Andrew McKellar interview with Cathy Van Extel, RN Breakfast

Event: Andrew McKellar interview with Cathy Van Extel, RN Breakfast
Speakers: Andrew McKellar, chief executive Australian Chamber of Commerce and Industry, Cathy Van Extel, host RN Breakfast
Date: 21 December 2021
Topics: Skilled migration, population growth, labour and skills shortage, wages growth, Omicron variant, masks, QR check-ins, booster shots.

E&OE

Cathy Van Extel, host RN Breakfast: Employer groups are clamouring for a big increase in immigration after a new report revealed that the nation’s population growth has slowed to its lowest level in more than a century. According to the 2021 Population Statement, the extended closure of the international border due to COVID-19 will mean that there will be one and a million fewer people expected to be living in Australia in 10 years’ time. The Australian Chamber of Commerce and Industry is calling for the annual skilled migration intake to more than double to 200,000 workers to address the worst skill shortage in more than three decades. Andrew McKellar is the Chamber’s chief executive. Good morning, Andrew.

Andrew McKellar, chief executive Australian Chamber of Commerce and Industry: Good morning, Cathy.

Cathy: Now the net oversees migration plummeted during the pandemic. How long is it going to take to make up lost ground when it comes to bringing in all the skilled workers the economy needs?

Andrew: I think the first and most important thing is we do have to press on with opening up the Australian economy again. The first step earlier this month was to start to get back in some of those international students, which are a huge export earner, starting to bring back in some of those existing, skilled visa holders, but we need to keep going with that. And it will now take a couple of years. It’s not clear that we will be able to make up for lost ground, but we do think that we’ve got to put back in place a substantial, skilled migration program over the next couple of years, as part of a broader strategy to address the skills and labour shortages that business is facing. It’s not the only component, but it’s a very important component.

Cathy: Well, certainly ACCI wants to see the permanent skill migration intake turbo charged to 200,000 for at least the next two years. If we lose the global war for talent to other countries, and we know that other countries are experiencing similar skill shortages, where would that leave the economic recovery from the pandemic? How much harder will it be to bounce back?

Andrew: This is a vital source of skills, productivity, demand. We know that immigration does boost the economy. We are going to struggle really to get to those levels. And you’re quite
right, there are many other countries that are in the game. Of course, we don’t know what now will happen with Omicron, how that will impact the global situation, but here in Australia, we’ve taken the hard steps, getting the vaccination rates up, we’ve got to keep going with that. If we continue in that vein, then I think we will be a very attractive destination for a lot of those people who are looking to move around the world.

Cathy: Is there really any realistic expectation though that the Government will permanently increase migration anytime soon? Josh Frydenberg, yesterday, the Treasurer says, “I think we’ve got the parameters right.” So, I don’t think he’s embracing this 200,000 increase.

Andrew: We are seeing caution from the major parties. I think we know that this is a politically sensitive issue. They’re reluctant to embrace it in an environment where we’re in front of a federal election. But if you look back past the past decades of history in this area, you can see some very strong leadership at times from the Federal Government on this. And we’ve seen the economic dividends as a result. So here, I think it really is a matter for leadership. We want to see that strong bipartisan approach from the major parties on this, acknowledging that an effective migration program will boost the Australian economy and really put that true picture in front of the electorate.

Cathy: As you say, we’re about to go into an election campaign. The government wants to fight the next election on cost of living. And that means trying to drive up wages, lower migration will keep the unemployment below 5 per cent, which would help bump up the pay packet. So doesn’t it sort of suggest that the Government’s going to be very gun shy about a big Australia fuelled by higher immigration?

Andrew: Well, they shouldn’t be. The evidence, the economic evidence, over a long period of time shows that stronger migration in fact does not suppress wages. We have a very real demand out there for additional labour. Of course, we have to invest in greater skills acquisition. Of course, we have to try to encourage people who have dropped out of the labour force to come back in. Those have to be part of the equation as well. But we know that migration boosts demand and boosts productivity. It gives us an access to essential skills that we are otherwise not going to be able to get to. The last thing we want in this economy is inflation that’s driven by supply side shortages, wage increases that are driven by supply side shortages. That’s not going to boost real incomes in the long term. All it’s going to lead to is a wage price spiral. And that’s going to be a constraint on growth in the future. We need to drive real incomes growth through productivity growth. That’s good economics. And I think if the government acts on that basis, then they will get the results accordingly.

Cathy: Andrew, could I pick up on the issue of Omicron with you? The Omicron strain is really causing great concern now. The Health Protection Principal Committee has recommended to National Cabinet that indoor face masks be introduced for high-risk settings, such as retail and hospitality. It certainly mirrors the call by other epidemiologists. Would employers support a mask mandate?

Andrew: I don’t think employers will have a great concern about the requirement to wear masks. I think here-

Cathy: And what about check-ins?

Andrew: Look, all of those sorts of things, if it helps to track and trace where the infections are going, then I think those sorts of measures can be quite responsible. The thing that business will balk over is to see very harsh restrictions going back to full scale lockdowns. We know that those full-scale lockdowns destroy jobs, they destroy economic growth, and they have a massive impact  cross society. We want to avoid that if at all possible. But if there are other measures, obviously, pushing ahead with the booster program, maintaining other prudent restrictions, widespread testing, including rapid testing, which should be free and accessible because at the moment it’s not being used widely enough. And it will be more and more difficult to do the tracing, but mass testing can be very effective at this stage of the pandemic.

Cathy: And are you comfortable at the moment with our response to the Omicron variant?

Andrew: I think what we’re urging is that really the states act in a coordinated way. Of course, continue to open up the domestic borders. Let’s not panic. Let’s stick to a clear plan, continue to open up. Let’s monitor the situation. And of course, above all else, let’s not get fixated on the daily case numbers, they will rise. But let’s ensure that the health system is managing any demand that’s coming through. That’s got to be the measure now of how we respond going forward.

Cathy: Andrew McKellar, thank you for joining us this morning.

Andrew: Thank you, Cathy.