important to, sort of, get the grid to be stabilised. And then we've actually got to sort out our climate policy. Because the absence of certainty on climate policy from both sides of politics, to be frank, has caused companies to be reticent about investing. So those three things have to be done together and we've got to stop telling people that, you know, we can do X, Y and Z without a plan to do it. Then when we get into, like we have for the last decade, everyone goes 'whoopsies' as this little ten year old friend of mine says all time. There's the steel industry gone, there's the aluminium industry gone, there's this regional community finished, oh well we better fix that and then they cobble something together. We can't keep doing this.
Will: We're talking about things from the prism of public policy given an election has just been called, today. But is the business community's view that the banks need to loosen the reigns a little bit at the moment? Because their loan books are tightening up massively.
Jennifer: It's a really good point because the one thing that you shouldn't do now is make credit harder. Now is that the banks fault or is that the fact that they are responding to a regulatory change? And so my advice to politicians, be very careful about making it hard for banks to lend money. Because in this current climate, with the economy slowing down a bit, a very very complex world, you've just been talking about Brexit. You know, the last thing you need to do is create an environment where the banks are reluctant to lend. And let's be fair, I mean I'm not making excuses for stuff that was in the royal commission but when you get a, sort of, vindictive approach to business and you say 'well we want to get after these guys for the sake of it,' there's a consequence for somebody. Not normally the people sitting around the boards. The consequence is for someone who can't get a loan.
David: Jennifer Westacott, the CEO of the Business Council of Australia. Thanks so much for coming in.
Jennifer: You're very welcome, thank you.