This opinion article by Business Council chief executive Jennifer Westacott was first published in The Australian on Friday 29 July 2022
With heightened global uncertainty the new normal, the only way Australia can forge ahead and fortify its resilience is by managing the economic factors that are within our control.
Few nations have emerged from the pandemic better than Australia. We are in the box seat to remake ourselves as a frontier nation at the cutting edge of creating new jobs, technologies and industries while delivering higher skills, higher wages and higher living standards.
But before we can determine our own destiny by resetting the economy, we need to contend with a barrage of potent global forces that are having real world impacts on the lives – and wallets – of Australians.
These include geopolitical tensions, a global energy supply chain crunch and rising global inflation which is outstripping wages growth.
To help immediately address some of the pressure points caused by these forces, the Business Council yesterday put out its report, Releasing the handbrakes on growth. It’s a checklist of practical and achievable reforms that are within our control which will help reduce costs for Australian families and spur faster economic growth.
If implemented, some of our shorter-term solutions would have quick results – making it easier to do business and help address the challenging set of economic numbers the Treasurer Jim Chalmers outlined yesterday.
Chief among these is urgently acting on the immediate supply pinch points that could derail the recovery such as debilitating worker and skills shortages and supply chain frictions.
Think of it this way – there are almost half a million unfilled jobs in Australia, more than double pre-pandemic levels and the second worst labour shortage in the OECD behind Canada. The worker drought means some companies have simply stopped tendering for projects.
And routine tasks like getting supplies onto shelves or construction sites has become a nightmare with truck driver shortages forcing one in every five delivery vehicles to sit idle.
We believe Prime Minister Anthony Albanese’s Jobs and Skills Summit in September can be an economic circuit-breaker – providing an opportunity to push ahead with the long-term structural resets needed to drive investment, productivity and growth. This needs to include the critical work of reshaping the industrial relations system and salvaging the enterprise bargaining system that sees workers get paid $100 more a day than those on awards.
But not every solution to every challenge we face has to be big bang reform. There are short term fixes we can start implementing now to skill up Australians, attract more skilled workers and remove supply chain blockages.
One simple way to boost our local skills would be to amend the changes in last year’s federal budget which reduced the 50 per cent wage subsidy for first-year apprentices and trainees down to 10 per cent.
We’re suggesting this subsidy be increased to 15 per cent for apprentices in city areas and 20 per cent in regional areas.
Similar support should be extended to in-demand traineeships in areas of widespread workforce shortage such as technology, retail and hospitality as well as more apprenticeships in fields that support advanced manufacturing.
And with job vacancies at record highs, it’s imperative every Australian can access the skills and support they need to find work. So why don’t we pilot a Lifetime Skills Account or skills guarantee to assist people returning to work and target sectors we people need more support? This should include upskilling and reskilling people aged over 30 including new parents who are returning to the workforce.
In addition to building the skills of Australians, we need to take further steps to attract workers back to our shores.
Australia needs to reinvigorate its brand as a welcoming destination for the world’s best and brightest talent. After all, it’s people that will drive the country’s economic reset and get us to the frontier.
As part of this, all temporary skill shortage visa holders should be eligible for a four-year stay with a pathway to permanent residency.
Longer-term visas will help attract skilled migrants who are weighing up the costs and uncertainty of moving to Australia with their families, and permanent residency pathways will help them to plan for the future and build a life here.
When it comes to busting supply chain blockages, we could make an immediate difference if we prioritised reforms to heavy vehicle driver training so it was based on competency, rather than time served, as well as permanently lifting delivery hour curfews.
We could replace the plethora of paper forms for exports and imports to make cross border trade easier, simpler and faster, adding $1.7 billion a year to the economy.
And if we streamlined regulations and removed red tape, we could immediately boost productivity.
For example, recent measures to streamline business reporting collected by the Australian Bureau of Statistics through accounting software could deliver $4.4 million of annual compliance savings and reduce reporting times from one hour to 5 minutes.
Imagine the savings if reporting to other agencies was also streamlined through existing software packages.
Let’s not forget the measures that drove Australia’s previous big era of productivity – which delivered higher wages and living standards – included the National Competition Policy reforms.
Benefiting the economy to the tune of at least $56 billion in today’s dollars, these reforms took a decade to implement and required the effort of all levels of government, covering close to 1,800 pieces of legislation. The benefits, which were the accumulation of many smaller reforms, flowed to people’s pay packets.
In times of great uncertainty, the one thing you need to do is grab every lever that is within your control.