Andrew McKellar interview with Patricia Karvelas, ABC Radio National Breakfast.

13 Apr 2022 |

Event: Andrew McKellar interview with Patricia Karvelas, ABC Radio National Breakfast.

Speakers: Andrew McKellar, chief executive Australian Chamber of Commerce and Industry, Patricia Karvelas, host ABC Radio National Breakfast.

Date: 13 April 2022.

Topics:  Back Australian Business Campaign, economic reform, workforce shortages, material shortages, industrial relations reform, boosting productivity, unemployment, wages, skills investment, Vocational Education and Training, workforce participation, skilled migration, payroll tax reform, ACTU casualisation scare campaign.

E&OE 

Patricia Karvelas, host ABC Radio National Breakfast: If you were hoping the first few days of the election campaign would focus on the big economic issues facing the nation, you might be disappointed. Instead, Anthony Albanese’s failure to recall the unemployment or the RBA cash rate has dominated the first few days of the election campaign. And we’ve got this focus, again, on moments in the campaign rather than the big themes. Well, today, the Australian Chamber of Commerce and Industry is trying to kickstart the debate about economic reform. ACCI’s chief executive is Andrew McKellar. Welcome back to Breakfast.

Andrew McKellar, chief executive Australian Chamber of Commerce and Industry: Good morning, Patricia. Great to be with you.

Patricia: A number of businesses and lobby groups claim there’s little economic vision from either political party. Is that your view?

Andrew: I think it’s something that we certainly need to get on the agenda over the next five weeks in the election campaign. Absolutely. There are some really pressing challenges facing the Australian economy and business at the moment. There’s a shortage of labour, the worst we’ve seen in nearly 50 years. Equally, supply chain pressures. There are concerns about cost of living, inflation growing. These are things that we’ve got to address. There’ve got to be some very clear policies that will build capacity back into the economy and set us in the right direction if we’re going to boost living standards over the years ahead.

Patricia: You’re calling for a reform of the industrial relations system. There was an attempt at this by the Morrison government, but it seemed to evaporate pretty quickly, I’ve got to say. What do you want to see?

Andrew: I think a couple of things are very important in industrial relations, and we have to understand the changes that have been taking place in the workforce over recent years. We’re seeing digitalization impacting business. We’re seeing different business models coming forward. So really, promoting greater flexibility. I think restoring the strength of our enterprise bargaining system, ensuring that we get much better outcomes there. At the bottom line, it got to be all about productivity.  We’ve got to boost our productivity levels, which have been very weak for a decade now. That’s the pathway to get to higher living standards. If we can’t do that, then we’re going to be worse off.

Patricia: Is there consensus? How much consensus did you manage to get in that process when you were working with the trade unions and others at the table to try and come up with something that people could agree on?

Andrew: Look, I think reform is always very difficult. There’s never been consensus. I mean, even if you go back to the glory days, the Hawke and Keating governments, the reforms that they pushed through, the Howard government, these were periods where there was a lot of reform being pursued in our economy. It was always a difficult process. And I think here, of course, what we are looking for is some vision from the major parties. Ultimately, in the next government, we’ve got a hope that we can bring the parliament together and that we can push through some of those critical priorities that we really need to address.

Patricia: Obviously, the big story when it comes to jobs, we keep hearing that the unemployment rate is low, but the other side of that is wages, and wages have not grown. And the forecasts are still for a slow wage increase, really. So what kind of impact would the changes you’re proposing have on wages?

Andrew: Well, there’s no doubt that we are in a very tight labour market at the moment. Employment has grown. It’s above the levels it was pre-pandemic. The unemployment rate is four per cent and it’s going lower. So it’s a-

Patricia: And yet, we still haven’t seen the wage dividend from that, have we?

Andrew: Well, we will see wages, pressing up in the year ahead. I think the headline figures, the Wage Price Index that’s often quoted probably doesn’t give a full picture. When you look at the level of churn that’s going on out in the labour market, the number of people who are changing positions at the moment, they’re not downgrading. They’re not going across for the same level of pay. In many cases, they’re upgrading their remuneration. This is something that’s very prevalent in the labour market at the moment, and it is driving wages up. Of course, we’ll see some greater pressure, but ultimately, we have to have productivity growth again. If we don’t have that, then it just becomes wages chasing prices and prices chasing wages. We don’t want to get into that sort of spiral, leading to higher interest rates in the end that doesn’t deliver higher, real wages. It doesn’t deliver higher living standards. That what we’ve got to do.

Patricia: Yesterday, the prime minister unveiled his government’s jobs’ promise. That’s what it is. It’s an aspiration. He claims it would create 1.3 million new jobs in five years. But if you look at the detail, I think it just is keeping up with population growth as far as I can see, and it’s premised on migration increasing, right?

Andrew: I think there was a lack of detail. I have to agree with you.

Patricia: Well, it’s sort of “We’d like to do this,” but there’s no explanation of where the jobs are going to be made.

Andrew: No, no, absolutely. And I think here, there are a couple of fundamental points. If we are going to achieve the sort of target that is being talked about there, then we’ve got to invest more in skills. That’s a critical area. We’ve got to promote more in terms of Vocational Education and Training. We’ve got to invest more in apprenticeships, keep those going at strong levels. We’ve got to encourage more people back into the labour force, so we’ve got to work on participation. So for example, if there are older Australians who are otherwise stepping out of the labour force and going onto the pension, many of them actually want to keep working a bit longer, not necessarily full-time, maybe two or three days a week. At the moment, the financial disincentive for that to occur is very strong. We’ve got to look at how we address things like that. And the other thing is migration as well. Yes, we do have to get back to a situation where we have stronger skilled migration and that we are making up for some of the lost ground over the past two years.

Patricia: So the budget showed, going back to pre-pandemic levels, you’re calling for more skilled migrants though?

Andrew: We are. We think there needs to be a more ambitious target. The figure in the budget in terms of the total permanent migration program was 160,000 places a year. We think it needs to go up to closer to 200,000 places a year. That’s only part of the picture, of course. We have a significant number of international students coming in. They support the workforce.  We have working holiday makers who come in. We temporary-skilled migrants as well. So it’s a complex equation, but we do have to be more ambitious. And we have to understand the benefits, the win-win outcomes that come from a well-structured migration program. It’s not about suppressing wages. It’s about boosting demand, complementing the skills that we have in Australia, generating more sustainable jobs, and getting better economic outcomes for all Australians.

Patricia: The coalition legislated the GST came more than two decades ago. Since that time, there have been a little structural reform of the tax system. Why is the party that says it’s pro-business and the best economic manager seemingly uninterested in changing that?

Andrew: We would like to see tax reform being on the agenda. There are many inefficient taxes that penalize business, that penalize investment, that destroy jobs. And payroll tax being a leading one. It’s not just the federal government. There has to be, I think, a commitment between the states and the federal government to develop a new tax reform agenda. Now, that’s a very difficult thing to achieve consensus on. Business won’t let it go. We have to continue to press for it because, at the moment, our tax system is a long way from where it needs to be. It does need to be back on the agenda as part of a national reform program.

Patricia: In recent campaigns, Labor has advocated for some big economic changes, the carbon tax, negative gearing, capital gains tax reform. Kevin Rudd even talked about wanting a big Australia, but these plans were all defeated, many through scare campaigns. Has that political strategy killed off any likelihood of reform? Are we seeing the fact that scare campaigns are so ferocious now in the political cycle mean that everyone, both side of politics, whatever they want to explore, they’re scared of the scare campaign?

Andrew: I think it’s a very detrimental part of the Australian political debate. I mean, it’s not unique to Australia, of course. And in fact, we have been fortunate in the past being able to get through many reforms that a lot of other countries haven’t been able to do. But you’re right, scare campaigns, I think, take a toll in the political process. It’s easy to do. It’s easy to whip up some uncertainty. And I think at the moment, to be honest, one of the risks that we’re seeing in the current campaign is that there’s this theme around insecure work. That is a myth. That’s a fiction. We’ve got to be careful about promoting those sorts of ideas, which are just not based on facts.

Patricia: Look, we don’t have enough time, because I would like to challenge you more on that.

Andrew: Another day.

Patricia: Perhaps yes, because there is clearly some insecure work happening in our economy. The extent of it, I understand people are debating. Just quickly, business groups supported Labor’s pledge to consider increasing the job seeker rate. Are you disappointed they’ve walked away from that?

Andrew: I’m not sure about that. I mean, I think let’s come back to the fact, again, we have an extremely strong labour market. We’re at or near full employment, so the priority now is addressing issues like skill shortages, getting participation back into the workforce. I think those are the top priorities.

Patricia: Andrew McKellar, thank you.

Andrew: Thank you.

Patricia: And that’s the chief executive of the Australia Chamber of Commerce and Industry, Andrew McKellar.

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