Interview with Ross Greenwood, Sky News
ROSS GREENWOOD: Right now, the pressures on Australian businesses are mounting. There are rising energy prices, labour shortages and wage rises. There's the prospect of falling consumer confidence and, of course, rising interest rates. So to be Industry Minister in this environment summit is, to say the least, challenging. Ed Husic, a long time advocate for technology based industry here in Australia, has the job and he joins me now. Ed, many thanks for your time.
ED HUSIC: Thanks for not putting the pressure on earlier.
ROSS GREENWOOD: No pressure early, my friend. Listen, before we get to the opportunities, and there are plenty of them out there, I want to address the challenges and the first I want to address is wages. This is what the Reserve Bank Governor, Philip Lowe had to say about wages this week.
PHILIP LOWE: I think people, if they can keep in mind that the steady state wage increases in this country, it's good to start with a three. I was complaining when they started with a two. I hope I don't get into an environment where I'm complaining that they got to have a five in front of them. But three and a half is kind of the anchoring point.
ROSS GREENWOOD: So the anchor point is three and a half percent. The minimum wage rises just come through 5.2%. Inflation is likely, even the Reserve Bank Governor says potentially 7%. So where does real wages occur for working families in Australia and also for the businesses that now you represent?
ED HUSIC: I guess a number of things. So, it never seems to be a good time to lift wages. And that's been the case for years. And we've been making those points when we were in opposition and recognise that in government. And you did see when you looked at the trajectories of profit and wages, profits were doing quite well for some time. We still couldn't get wages up and appreciate that the current circumstances will create a challenge in terms of lifting wages and understand that. And I think in the general public, too, they appreciate that as well. The recent wage decision by the independent umpire for the lowest paid in the community, I think they took on board where things were headed in terms of the broader economy, but also realised that those wage earners are also consumers. So let's understand too, that you need to have that sort of, in effect, liquidity occurring where that money is moving around in the economy. We can help those people on lower wages while also being conscious about the broader I mean, that's one segment of a very big labour market.
ROSS GREENWOOD: Okay, can I pick you up on that?
ED HUSIC: We have to work out where that heads longer term and how we play that out.
ROSS GREENWOOD: Okay, but I want to pick you up on that because to my mind at least, anyway, I would prefer to see wage rises be more moderate, but to keep the unemployment rate close to 3.9% rather than rising to 5%, that wage rises, don't then encourage businesses to lay workers off, because I think the economy works better when there's more people in work, even if they're being paid a bit less than what they perhaps think they are entitled to.
ED HUSIC: I guess we are going to have a range of chats or issues that we'll cover off today, right. I'm not so certain that, given the critical impact of skill shortages, whether or not the layoffs will necessarily occur, that. I'm not saying it won't
ROSS GREENWOOD: Because there's a lag, there's no doubt.
ED HUSIC: I also look, if I can say there's a whole mix of factors we got to consider and we want businesses to be strong and operate, to be healthy, and that they're not just in from a jobs perspective, but that they're doing well as well and they're building longer term strength. So we've got to get a number of things right. I don't think of them. Obviously, employers will have to make that call. One of the things we've been concerned about for a while is whether or not the enterprise bargaining system is working in a way to ensure that wages are in line with what enterprises can cope with and that's in line with what they're able to pay with.
ROSS GREENWOOD: Does that mean we need a new Accord, what the Hawke government was famous for?
ED HUSIC: We have flagged that we do want to look at what's happened with the enterprise bargaining system to make it a lot more fit for purpose and to ensure that at times like these, it operates in a way that is mindful of the relative strength of enterprises in an economy and the way it's behaving right now. But there are other things that we need to do as well on skills, skilled migration, addressing supply chain, energy. As I said, I don't want to take away your thunder because you're going to ask me about a whole lot of stuff there. But I see that those things, and I'm definitely talking with colleagues and saying, look, we've got some big ambitions in the industry space, but we've got some lead in the saddle. And those issues that I just referenced, we've got to be able to deal with them all. Wages on top, cost of capital and obvious interest rate rise. The other thing too. So we've got to be able to work through those issues. And those are the ones I was joking when I said thanks for the easy ride in, but they are the things that weigh on my mind that we've got to address.
ROSS GREENWOOD: Because it's about competitiveness, right?
ED HUSIC: Totally.
ROSS GREENWOOD: Let's go to the other issue of competitiveness, and that is energy prices. If we don't have affordable energy for business, then investment and jobs go offshore. I spoke a little earlier in the programme to Gina Cass-Gottlieb, the chair of the ACCC. Here's what she said about her concerns about current energy retailers.
GINA CASS-GOTTLIEB: The conditions are of concern to us as the competition watchdog as to whether we are going to see the playing out in these circumstances of a reduction of competition.
ROSS GREENWOOD: Okay? Reduction in competition she's talking about there is retailers collapsing, and that largely would be a knock on effect if all of a sudden more people are running for that wholesale market to get the energy they require for their business and all their household. So higher energy prices works against Australia's competitive advantage.
ED HUSIC: And there are a number of things that are playing out in this space. That is one of them. And we've seen some smaller energy retailers this week announced that they are just going to have to pull out. And the lack of competition there and the like I described as a calcification of [indistinct] and reduction of an ability to have competitive pricing, that's a real concern. And I know that my colleagues, both the Energy Minister Chris Bowen, and the Treasurer Jim Chalmers, are very mindful of that. There's also some other things. There are some great conditions right now for gas companies. I get that the global demand for their product is high, but I've said publicly, I'm very agitated about some of the pricing that's been the way it's been levelled towards Australian industry, and particularly manufacturers who need access to affordable.
ROSS GREENWOOD: It is dumb that we have some of the biggest gas reserves in the world and yet we don't have it reserved for Australians and Australian industry to make jobs easier and more available here.
ED HUSIC: And I think there will be a greater focus on that type of mechanism. I think we've already flagged, and the Resources Minister, Madeleine King has flagged. We're reviewing the trigger that's used, the way that it's operated. It's a complicated issue because the way it's set up at the moment is around supply. But what we've got at the moment is not a supply issue, it's not an extraction issue. It's about pricing. And we do need to get a fairer deal, a better deal for local industry. Again, I get gas companies want to do well when the sun's shining, but they cannot blaze off, go off in a blaze of glory and leave a smouldering wreck. They need to be very conscious that their pricing decisions have a broader economic impact, and particularly from an industry perspective. And I'm not going to apologise for standing up for Australian manufacturers who I think are getting a rough deal right now.
ROSS GREENWOOD: Okay, I want to move on to a couple of things because my time is running out. But one thing, instant asset write-off rules right now expire June 30, 2023. So next year, can under a constrained spending environment that the government's going to have, will that continue for business?
ED HUSIC: Two things. When we were last in government, we had that type of policy framework in place, big supporters of it. I am not going to have the first call after I finish your programme from the Treasurer making commitments that he's going to make a decision on in the budget, so watch this space. We've got a budget coming down in October, so we will go through there and we got a balancing act because the things you've raised about the state of the economy, where finances are at, and making sure we make the right calls, that when we adjust the budget, that we don't have a broader economic impact as well. All that stuff has to be borne in mind.
ROSS GREENWOOD: Ed Husic, good to have you on the programme. We'll do it again very soon.
ED HUSIC: Thanks so much.