Event: Panel interview with Tom Connell, Sky News
Speaker: Business Council chief executive Jennifer Westacott, Microsoft Managing Director Steven Worrall, Bendigo and Adelaide Bank Managing Director Marnie Baker, Sky News host Tom Connell
Date: 3 October 2019
Topics: Regional Australia, skills and eduction, surplus, economic growth,
Tom Connell, Host: Jennifer, Marnie, Steven thanks for joining us here in the regional powerhouse of Geelong. Can I start with you, Jennifer on this rate cut, what does it say about the economy right now?
Jennifer, Business Council chief executive: Well it says the economy is sluggish, its not at the pace we need it to and obviously the Reserve Bank feels it needs to put more to put it more of a sense of investment stimulus in the economy. I think it's a great example of why we're here in a place like Geelong, where we need to ask ourselves how do we get that next bit of growth? And that's about investment, about sort of backing in these new industries, creating businesses, driving the private sector economy harder, getting those new markets. And that's what we've got to do as a country. We've got to say how do we start to accelerate that rate of economic growth?
Tom: Within your position, Steven, at Microsoft, why do you think the investment at this stage is not coming?
Steven, Microsoft Managing Director: Investment in terms of business investment? One of the reasons I think,Tom, is related to the availability of skills, we need the right resources in organisations and capabilities to build these new businesses of the future. It’s an area we spend a lot of time thinking about because obviously IT skills are one of the primary shortages that we see across the economy, not just in regional Australia, but really across the entire Australian economy, in every industry. And this focus on skills and how we can continue to build pathways to bring more people into the tech industry and by consequence how doing that can contribute to economic growth for organisations across the country, was a primary topic of discussion today, as you know.
Tom: And that shortage is a massive one, talk us through that.
Steven: Yeah. In IT alone there's 650,000 people in the IT industry in total, there's about 100,000 jobs being created over the next five years. So let's say like there's about 20,000 per year, there's about 6,000 graduates coming out of our universities across the country that have some form of technical degree that would lead into one of those jobs, which means we have about 14,000 gap. So, one of the reasons we are not seeing the investment that we need across our economy is the access to talent is so essential to drive our businesses forward.
Tom: That's a huge gap and something I'll follow up with some politicians I promise you. Marnie, as for your take on the economy and you know, the sluggish amount of lending as well that's happening right now despite low rates. Part of what you're seeing on the front line is around regulations. In the wake of course of the Royal Commission, whether or not it might go too far, make it to onerous?
Marnie, Bendigo and Adelaide Bank Managing Director: Yeah, this is definitely not the time to make it harder for both individuals or consumers and business to get or access credit and that's unfortunately that's what we're seeing at the moment. So even for existing borrowers and to refinance, they're finding that its a lot harder and more stringent and more the criteria to be able to actually get access to that credit.
Tom: And how big an impact is this having? Because the issue here is, you know, we talk about low rates and the government is saying let's get this going. We're having this strange commentary right now, Josh Frydenberg is telling banks to lend but there are these pesky things called regulations and laws they’re contending with, is it a bit of a double message?
Marnie: Yeah, I mean there is probably some unintended consequences that are flowing through from not only the Royal Commission but other inquiries we've seen in more recent times. I do think the government is actually very much aware of that, and they're thinking about how do we now get a bit more normality back into the system so that it does actually free it up and open it up for people to be able to get the capital and get the investment that they require on their businesses.
Tom: There's the other big discussion about whether the government goes down the stimulus path or perhaps more when. Jennifer Westacott, you were pretty comfortable with the chase for a surplus at least initially?
Jennifer: Look, I think people are confusing things. The surplus is really important because it tells us we're living within our means. We're doing things we can afford. Every household across Australia knows two things: you spend more than you earn and you get into trouble, something goes wrong you are in serious trouble. Now the government is going to prevent that serious trouble for Australia by getting back into surplus. Its not the same conversation as in 2008 when we were looking down the barrel big unemployment. We don't have that problem. What we've got is to get the economy to grow faster. That's about infrastructure. It's about Steve's point around skills. It's about access to capital. And it's about making investment attractive for the private sector. So if it's not a tax cut it's something like an investment allowance. You know out here in Geelong we were out at a company yesterday, Farm Fresh, fantastic organization, producing the sausages and rissoles for Woolies and Coles, but also a big export opportunity, they need new plant equipment, so they can flex up and go into new markets, employ more people but you've got to make that tax attractive for them, so you need to look at something like an investment allowance.
Tom: Well the path we seem to be on now is that Josh Frydenberg wants to hold fire and include that very thing, an investment allowance, by the next budget. Are you comfortable with that trajectory?
Jennifer: Well I am because I think these things have to be calibrated, to use that expression, as part of a budget. I think what we don't need is more knee-jerk things. We need a careful budget that says, okay, how do I now re-position the economy for an accelerated rate of growth, which is infrastructure, skills and getting private sector investment up. It's not about how do I fix this problem today. That's what budgets are for.
Tom: You, Marnie, what's your view on stimulus to help the economy get going, I guess in part, in a regional sense in particular?
Marnie: Yeah, I think its a combination of a number of things that need to occur. And we're in a really interesting environment at the moment, its uncharted territory for us here in Australia with the record low levels of interest rates. And so pulling the lever on some of those things we're expecting the same types of, I suppose outcomes, as what we're seen in the past, in reducing rates. We're seeing that that more people are actually paying off their debt rather than spending that additional money. So, we need to do things more on the fiscal side. You know, tax cuts are great. The ones that have been done to date, I think were very, very welcomed. Infrastructure, spending into infrastructure is going to help as well. But when do you get out into the regions themselves, it really is a lot around the red tape, the things are actually stopping businesses from being able to do what they need to as part of the business. I think that's more of the issue that we've got that we need to start to address.
Tom: I'll let you get back to red tape, but I'm intrigued l when you talk about what the government should do in this particular area and you're saying, well, the tax cuts are perhaps working and not being spent yet. So does that give the sense they're in the pipeline and actually when confidence returns people will have the money to spend.
Marnie: The latest tax cuts haven't really flowed right through the economy yet, so I think there is still to come. I think once we do see that start to flow through, we'll start to see a bit more confidence come back into the economy, both in consumer confidence and in business confidence. The stability of the government is a good thing, a really good thing, because I think that actually has assisted but I think once we start to see these tax cuts, the changes in monetary policy, those things start to fully flow through we'll see an uplift.
Tom: And you Steven, the government's almost gone the other way on the R and D incentive for example of late. Is that hurting at all in the industries you look after? What would you like to see to get stimulus going?
Steven: I think that's one aspect of the mix but I think the bigger area for stimulus is in regards to how we can partner more effectively with government to address the skills gap that we talked about earlier. We're seeing some wonderful collaboration in parts of the country, but there's obviously much more that needs to be done with the emphasis on partnership. Because I think it's about the tech industry, of which I’m a member, we'll see working more closely with the VET sector, with the tertiary sector governments across the country to invest the sorts of programs that will attract more talent in industry and by relation help provide all the workers that we know we're going to need in the future as our economy continues to transform.
Tom: Yeah and an issue you've spoken about. So is that more focus thing or a funding thing?
Steven: I think it's about focus. I think there's funding in the systems today and we're tapping into that working with governments around the country. In fact, just yesterday with RMIT and the Victorian government we launched our traineeship program, in Melbourne, which is a wonderful initiative that we think will address part of this issue. But it's about replicating that more often and finding other ways we can bring those programs to other centres like Geelong with Deakin University and the many universities we have across the country, for that matter the many vocational and educational organisations across the country as well. That will help to create those jobs in regional centres but also across the entire economy.
Tom: Alright, red tape, so the government is going to be getting a lot more feedback from your organisation on this. It was a huge focus when Tony Abbott became prime minister, was the ball dropped?
Jennifer: I think the ball was dropped. I think it's one of those things where we get rid of it and then as soon as we got rid of some of it, meanwhile back at the ranch, someone's created some new stuff. So we've got to keep this kind of vigilance on letting red tape creep into the way we do business. Whether it's putting an extra cost on hiring someone, I mean, seriously, it should not be hard to hire someone in Australia - it is. We shouldn't be making it harder in terms of multiple licenses for small business. We shouldn't be making hard for someone to get their house approved with a long planning approval. And then if you go to the top of the value chain, it should not be so difficult to get a major project approved in Australia, with sometimes two or three year planning approval times. That that just puts the risk of that project right up on the Richter scale. So as a nation, whether it's the federal government or the state governments, we all need to kind of recommit ourselves to getting rid of red tape because who pays for it? Consumers pays for it.
Tom: You say you're getting a lot of feedback from members. Do you have a specific example of something you just think, look this is just crazy?
Jennifer: Oh gosh, you know, we'd need a five hour program for that. Look, a couple of examples: licensing arrangements, building licenses who signs them off. Payroll tax complexity. Stamp duty of course, the worst of the taxes. Planning approvals, you know whenever I talk to businesses, getting something approved is just so difficult. You know people tell me they've got to get a DA for a pergola in their backyard. Seriously, its a pergola not a high rise. These things you just read example after example after example. The thing that really gets me concerned is licensing and hiring people, just complexity of that. And then you've got the complexity of multiple awards, multiple licenses. So if you're setting up a small business suddenly you've got people on six awards. Well that's just, if you're a small business, that's just work you have to do a on a weekend to try and make sure that you've got everything right. I just think we need to also think about red tape differently. The way we've approached in the past is we take a law and we say, what's the impact of that? That's not the problem. The problem is the cumulative burden on businesses.
Tom: So take the processes instead, of hiring someone, what does that involve?
Jennifer: Exactly. And I think the other principle is this idea of just asking once, I mean the health system is a great example of this where you're asked the same question over and over and over and over and over again. You think seriously, can't someone write this down? That's a great example. Nurses, people tell me, spend 50% of their time doing admin, I'm sure patients would like to see them. So let's just sort of take some categories of doing business or some categories of getting services and say, let's just get the red tape out of that.
Tom: We don't have five hours but I feel like we got a good feel for it there Jennifer. Can I ask you finally Marnie, you have managed as Bendigo Bank, to remain a trusted brand within Australia, despite the troubles of other banks. How has Bendigo Bank done that?
Marnie: I think by staying true to its purpose and to its values, you know for 161 years we've continued to feed into prosperity not off it and that's been our purpose. Understanding that it's a privilege, it's actually a privilege to be the bank in this country, which has one of the most robust banking systems. Using that privilege for the right purposes, not for the wrong ones.
Tom: Working so far. And finally for you Steven, I wanted to check in on your lobbying efforts on encryption laws. I know this is an issue you raised and the impact on the tech sector, particularly that this was looming as possibly a bit of sovereignty issue, a sovereign risk in Australia. Much sympathy so far from the government?
Steven: We're continuing to discuss the legislation and how we could look to improve it over the next little while.
Tom: Is that sort of no major progress as yet?
Steven: We're making progress. Obviously with the election and now with Minister Andrews in place, there's conversations underway, they've been productive and I expect they'll continue to be so