Andrew McKellar interview with Peter Stefanovic, First Edition Sky News

Event: Andrew McKellar interview with Peter Stefanovic, First Edition Sky News.

Speakers: Andrew McKellar, chief executive Australian Chamber of Commerce and Industry; Peter Stefanovic, host First Edition Sky News.

Date: 11 May 2022.

Topics: Rising costs for business, inflation, interest rates, cost of living increases, ACCI submission to the Fair Work Commission, wages, labour shortages, supply chain disruptions, small business recovery.

E&OE 

Peter Stefanovic, host First Edition Sky News: The Australian Chamber of Commerce and Industry is arguing for a wage increase of 3 per cent. That’s lower than Anthony Albanese’s proposal of 5.1 per cent. The chamber says small business cannot afford any increase of 5 per cent or more and Andrew McKellar from the Australian Chamber of Commerce and Industry joins us live now. Andrew, good morning to you. Innes Willox, he was on the program earlier and he said anything in the range of 5 per cent would be destructive for small business. What would you call it?

Andrew McKellar, chief executive Australian Chamber of Commerce and Industry: I think certainly it wouldn’t be responsible. One of the things that we have seen, it’s not just the cost of living that’s going up at the moment. It’s the cost of doing business as well. We’ve seen ABS data very recently showing that in the last three months, three out of five businesses faced higher than normal cost increases. So we know that supply chains are really disrupted at the moment. We know that it’s as hard to get materials and inputs as it has been in any time in the last 50 years. So this is a very sensitive time for businesses. 98 per cent of all businesses are small businesses, it’s particularly critical for them. Of course, people want to see wage increases, but they have to be responsible wage increases. And we can’t be having something that’s going to feed back into inflation and end up just pushing interest rates higher.

Peter: Okay, just getting into the nitty gritty of it now, and I’ve made this point a few times today already, if we are looking at a 5 per cent increase to the minimum wage, it’s currently at about $20.33, a 5 per cent increase would be a dollar an hour. You’re proposing a 3 per cent increase. So that would roughly be about 60 cents an hour. So, a 40 cent an hour difference doesn’t seem like that much. Could business not afford that?

Andrew: No, we’re talking about here, so you’re right on the hourly rate it’s $20.33 an hour currently. That’s about $772 a week. But we’re saying that could go up to about $795 a week, about $23 a week. Look, we think that is responsible when you put that alongside the tax cuts that are scheduled to come through, when you recognise that superannuation is also going up another half a per cent from the 30th of June. These are additional benefits that people will get, and certainly, the superannuation measure is a cost to employers. So, when you put all of those things together, you’ve got to remember that many businesses, many sectors have been through extremely tough times. This is not the time to put all of that at risk.

Peter: People have argued though that, and mostly critics of the government’s economic policy here, have argued that the current settings aren’t working because wages have been flat for so long now. So wouldn’t that suggest that there does need to be something a little extra than you are proposing?

Andrew: No. We think 3 per cent increase to the minimum wage, and let’s not forget, this is the safety net that underpins the entire system, that that’s appropriate, that’s responsible. That’s as high as we have supported at any time since 2009. So I think we’re recognising that there’s some underlying pressure there. But equally, if you go back and look at what the Reserve Bank said last week when it raised interest rates, they said there’s more evidence out there with the business liaison surveys that it’s undertaking, that wage increases are actually occurring.  We’re seeing a lot of mobility in the labour market at the moment. And when people change jobs, they’re normally changing jobs to get a better pay packet. So we think there is some underlying activity going on. It’s probably not showing up in those official figures yet. We do expect that that will be the case over coming months.

Peter: Are you forecasting closures? Would you be forecasting layoffs? Are you singing from the same song sheet as Innes if it were to go to 5 per cent, 5.1 per cent?

Andrew: That would undoubtedly put a lot more pressure on some sectors that have really been doing it tough. If you look at areas like the tourism industry, accommodation, food and beverage, cafes and restaurants, many small businesses in these sectors, if you were trying to force a 5 per cent increase in the minimum wage through at this point in time, then undoubtedly, that will put some businesses to the wall. We cannot risk that sort of outcome at a time when really, we are trying to strengthen the recovery. We’ve got a very strong labour market. All of the constraints are on the supply side. We’ve got to make it easier to do business and to help grow the economy and keep the recovery on track.

Peter: Okay. Andrew, good to chat. We’ll talk to you soon.

Download PDF here.