Opening remarks to The Australian and Melbourne Institute’s Economic and Social Outlook Conference

02 November 2022

Speaker: Jennifer Westacott AO, chief executive of the Business Council of Australia
Event: Opening remarks to The Australian and Melbourne Institute’s Economic and Social Outlook Conference
Venue: Sofitel, Melbourne
Topic: A bigger Australia?

**Check against delivery**

Cameron Stewart, associate editor, The Australian:  Excellent stuff. I was fascinated by the fact that you said the research doesn't necessarily provide answers to the optimal level of migration, which of course is why this is such a debatable and I guess, contentious topic over so many years. Jennifer, what's your take from the BCAs position on this debate and where you think it should be heading?

Jennifer Westacott, chief executive, Business Council of Australia: So, I just needed to kind of pick up where Roger left. So, we would argue that well planned, well targeted migration is overwhelmingly good for the country.

I think the Jobs and Skills Summit was an important reset around the conversation around migration. I don't think it's about a big Australia, it's about a better Australia, a more prosperous Australia and a frontier Australia. I think the Summit was important in changing some of the long-term thinking.

Before the summit and during COVID I think we had this binary conversation, you either skill Australians or you increase migration, but you can't do both. Our view is that you have to do both.

You have to both skill people and you have to increase migration. But it does need to be well planned and well targeted, and I'll come into some ideas there.

I think there was a real change in the Summit, that it is productivity that drives real wages increases, and that well planned migration contributes to higher productivity because it creates that extra value in the economy.

It brings the talent, the skills, the knowhow so we can expand, add value, and create new industries and support existing ones. I think there is obviously a legitimate debate to be had about the role of migration in suppressing wages, but recent papers by the Productivity Commission and the Grattan Institute push back on that.

It's a legitimate debate to have. But really the big impact on wages is our very, very low productivity, now at a 60 year low. And we know from the data that 80 per cent of income growth over the last 40 years has been about productivity.

Both the Treasury and the RBA have downgraded our economic growth to 1.5 per cent, as I described in my budget commentary, feeble economic growth, not a recipe for productivity, not a recipe for increasing wages.

Let me just go to a couple of the kind of key issues. Let's go short term and then long term.

I think the questions we need to focus on similar to Roger, is who do we need and why? And that's got to be about productivity, industry formation, skill shortages. When and where do we need people and how do we plan for it?

Let's just quickly go to immediate labour shortages. These are a handbrake on the economy. They're not numbers, they're real impacts. So, I've got companies telling me they're not going to tender for work, that they just cannot staff it up, so they won't tender for major projects.

Obviously, the tax take that Roger talked about and then obviously you can see this in your day-to-day life as you try and navigate the fact that we are so many workers down.

So, the government has taken some important steps in resetting those numbers, but we've now got to take urgent action to simplify the system and make it easier to use both in the short and medium term. Totally agree with Roger, reassess the current occupation list, particularly for higher paid jobs.

Simplify labour market testing, including providing exemption to what we call trusted employers.

Reviewing the Skilling Australians Fund and other upfront fees and how they're charged as lump funds. They have not changed the skill gap; they have not been used to change the skill gap. We would argue pretty strongly that we need to move to permanent pathways, extend temporary visas to four years and make it easier for those permanent pathways. And we argue pretty strongly for a 70 per cent ratio of skilled workers as part of the migration program.

Obviously, we're still going to need temporary migration to flex up and keep parts of the economy running when we're under pressure, but we need to make sure that we focus on the permanent program to around that 70 per cent of skills.

I think we’ve had, to your point Roger, a very confused debate over the last decade around migration. We've confused asylum seekers with long term permanent migration. We've confused a whole lot of issues, I think Cameron. And I think one of the things that we need to reset is of course making people feel welcome to Australia, getting the settings right to encourage people, support people when they're here.

Something that we do feel pretty strongly about, which is of course ridding the supply chain of exploitation. We also should look at the people who are already here, long term asylum seekers and refugees, people on temporary visas and ask, have we actually got the right settings so that those people are actively participating in the program.

So very quickly then to long term migration. I think we need to think about this the way we think about Australia as a frontier economy, cutting edge technologies diversifying into new supply chain and that's going to be about the skills and capabilities of people, not the cost of labour, in terms of our capacity to enter into those new supply chains. And that's the big switch for countries as they move up the value chain.

So, we need to be bringing people in around those key competencies that we're going to need that will allow us to actually enter those supply chains and diversify our industrial base. For example, semiconductors, quantum printed circuit boards, cyber defence capabilities, logistics and supply chains. And when we want people to come here, we want them to share their knowledge.

Companies tell me the crucial nature of bringing experts out to Australia who then allow them to scale up. Great example, Romar Engineering in Western Sydney brought some of the world's best experts in cutting edge manufacturing from Germany. They now have a huge partnership with GE around additive manufacturing and they're starting to expand dramatically in Western Sydney.

If we are going to reach that goal of 1.2 million tech jobs by 2030, we are going to have to bring people in from international markets. If we want to be a cyber secure country, we've got to bring in some of those world leading cyber experts. We want to lure the companies where they are going to be on the doorstep of these huge markets in Asia, they are all saying to me, we need to see that the density of skills are here to make it attractive for us to come and relocate or expand our operations in Australia.

So, a few things about how we solve this.

First of all, Jobs and Skills Australia need to identify the skills and competencies, not the jobs. The skills and competencies, not the jobs and I think that can play an important role.

We need to be attractive, make the system easier, make sure that we're very clear that we're in a competition for labour. And also make sure that we're dealing with labour mobility issues within Australia, stamp duty, occupational certifications that all prevent people moving around the country as well as coming into the country.  Proactively invite people from key countries which are secure and obviously target companies there.

Infrastructure and planning, absolutely crucial, and we can talk about this in the discussion. But we really do need to take infrastructure planning on this more seriously than we have. It's about making sure we got the right projects. It's about calibrating the infrastructure pipeline, working with the states to plan that pipeline, lock it in.

We need to get serious about that long term infrastructure pipeline. We need to get serious about nationally significant precincts that allow us to scale up industries and they need to be a magnet for talent and high skilled workers. We need to get serious about our regions unlocking their potential.

We have this idea of 30-year infrastructure compacts for regions of greater significance who can contribute to the nation's growth. This is about picking priority places, focusing on that hub and spoke model. And we need to make sure the Infrastructure Australia is coordinating that.

We need to get serious about connecting places, major transport. Things like the high-speed rail should not just be dismissed. It's good to see the budget in at least reserving the corridors, give us some flexibility for going forward.

And then we need to get serious about housing. We have constantly acted on the demand side when in fact the supply side is actually really the problem to solve. And that's about a kind of permanent continuous stock of housing that's a net addition to stock, but it's also about housing type affordability, family types.

We have to sort out the mess that is the planning and approval process in this country, which continues to hold back housing supply and of course sort out how infrastructure and services provision such as schools, health facilities, fit in with those population projections and demographic changes and follow some of the housing stock that is planned.

Most important thing though, and this is what we're doing in Western Sydney for the Western Parkland Authority, which I'm chairing, is making sure that jobs are the lead driver of how the population planning will be done. Not do housing first and then try and work out infrastructure, jobs and industries later, which creates tremendous inequalities.

So, I think final point is we’ve got to fix the skills system. We can talk about that interoperability between VET and higher ed, proper recognition of workplace learning and so on. I'm happy to go on about that.

But I guess the point that Roger's making that I would echo, migration is good, it's got to be well managed. We've got to get that mindset locked in.

We've got to now focus on how we manage it better and we've got to actually deliver that better management so that the community does feel that this is acting for their benefit, and they don't feel that this is actually taking away their jobs, diminishing their wages, making their housing less affordable.

That’s about better planning, not about shutting the door to migration.


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