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Speaker 1: Welcome to Fear and Greed Q and A, where we

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Speaker 1: ask and answer questions about business, investing, economics, politics and more.

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Speaker 1: I'm Sean Aylmer. We've heard a lot lately about Australia's

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Speaker 1: productivity crisis and why reform is needed to boost our

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Speaker 1: economic growth. Today, I wanted to look at it from

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Speaker 1: the other side, rather than just waiting on action from

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Speaker 1: the government. What does business need to do in as

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Speaker 1: Willocks is the chief executive of the Australian Industry Group.

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Speaker 1: AI Group is a peak national employer organization representing thousands

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Speaker 1: of employers from large international companies operating in Australia through

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Speaker 1: to family run SMAs in it's welcome back to Fearing,

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Speaker 1: Greed Q and A.

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Speaker 2: Hi Sean, great to talk with you again.

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Speaker 1: Shortly we'll get to what you'd like to see from

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Speaker 1: government in terms of tax reform, red tape, et cetera.

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Speaker 1: But let's start with business itself. We've got a productivity

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Speaker 1: problem in Australia. How can business contribute to the solution.

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Speaker 2: It's a great question because business just can't rely on

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Speaker 2: government and government alone, and nor should it. But government

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Speaker 2: has a big role here too, around the settings that

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Speaker 2: business can operate in. But notwithstanding that, there is a

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Speaker 2: big role for business, and businesses talking about it a

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Speaker 2: lot and is acting a lot. There's a three d's

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Speaker 2: we talk about sean one is decarbonization. Diversification is another

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Speaker 2: which is very important, and also digitalization is the third,

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Speaker 2: and businesses are heading down the track on all three

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Speaker 2: of those at the moment. Decarbonizing to fit in with

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Speaker 2: government policy, government approaches, but also good practice for customers,

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Speaker 2: for suppliers and the like very important for us to

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Speaker 2: help move towards our net zero by twenty fifty targets.

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Speaker 2: Diversification is looking at new markets, new products, new ways

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Speaker 2: of working basically, and digitalization fits into that. We all

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Speaker 2: talk a lot about artificial intelligence. We're also looking at

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Speaker 2: things like automation and robotics and the like. So business

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Speaker 2: is looking to become more productive in its own way

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Speaker 2: and in ways they can because the world around them

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Speaker 2: is changing. Global trade is changing. We've just got some

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Speaker 2: data out showing that we've seen a significant rise in

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Speaker 2: imports coming into Australia, which is part we believe of

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Speaker 2: the global of the implications of the global trade in

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Speaker 2: Brolio that we're seeing at the moment and changes there.

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Speaker 2: So business is having to adapt, whether large or small,

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Speaker 2: and of course business works from large too small and

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Speaker 2: small to large. So this pressure is being put on

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Speaker 2: right up and down supply chains for businesses to become

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Speaker 2: more productive and more adaptable. The final point I make

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Speaker 2: is that a lot of this is being driven by

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Speaker 2: labor and skill shortages. In Australia. We see significant skill

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Speaker 2: shortage across key areas of the economy, cross housing, across manufacturing, mining,

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Speaker 2: right across the economy. We're also seeing labor shortages and

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Speaker 2: emerging real issues around labor mobility in Australia, which is

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Speaker 2: all impacting on business, which is meaning business is going

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Speaker 2: to find new ways to get product to market quicker,

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Speaker 2: more cheaply, and more competitively.

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Speaker 1: Okay, I like the three d's. I kind of understand

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Speaker 1: that is something I want to move on to now,

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Speaker 1: which some companies seem to have had problems within the

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Speaker 1: recent times, Optus being the most recent example. It's the

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Speaker 1: social license that a business has to operate. And I

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Speaker 1: don't know that we always think about it that much,

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Speaker 1: but from sort of Rio tinto a couple of years

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Speaker 1: ago blowing up minds through to optus. It's not just

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Speaker 1: the telcose, it's all business. How important is that.

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Speaker 2: Oh, look, it's crucial. If you don't have what is

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Speaker 2: called social license to operate, it's very hard to get

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Speaker 2: traction and in fact, you're more likely to get opposition

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Speaker 2: and you're going to have difficulties trading. So a lot

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Speaker 2: of that is around getting involved in your community and

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Speaker 2: showing that, whether that is at the more basic level,

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Speaker 2: interacting with local schools in universities, particularly if you're in

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Speaker 2: a smaller town or regional center, getting the community on

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Speaker 2: board and aware of what you're doing, what you're providing,

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Speaker 2: the opportunities that you're giving to the community, whether it

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Speaker 2: be just local or regional, working with your supply chain

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Speaker 2: in an appropriate way. What we're seeing is community attitudes

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Speaker 2: have changed and very clearly changed, and business has to

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Speaker 2: be aware of that and keep up community attitudes towards

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Speaker 2: how business operates. Things like the modern slavery requirements that

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Speaker 2: businesses are working to at the moment, the workplace gender

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Speaker 2: equality agency work, A lot of that's a lot of

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Speaker 2: compliance work for business, but that's now expected from the

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Speaker 2: community to show that businesses are good corporate citizens. The

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Speaker 2: decarbonization component I talked about earlier as that's business demonstrating

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Speaker 2: that they are acting in an environmentally responsible way. So shareholders, customers,

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Speaker 2: communities all look at these sort of things for businesses

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Speaker 2: large and small to make sure that they are acting

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Speaker 2: in an appropriate way and that they're contributing to the economy. Undoubtedly,

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Speaker 2: business is still motivated by profit, by the need for

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Speaker 2: profit to grow and to expand and create jobs. But

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Speaker 2: there's also that community license which is incredibly important for

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Speaker 2: business to be successful and not to be targeted.

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Speaker 1: Okay, what about the JEO political climate at the moment.

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Speaker 1: Clearly some industries are hit by tariffs more than others,

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Speaker 1: although even selling into the US, just the duties that

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Speaker 1: now have to be paid on smaller parcels, etc. We

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Speaker 1: hear a lot about it, I talk a lot about it.

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Speaker 1: But is it as big an issue for business as

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Speaker 1: it seems, or is it actually at the margins given

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Speaker 1: these other things we're talking about.

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Speaker 2: It's a great question. It's multi layered and it's not uniform.

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Speaker 2: It's not across the economy. So at a headline level,

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Speaker 2: the US ten percent tariffs have different impacts on different sectors,

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Speaker 2: but overall I think you can make the claim that

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Speaker 2: it hasn't really made that much difference to Australia in

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Speaker 2: terms of the direct US ten percent tariff on Australia.

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Speaker 2: What's uncertain about the US is what happens around what's

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Speaker 2: called the Section two three two tariff's seeds are the

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Speaker 2: specific tariffs. You've seen some debate and discussion in the

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Speaker 2: past few days around pharmaceuticals for instance. Copper is another one,

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Speaker 2: steel is another. So there is about ten or twelve

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Speaker 2: quite clear components of the global economy which are going

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Speaker 2: to be impacted by quite specific tariffs, and they will

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Speaker 2: have impacts on different, quite distinct parts of the economy.

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Speaker 2: But overall, what is happening is in the Australian context

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Speaker 2: is the biggest impact is actually around our trading partners,

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Speaker 2: third party third country trading partners. So think of China, Thailand, Malaysia, Vietnam,

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Speaker 2: all of whom have been quite heavily hit by American tariffs,

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Speaker 2: and that's reorienting global trade. It's making business think about

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Speaker 2: who they partner with. This goes back to the diversification

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Speaker 2: d that I talked about earlier. That's where the biggest

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Speaker 2: impact directly at the moment is on businesses. The second

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Speaker 2: component of is that's just added incredible amount of volatility

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Speaker 2: and uncertainty into the equation. The old trading norms are gone.

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Speaker 2: We're now in a point where the trading system is

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Speaker 2: remaking itself, reinventing itself. Countries and nations are finding new

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Speaker 2: trading partners and new ways of trading, and businesses are

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Speaker 2: directly impacted by that. So we're in a period of

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Speaker 2: great uncertainty when it comes to global trade. Global shipping

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Speaker 2: has been impacted as well, and you know you mentioned

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Speaker 2: the small parcels, you know that got turned off for

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Speaker 2: a while, it's now turned back on. This adds into

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Speaker 2: the uncertainty and the unpredictability that business is dealing with

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Speaker 2: at the moment. But when you think Sean that one

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Speaker 2: in five Australian jobs is trade related, that broader impact

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Speaker 2: is where it's really been felt by Australian businesses and

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Speaker 2: they're just sort of, I would hesitate to say, muddling through.

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Speaker 2: They're doing better than that. There's been quite proactive, but

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Speaker 2: that uncertainty at the moment is really creating some difficulties and.

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Speaker 1: I've been trying to stay away from government policy because

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Speaker 1: I think it's interesting to talk about non government policy

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Speaker 1: issues facing business. However, we are almost out of time.

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Speaker 1: But you know, in terms of government policy, be it

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Speaker 1: tax or I are what are the key things for

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Speaker 1: business that you'd like to see progressed.

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Speaker 2: Well, I was at the Productivity round table held in

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Speaker 2: August and that progressed a few issues. So I'll just

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Speaker 2: quickly touch on a couple. One is government approach to tax.

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Speaker 2: You've already seen the government put out a request for

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Speaker 2: submissions around tax simplification, which is something we really push for.

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Speaker 2: An incredibly complex tax system that Australia has, which is

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Speaker 2: a disincentive to invest. Obviously, we want to look at

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Speaker 2: business taxes. We are at a headline rate about fourth

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Speaker 2: in the OECD on headline tax rates, but when you

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Speaker 2: take all taxes and business into account, payroll tax, land taxes,

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Speaker 2: insurances and the like, we're at number two behind Columbia.

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Speaker 2: So we need a big rethink around how we do

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Speaker 2: business tax and personal tax as well. Bracket creep is

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Speaker 2: a big issue for business because it's a disincentive for

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Speaker 2: people to work and work harder and strive to do better.

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Speaker 2: So tax forms a big issue, but we recognize no

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Speaker 2: quick fix. This is probably a three year project the government,

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Speaker 2: but will be heavily involved in that I do no

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Speaker 2: more harm proposition for business. Our business is absorbing massive

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Speaker 2: change in the industrial landscape over the past three years.

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Speaker 2: The government's got a couple of things that's working through

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Speaker 2: at the moment. We're consulting broadly around legislation of penalty rates,

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Speaker 2: around some more sort of what you might call paternity

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Speaker 2: leave arrangements, around noncompete clauses, and around pay Day's super

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Speaker 2: They're probably the four big issues that we're facing into

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Speaker 2: at the moment, apart from reviews of other legislation. But

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Speaker 2: let's try not to do more harm. And the third

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Speaker 2: one zero point two Sean is artificial intelligence on many levels,

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Speaker 2: where Australia gets to is going to be really important

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Speaker 2: for business. The guardrails that the government puts in place

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Speaker 2: around use of AI more broadly, that's a review that

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Speaker 2: we're involved in. Hopefully we're report by the end of

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Speaker 2: the year. AI from the industrial relations perspective as well,

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Speaker 2: where we get to into discussions with unions and government

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Speaker 2: around use of AI within workplaces. I think there's been

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Speaker 2: a pretty positive shift in that direction since the roundtable,

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Speaker 2: that's really important. And then the government's own use of

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Speaker 2: AI to improve business process from a business perspective, to

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Speaker 2: improve business processes, making regulation easier, things like tendering more streamlined.

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Speaker 2: All of those things are going to be incredibly important

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Speaker 2: for business. But look, there's a multitude of issues that

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Speaker 2: government is facing into that we're dealing with. I could

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Speaker 2: talk about energy costs all day and energy prices, but

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Speaker 2: i'd sort of point to those as things that are

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Speaker 2: front of mind at the moment at the moment for

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Speaker 2: business and trying to navigate those through pretty choppy waters

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Speaker 2: globally at the moment. We can't afford to be left behind.

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Speaker 2: We need to remain competitive and we need to be competitive.

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Speaker 2: A big parts of the economy are in recession or

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Speaker 2: have recession like conditions at the moment, so it's not

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Speaker 2: easy out there. So the role for where possible is

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Speaker 2: to enable business success and that's what we're pushing for.

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Speaker 1: Inness. Thank you for talking to Fear and Greed.

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Speaker 2: Thanks Sean.

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Speaker 1: That was inners Willock's chief executive of the Australian Industry Group.

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Speaker 1: If you've got something you'd like to know, then sendsor

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Speaker 1: your question on LinkedIn, Instagram, Facebook, or at fearangreed dot

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Speaker 1: com dot au. I'm Sean Alematin. This is fear and

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Speaker 1: greed at Q and A