The Australian’s CEO Survey 2024: Judo, Kmart to Rio Tinto
The Australian surveyed the nation’s CEOs on inflation, energy and opportunities for 2024. From Judo and Kmart to Rio Tinto. These are the responses for J-R companies.
The Australian surveyed the chief executives of the country’s largest companies. We asked their views on inflation, energy, industrial relations, and all the issues and opportunities for their businesses in 2024.
Judo Bank, Joseph Healy
■ How is inflation and the prospect of higher for longer interest rates affecting your business? Importantly, is the behaviour of your customers changing?
It is important to remember that Small to medium sized enterprises (SMEs) are not a homogenous category of business. Some sectors are better placed than others to manage the current economic challenges, such as higher interest rates, rising costs, and labour shortages.
The next 12 months will be key for Australian SMEs as the burden of interest rates and inflation washes its way through the economy. We anticipate that some sectors will cope better than others, particularly those reliant on discretionary consumer expenditure and the construction sector, which will need close monitoring.
■ How would you rate the shape of the Australian economy as we head into the New Year?
In my view, we’ll avoid a recession, but some sectors are going to feel as if there is a “recession”. This will lead to the emergence of a two-speed economy.
It will be a tough year ahead for businesses relying on discretionary consumer and business spending as cost-of-living pressures bite, forcing consumers to tighten their belts and cut back on spending. Businesses will be cautious in terms of investment given the uncertain interest rate and inflation outlook. There is a real risk that we will have to live with higher interest rates and higher inflation longer than might the case in other western economies.
■ What do you think is the big area of reform needed to happen so the Australian economy (and your business) can sustainably reach full potential?
The burden of regulation at a state and federal level continues to grow at a time when small
businesses are grappling with a wide range of challenges. Whether it is taxes, labour laws, or food and safety regulations, adding to this burden acerbates the challenges that small businesses are already facing.
There has been a tendency over time to add more and more regulation without regard for the capacity of small businesses to manage and cope. And this is now in a world where SMEs are having to navigate significant economic pressures. At a time like this, we should be looking at reducing red tape and making it easier for small businesses to fulfil their economic potential.
■ Australia has six years to meet its 2030 targets for a 43 per cent reduction in baseline emissions. What needs to happen here?
Philosophically, everyone is aligned – the public, the business community, and the Government. We all want to see climate change taken seriously.
Unfortunately, such a rapid reduction in baseline emissions will be hugely challenging for high-emitting sectors. In fact, these targets will be a death knell for any sector that is incapable of change.
Yet conversely, it represents an opportunity for many parts of the economy, as demand for eco-friendly products and services increases over time – balancing out the pain caused to other pockets of the economy.
The state and federal Governments are doing a good job in opening up land for wind and solar farms. However, there needs to be more subsidies to help businesses and households to transition to solar power and electric vehicles and unlock the significant cost savings available with these technologies. Judo is doing its part by not lending to fossil fuel extractors and a range of other businesses with overwhelmingly negative ESG-related factors. While we have no Scope 1 emissions and have already begun the work to reduce Scope 2 emissions, our focus now is the work to map our Scope 3 emissions.
■ What level of adoption is your business currently at with the use of AI technology?
I am very excited about the potential for AI. It will be transformative not just for businesses, but for all of us and for society. Judo is busy experimenting and testing AI technology to identify opportunities for enhancing our relationship-led customer proposition or make it easier and faster for our teams to serve our customers.
We see smart use of data, advanced analytics and Machine Learning as core capabilities and are investing acutely in these as we scale up our bank.
■ What external issues do you expect to impact or disrupt your business within the next 12 months – the so-called 3AM thought?
In truth, my greatest fear – the so-called 3am thought – is the threat of cyber-attacks.
High profile cases in 2023 highlighted the damage these a[attacks can have on a business. Making sure that everyone within the business is alert to this risk and takes personal responsibility to protect the bank is critical – and is something that I am completely focused on and that Judo is very well prepared for.
■ Is business getting the balance right between investor, customer and other stakeholder demands when it comes to ESG issues?
The breadth of the issues contained under the umbrella of ESG is complex, challenging, and can sometimes feel overly bureaucratic and more of a compliance obligation rather than a positive motivator. Yet, the underlying principles are vitally important, particularly the ‘E’.
I don’t accept that the ‘G’ is getting left behind – far from it. Australian businesses, particularly publicly listed businesses, generally perform well in terms of governance. I think the concept of social licence by necessity, varies by industry. It is well accepted and proven that banks, telcos, and energy companies have a higher bar to retain their social licence.
On ESG generally, a clearer definition of what each element means and how it is applied would assist in bringing more focus and specificity that we need.
■ How has your organisation’s approach to staff working from home evolved since the pandemic?
I strongly believe that an office environment, where people turn up in person, is vital businesses and their cultures, particularly for young and growing businesses like Judo. Negotiating, brainstorming, building relationships, providing feedback – all these things can lose their effectiveness when done remotely.
The number of virtual meetings and chat messaging should be managed to avoid work becoming even more staccato, which research shows can come at a heavy cognitive cost and maybe a factor in the burnout rates that some recent international research has highlighted.
Many people, particularly younger staff, don’t always appreciate the long-term mental health costs of working remote and not having the support of an office environment. A famous scholar once said that there is only one true law of history, and that is the law of unintended consequences. This is a big concern for me when l think about working from home on a long-term basis.
Kmart, Ian Bailey
■ How is inflation and the prospect of higher for longer interest rates affecting your business? Importantly, is the behaviour of your customers changing?
Higher interest rates combined with inflation has had a material impact on consumers, with many experiencing these dynamics for the first time. With mortgage repayments and rent becoming a much larger cost, consumers are becoming increasingly creative to maintain the lifestyle they aspire to. In this context, value has become and will continue to be a critical driver for consumer spending. We are seeing this behaviour across all income levels in retail, which demonstrates that these same drivers are important for the vast majority of Australians.
■ How would you rate the shape of the Australian economy as we head into the New Year?
High employment levels and record levels of immigration have helped sustain consumer spending in 2023, despite many individuals reducing their discretionary expenditure. In 2024, we are likely to see a small increase in unemployment and immigration stabilising or even reducing slightly.
The absence of these two positive forces offsetting the decline we are experiencing in individual spend levels, is likely to see a tightening in consumer expenditure. 2024 will be a year with clear winners in retail. We know that competition will intensify as the capacity for consumers to spend continues to be restricted and household savings are diminished. Retailers who have very clear customer propositions that they own and who deliver value to their customers in a unique way, will be in a strong position. Kmart is especially well placed in this context.
■ What do you think is the big area of reform needed to happen so the Australian economy (and your business) can sustainably reach full potential?
Much needed Industrial Relations reforms are currently being contemplated. Unfortunately, the current proposed reforms will do little to reduce complexity in an already complex system, nor will they contribute to increased productivity in the wider economy, both of which are very much needed. Undertaken correctly, we can return to an environment where effective bargaining between team members and employers delivers beneficial outcomes for all stakeholders, which should always be our starting point. As society and customer behaviour changes, this is important for businesses to evolve effectively.
A casual job at Kmart or Target after school or while working through university or TAFE is how many Australians start their career – and it’s a pathway that creates economic opportunity for a diverse mix of people from across the full socio-economic spectrum. What we don’t want to see is reform that ends up resulting in fewer people being employed because we can’t offer the same flexibility or choice to team members. Casual positions are common in retail because they provide the flexibility needed for both the team member and the business. What’s important to us is ensuring that team members can still have the right to choose – at the same time as having clear and fair pathways for a team member to request a casual conversion to a permanent position. That balance is an important and constructive principle that is worth the investment of effort in getting right.
Meaningful progress is required in many areas of sustainability, for business to make the progress we aspire to. For example, for businesses to transition at pace towards renewable energy requires greater access to renewable energy at all times of the day. Supply of reliable, firmed renewable energy is not keeping us with demand, and we need investment in the infrastructure needed to support a renewable National Energy Market. In the case of recycling of products critical infrastructure is required to enable recycling at scale and participation needs to be inclusive of every retailer and brand selling clothes in Australia to ensure a level playing field, whether they are sold directly here or delivered from overseas.
■ Australia has six years to meet its 2030 targets for a 43 per cent reduction in baseline emissions. What needs to happen here?
Successful energy transition will demand unprecedented levels of collaboration between governments, consumers and industry to meet our commitments under the Paris Agreement. We all must play our part in that. We know this is an issue that matters to our customers, and our communities want to see real action on climate. Kmart is committed to achieving Net Zero emission from our own operations from 2030, and 100 per cent of the electricity used in our own operations will be from renewable sources by July 2025. That will come from reducing energy use and using more energy efficient technologies across our stores and distribution centres, working with landlords to generate more energy from behind-the-metre solutions like solar panels, but also looking for ways to collaborate and create demand for greener services in our facilities, such as air-conditioning systems with a lower emissions footprint.
■ What level of adoption is your business currently at with the use of AI technology?
Kmart Group’s scale enables Investment in data and technology to be a competitive advantage – but it needs to be focused on where we can genuinely turn the dial on things that matter for customers. For us that means using it extensively to drive growth by delivering a better customer experience while also using it to improve the productivity of our business to further lower our prices. Artificial intelligence (AI) is the latest technology with the potential to deliver new and improved outcomes. Kmart Group is piloting this technology in many areas to identify where real potential lies. To date work has been undertaken in product development and design, technology coding and testing, consumer facing chatbot and intelligent customer search capabilities. We are very aware that new technology can also come with unintended consequences and we are focused on constantly assessing potential risks before full scale roll outs for any technology.
■ What external issues do you expect to impact or disrupt your business within the next 12 months - the so-called 3AM thought?
We are undoubtedly in a period of significant disruption due to the cost of living pressures facing Australian households – but with disruption comes the opportunity for significant innovation. New business models will emerge finding new ways to deliver value to customer and there is potential for material market share gains and losses. For a retail business like Kmart we have an incredibly powerful connection with our customers which we never take for granted and is a competitive advantage that we will continue to work hard to maintain and improve. Our competitor set includes digitally native retailers who excel at ruthless efficiency and the removal of friction. We must getter better at this skill. The winning retailers of the future will be strong brands with human connections that are powered by efficient and effective technology.
■ Is business getting the balance right between investor, customer and other stakeholder demands when it comes to ESG issues?
ESG needs continue to grow and are also becoming more complex. ESG priorities must always be responsive to varied expectations, working through complex issues and finding balance. It’s this responsiveness to all our stakeholder cohorts that allow businesses like ours to achieve real advances in this space and ensure that we are maintaining our licence to operate. In recent years, we have seen an intensified focus on the environmental aspects of ESG, as the negative effects of climate change, waste and environmental impact become a growing concern and spearhead momentum. We’ve also seen critical social indicators such as diversity, inclusion and modern slavery gaining momentum and focus in the last ten years and become key priorities. Governance isn’t left behind – it’s the foundation upon which we build both environmental and social actions to ensure we are creating the right impact, with the right governance and procedures in place.
■ How has your organisation’s approach to staff working from home evolved since the pandemic?
One of the positive things that came out of the pandemic was the opportunity to set a new operating rhythm – and facilitate greater flexibility amongst Australian workplaces. We also know that flexible work practices have a positive impact on diversity and inclusion, notably increasing engagement with female leaders and emerging talent. Equally, the isolation that can occur for those who work from home frequently is a real problem for mental health as well as the essential skill development required to progress careers. 2024 will see an increase in the amount of time spent in the office and a greater clarity of the long-term ramifications of high levels of working from home for both individuals and businesses. In Kmart Group an inclusive, team-oriented workforce and culture is critical to success, as we are a business or normal people leading everyday lives but trying to do something important for our customers. Providing our team members with flexibility ensures Kmart and Target have access to the best team members out there and we will continue to evolve the way we work to improve in person collaborative time whilst maintaining flexibility.
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KPMG, Andrew Yates
■ How is inflation and the prospect of higher for longer interest rates affecting your business? Importantly, is the behaviour of your customers changing?
This year has been a tough one for many organisations, and 2024 is expected to see slow, low growth, especially in the first half of the year. In this environment, it is clear that, like us, our clients are concerned with ‘here and now’ issues such as productivity and controlling costs. But as things pick up towards the end of next year, this will change, and mindsets will turn more towards growth, innovation and looking to take the opportunities presented by new technologies like AI.
One example of an area of our business being impacted is investments. The pool of investment opportunities being considered by KPMG has tightened, both because higher funding costs are impacting cash flows, and because of a gap in capital value expectations.
■ How would you rate the shape of the Australian economy as we head into the New Year?
The Australian economy is slowing more rapidly than previously expected as monetary policy bites hard into the spending side of the economy. KPMG expects a strengthening of the economy in 2024H2 as the RBA loosens the cash rate and consumers and investors return to increased spending. We do feel that the tight labour market has eased though.
What’s happening in the talent space is nuanced and as the market bounces back and disruption through AI accelerates – all businesses will be impacted as we look to hire for the same skills/ talent. The availability of skills in machine learning, AI, data structures, deep learning and NLP are already at a premium, and will be even more scarce and critical.
And because we can’t access the skills, the integration of AI in the workplace is driving a renewed focus on the importance of upskilling. The skills needed for jobs is changing rapidly and this will accelerate efforts on reskilling and upskilling in 2024.
KPMG does not expect a technical recession to occur (noting that Australia is currently in a per capita recession and will continue to be in such circumstances for a few more quarters yet).
■ What do you think is the big area of reform needed to happen so the Australian economy (and your business) can sustainably reach full potential?
The recent migration surge has exposed the lack of a coordinated housing policy between the Commonwealth, States and Local Governments.
KPMG continues to advocate the need for wholesale tax reform or spending restraints in order for the budget to be balanced ‘over an economic cycle’. Government spending as a percentage of GDP is still too high relative to our tax take.
Reforms need to focus on productivity as this is a consistent concern of clients across the marketplace.
■ Australia has six years to meet its 2030 targets for a 43 per cent reduction in baseline emissions. What needs to happen here?
Australia pledged to triple renewable energy capacity by 2030 at the recent COP28 gathering. The starting point for effective action is an accurate diagnosis of the primary challenges preventing a dramatic scale-up of renewable energy. KPMG analysis has identified market structures, supply chain issues and access to capital as the three biggest challenges to reaching 2030 targets.
■ What level of adoption is your business currently at with the use of AI technology?
It’s fair to say that all businesses are still in the experimentation phase in terms of applying AI – but I’m proud of how KPMG is helping to drive forward the safe and ethical application of AI, both within our business and through helping our clients.
KPMG was one of the first businesses to launch its own Gen AI version of ChatGPT, KymChat - which we use to help draft advice, power research, and ensure compliance with ESG standards. Based on our learnings we now offer KymChat as a customisable AI service to Australian clients so they can explore AI within their business.
■ What external issues do you expect to impact or disrupt your business within the next 12 months - the so-called 3AM thought?
Cyber risks continue to escalate as society’s reliance on technology increases by the day.
Government, institutions, and private business have a collective leadership role to play in securing technology so users and the public have the confidence and trust that wider digital ecosystems will withstand attacks from bad actors.
■ Is business getting the balance right between investor, customer and other stakeholder demands when it comes to ESG issues?
The G in ESG isn’t left behind; it’s becoming more important, especially in our profession.
While organisations are expected to focus on what is material to their business, their stakeholders and their communities, we are seeing stakeholders link their trust to integrity more than ever before – doing the right thing across the E, S, & G. Stakeholders are also demanding more transparency on disclosing progress, setbacks and learnings on ESG.
■ How has your organisation’s approach to staff working from home evolved since the pandemic?
While we haven’t had mandates in place, we have been asking our people to prioritise their time to the office or our client’s offices. And we will be doing more to encourage people to be present so that we can continue to build connections and interpersonal relationships that are so important for our business.
Latitude, Bob Belan
■ How is inflation and the prospect of higher for longer interest rates affecting your business? Importantly, is the behaviour of your customers changing?
Given the unprecedented speed and scale of interest rate rises, margin management and operating efficiency have been key priorities. While we were quick to take pricing action, there is always a lag effect which results in a short-term impact on revenue. The opposite action of course, when the rate cycle pivots, will create a positive tailwind, which we believe could be as soon as late next year.
Like many businesses, we’ve seen the effects of inflation on discretionary consumer spending and lending. Fortunately for Latitude, one of our core propositions in an Interest Free payment plan product is more relevant and attractive for consumers and retailers in a high rate, high inflation and lower savings environment.
■ How would you rate the shape of the Australian economy as we head into the New Year?
While households and certain sectors are clearly stressed, on balance the Australian economy in my view is well diversified and therefore well positioned. Unemployment remains low and strong migration is clearly supporting growth. We are also nearing or at the peak of the interest rate cycle, with the high-water mark still well below some of the historic levels we’ve seen in previous cycles.
■ What do you think is the big area of reform needed to happen so the Australian economy (and your business) can sustainably reach full potential?
Latitude is proud of the role it plays in providing competition in financial services, offering choice to consumers as an alternative to the banks. As a country, we need to continue to evolve our business and industrial settings so that our economy encourages greater competition across all sectors, and rewards innovation and calculated risk taking. This continued evolution is critical if we are to lift productivity, improve outcomes for consumers and ensure that Australia remains an attractive destination for investment.
■ Australia has six years to meet its 2030 targets for a 43 per cent reduction in baseline emissions. What needs to happen here?
The curve of clean energy investment is clearly in Australia’s favour as newer forms of low and zero emissions technology become more affordable and accessible. What’s also clear is private and public sector support is accelerating, which is adding to the momentum and driving real innovation in this space.
■ What level of adoption is your business currently at with the use of AI technology?
Algorithm-based decision making is at the core of Latitude’s business model, especially when it comes to assessing loan applications and making decisions on who to lend to and at what price. AI, and generative AI in particular, is the next frontier and we, along with the finance industry more broadly, are looking for opportunities to leverage and scale its benefits across our business, including in the way we service customers.
■ What external issues do you expect to impact or disrupt your business within the next 12 months - the so-called 3AM thought?
The increasing prevalence of ransomware is a growing challenge for businesses right across the economy and certainly something that requires a coordinated response from industry and government. To this end, I was pleased to see the government recently release the Australian Cyber Security Strategy. As well as government support, ongoing investment and high vigilance are required by all companies to protect their assets and customers from malicious attacks.
■ Is business getting the balance right between investor, customer and other stakeholder demands when it comes to ESG issues?
Governance is undoubtedly something that businesses and their boards are paying more and closer attention to – we have seen the reputational and commercial implications for businesses that don’t take these responsibilities seriously.
■ How has your organisation’s approach to staff working from home evolved since the pandemic?
We have found that a flexible workplace that enables our teams to split their time between the office and home works well for the productivity and morale of our people. What that split looks like varies depending on individual teams and the requirements of their role. Our senior managers spend at least three days a week in the office which we have found has helped facilitate collaboration and connection.
Lendlease, Tony Lombardo
■ How is inflation and the prospect of higher for longer interest rates affecting your business? Importantly, is the behaviour of your customers changing?
Inflationary pressures, and the attendant “higher for longer” interest rate environment, have impacted investor appetite and the speed of completing transactions in real estate markets right around the world. Some of our traditional capital partners want certainty in the inflationary and interest cycle before committing to new projects.
In saying that, some asset types have continued to perform strongly. Sales at our One Circular Quay luxury apartment project in Sydney have surpassed $1.5 billion in just one year. Further afield, one of our major capital partners, Japan’s Daiwa House, recently locked in major investments in our residential projects in Melbourne and London. In 2024, we expect to see further easing of inflation across most major economies, which will change the outlook for long-term interest rates.
■ How would you rate the shape of the Australian economy as we head into the New Year?
The Australian economy seems in better shape than many other countries. While many Australians face ongoing cost of living challenges over the coming months as the RBA seeks to tame inflation, the longer-term outlook for the national economy is positive.
On labour markets, the current shortage of construction workers needs to improve significantly to help demand right across the country. Federal and State governments need to spread the timing of infrastructure spend over a longer duration which, in turn, would allow the housing sector to access labour currently diverted to other projects.
■ What do you think is the big area of reform needed to happen so the Australian economy (and your business) can sustainably reach full potential?
A key issue facing our industry is the time it takes to secure approvals for new projects. If we want to increase housing, we need to do significantly more to streamline the nation’s permitting and approvals processes and get builders to the start line faster.
Australia’s ability to attract global investment capital – and fund the nation’s growth – relies on us having a regulatory process that’s commensurate with that of other advanced economies. In other markets, we achieve approvals in less than half the time it takes in key Australian cities.
■ Australia has six years to meet its 2030 targets for a 43 per cent reduction in baseline emissions. What needs to happen here?
Over the past decade, we as a company have been focused on helping our customers reduce energy use and consumption. Compared to buildings constructed pre-2010, our latest workplace and residential assets help customers reduce energy consumption by as much as 60%.
We have focused on supporting our supply chain to transition their work practices to being more sustainable from supporting fleet renewal to electric plant and equipment. Across our funds, we procure 63 per cent of our energy from renewable sources. Since commencing our Mission Zero strategy in FY2021, we as a company have reduced our Scope 1 and 2 emissions by 30%, and we’re on track to be net zero by 2025.
Our focus is now on how we achieve absolute zero carbon emissions by 2040.
Governments, companies and individuals each have a different role to play. Those who can invest in reducing energy consumption should continue to prioritise those investments big and small. Governments need to support the energy infrastructure transition and we, as individuals, need to continue to focus on energy efficiency.
■ What level of adoption is your business currently at with the use of AI technology?
We’re using AI to help analyse previous bids – both successful and unsuccessful– to home in on the information that’s of greatest value to our clients. Our people are then freed up to focus on the projects we’re trying to deliver.
We’re also using AI on construction projects in Asia to enhance site safety. CCTV footage is analysed by AI to identify potential issues and recommend mitigating actions in line with our global minimum safety requirements. Our marketing teams use AI to improve the quality and performance of our advertising, insights and content recommendations for customers.
■ What external issues do you expect to impact or disrupt your business within the next 12 months - the so-called 3AM thought?
In the past few years, we have been dealing with our global pandemic, wars, increased geopolitical tensions, increases in natural disasters, a rise in cyber attacks and persistently high inflation and interest rates.
A key risk we have been scenario planning for is a recession in the next 12 months. It is a real risk that may emerge in many markets in which we operate as forward-looking indicators point to markets slowing.
■ Is business getting the balance right between investor, customer and other stakeholder demands when it comes to ESG issues?
ESG is playing an increasingly important role in helping investors, customers, employees and others quantify a company’s impact on society at large. A growing number of investors simply won’t invest in real estate assets unless they have visibility of a clear strategy that goes beyond straight economics. When awarding large projects, governments want a clear demonstration of the social value their partners will create.
In 2020, we launched a target to generate $250 million in social value by 2025 – we’ve already generated $180 million towards this.
■ How has your organisation’s approach to staff working from home evolved since the pandemic?
Two thirds of our people are frontline and have not enjoyed the ability to work from home as their office-based colleagues have. As a company, we’re trying to strike the right balance for all our people. Before agreeing to flexible arrangements, our people must work with their leaders to first prioritise our customers’ and teams’ needs. Our people need to be at their primary place of employment for a minimum of three days a week.
People who refuse to return to their workplaces will, ultimately, have fewer career opportunities than those who are regularly in the office. Their development will be stunted from missing out on the informal collaboration and learning that takes place at the workplace. In turn, this will impact their future career opportunities as they haven’t built the networks or relationships to properly support advancement. The old adage out of sight, out of mind is real.
Lynas Rare Earths, Amanda Lacaze
■ How is inflation and the prospect of higher for longer interest rates affecting your business? Importantly, is the behaviour of your customers changing?
Our Australian operations, in particular our construction projects, have been significantly affected by cost inflation for both materials and labour in Western Australia. While employee costs have increased, we, like other firms in the Minerals Industry, remain committed to paying our people well. We can afford to do this so long as we continue to innovate and improve productivity and this remains the focus for all members of our team. We are a global firm; all our direct customers are outside Australia. Our customers are affected by changes in the global economy and the China economy in particular. The global economy remains muted and we are seeing that global economic uncertainty translating to more conservative choices by consumers.
■ How would you rate the shape of the Australian economy as we head into the New Year?
There are some parts of the economy where people remain relatively prosperous. Those working in the mining industry, for example, continue to be paid well and remain in high demand. Recent data shows an average salary of $144k for Mining industry workers reflecting the value we place on the people who work in our industry. The Mining Industry pays over 50% of the corporate tax in Australia funding many of the government services expected by all Australians.
There are a number of Federal and State government policies, including Permitting, Industrial Relations and Taxes and Royalties, which may put the mining industry project pipeline at risk and other policies, eg Industrial Relations, which will affect our ability to sustain the favourable employment conditions enjoyed in the industry.
If investment in new Mining and Minerals projects reduces and employment in Mining reduces, all Australians will be affected.
■ What do you think is the big area of reform needed to happen so the Australian economy (and your business) can sustainably reach full potential?
The provision of cost effective shared infrastructure such as renewable power, logistics hubs, and R&D could support the economy to reach its full potential, particularly in new green technologies. We see this in other jurisdictions around the world where the government is investing in plug and play type industrial parks to attract exciting industries such as critical minerals processing and downstream manufacturing. Simplified approvals processes, especially across state and federal governments, would support economic development and accelerate our economy’s transition as we all work to deliver significant reduction in emissions.
■ Australia has six years to meet its 2030 targets for a 43 per cent reduction in baseline emissions. What needs to happen here?
Government investment in new energy infrastructure is essential. This has historically been the role of government and in the case of renewable energy infrastructure, government investment can deploy patient capital to create scale.
Australia also needs to be able to have a grown up discussion on the role that new generation nuclear energy options could play in the energy mix.
■ What level of adoption is your business currently at with the use of AI technology?
Automation and the use of AI in mining and processing plants can be expected to continue to increase as we continue to innovate and seek productivity improvements. In particular the use of automation and AI has potential to improve safety systems by segregating humans and heavy equipment.
I’m usually very peacefully asleep at 3am.
■ Is business getting the balance right between investor, customer and other stakeholder demands when it comes to ESG issues?
e believe that ESG guidelines simply formalise reporting on the adoption and implementation of ethical and sustainable practices in our business. We think every business should be run with these ethical standards guiding decision making.
At Lynas, we hold ourselves to high standard and each of our people is committed to upholding these high standards on Environmental, Social and Governance matters. We don’t need to be told the right thing to do. We know it and seek to deliver on it in our daily operations.
Embedding ethical practices in our business will deliver better outcomes for all our stakeholders.
■ How has your organisation’s approach to staff working from home evolved since the pandemic?
The vast majority of our workforce work on our operating sites. Our policies have always sought to accommodate the needs of our people alongside the needs of the business. The majority of our people choose to enjoy the benefits of working alongside their teammates and choose to work from the office.
Macquarie Group, Shemara Wikramanayake
■ How is inflation and the prospect of higher for longer interest rates affecting your business? Importantly, is the behaviour of your customers changing?
The impact of inflation and higher interest rates varies across our diverse businesses and across the many global markets we operate in, and we have deliberately developed a level of resilience through that diversity. Uncertainty on when rates will stabilise is more challenging than their absolute level and we’ve seen more caution in executing large transactions until that volatility subsides.
■ How would you rate the shape of the Australian economy as we head into the New Year?
While we expect growth in Australia will slow further as we head into 2024, a recession next year may well be avoided. Slower global growth and tight monetary policy settings will remain key headwinds for the economy, but population growth from immigration and exposure to key global growth sectors will continue to provide some support.
■ What do you think is the big area of reform needed to happen so the Australian economy (and your business) can sustainably reach full potential?
Amid a challenging geopolitical and economic environment, the government has made significant progress advancing its priorities across energy, foreign and economic policy. One of many areas of opportunity is continued reform in skills and education to drive productivity. Better alignment and diversification of international student intakes to address critical skills gaps also strengthens long-term regional relationships between countries.
■ Australia has six years to meet its 2030 targets for a 43 per cent reduction in baseline emissions. What needs to happen here?
A legislated target and the recent expansion of the Capacity Investment Scheme have created greater investment certainty and private sector ambition to help realise an achievable target. The next six years require careful coordination of investment across generation, storage and transmission to ensure an orderly transition, as well as streamlining of state and federal planning and permitting processes to progress projects at the pace required.
■ What level of adoption is your business currently at with the use of AI technology?
We’re currently implementing a range of generative AI applications across Macquarie’s businesses. With the appropriate risk guardrails in place, our aim is that everyone in Macquarie has access to these tools to streamline everyday tasks, deliver on the insights from data and create more capacity to innovate for our clients.
■ What external issues do you expect to impact or disrupt your business within the next 12 months - the so-called 3AM thought?
At a time of heightened change in the external environment and across all of our areas of activity, I tend to stay focused on what we can control – that our teams are properly resourced to work with our clients on the many areas of opportunity emerging, and that we remain focused on the areas of structural need in which we have expertise such as decarbonisation and digitisation.
■ Is business getting the balance right between investor, customer and other stakeholder demands when it comes to ESG issues?
We have a long history of considering outcomes for a broad range of stakeholders from our activities, given our businesses seek to address the day-to-day needs of communities around the world. As significant structural shifts play out, it’s important to consider short-term impacts on communities and to hold ourselves accountable for addressing these impacts as we make investments. We regularly engage with a broad range of stakeholders to validate our ESG focus areas, while also assessing our approach against external standards and market expectations.
■ How has your organisation’s approach to staff working from home evolved since the pandemic?
Prior to pandemic we had around 80 per cent of our staff working flexibly at Macquarie. We remain committed to this flexible model, with staff spending varied amounts of time in the office and at home according to the needs of our different businesses. In 2024, all of our Sydney-based staff will come together in one campus for the first time in 20 years when we open our new global headquarters at 1 Elizabeth Street.
Medibank Private, David Koczkar
■ How is inflation and the prospect of higher for longer interest rates affecting your business? Importantly, is the behaviour of your customers changing?
We have continued to grow this year as people have remained focused on their health and wellbeing, prioritising health insurance over other discretionary items. While there’s been no noticeable shift in
customers downgrading or dropping their health cover, people are shopping around with value top of mind. With cost-of-living pressures, consumers are looking for their dollar to go further, so we’re continuing to provide products and services that consumers
can see and feel the value in right now, while also investing in ways that will support their health needs, and the sustainability of the health system, in the longer term.
■ How would you rate the shape of the Australian economy as we head into the New Year?
The economy is clearly showing signs of some pressure, in particular the cost-of-living impacts on customers, and we are expecting this to continue into 2024. Despite that, we continue to see strong industry growth given health insurance is seen as essential. And we see the number of health professionals in hospitals has now largely recovered to normal levels, and we continue to work with our health partners to remove unnecessary costs and innovate to limit premium increases for our customers in the current environment.
■ What do you think is the big area of reform needed to happen so the Australian economy (and your business) can sustainably reach full potential?
Our focus as a health company is on reform of Australia’s health system. While recognised as world-class, the health system is struggling to meet the changing needs of Australians, with demand for healthcare growing as our population ages and chronic disease becomes more prevalent. Virtual health and homecare can help transform our health system and by adopting models of care like these, the private hospital system could treat an extra 300,000 patients every year at no extra cost. As a nation we can achieve better health outcomes through strategic reforms, and also create better efficiency that could help address our productivity challenge too.
■ Australia has six years to meet its 2030 targets for a 43 per cent reduction in baseline emissions. What needs to happen here?
Perseverance and persistence are key to hitting the targets, as well as investing for the longer term. Australia appears on track to meet the targets, which is encouraging, as is the government’s collaboration with business to help achieve this. However, as the Minister for Climate Change has said himself, it is a big task and the work is not done yet.
■ What level of adoption is your business currently at with the use of AI technology?
We’ve been utilising various forms of artificial intelligence across different parts of our business for many years, such as helping to connect our customers with relevant products and health programs or supporting our people to enhance the customer support they are providing. More broadly, there are big opportunities for AI in healthcare - particularly when it comes to tailored health advice, telehealth and health data analysis and diagnoses. We’re currently also exploring some opportunities with generative AI such as improving knowledge management among our customer teams and in our technical areas, while also building upon our existing policy guidelines to ensure we’re acting safely and in the best interests of our customers.
■ What external issues do you expect to impact or disrupt your business within the next 12 months - the so-called 3AM thought?
The pressing need to move faster to bring change to the health system is what keeps me up at night. We may have a world class health system but we lag behind other countries when it comes to investing in preventative health and adopting new care settings like virtual health or homecare. These are crucial if we want to ensure quality care and health equity across Australia and help address the increasing wait times in the public system for both hospital and primary care with some people waiting more than 6 years to see specialists.
■ Is business getting the balance right between investor, customer and other stakeholder demands when it comes to ESG issues?
The expectations of all stakeholders continues to rise, and it is our job to meet them. At its heart, sustainability is about shared values and we’re seeing a greater convergence between stakeholder groups and their expectations – diversity is a great example of this - as ESG continues to evolve and become more integrated into the day-to-day of business. If anything, the prominence of governance is increasing as all stakeholders look for more reassurance that companies do what they say, and want greater transparency and disclosure, which the emerging AASB and ISSB standards will help address when they come into practice.
■ How has your organisation’s approach to staff working from home evolved since the pandemic?
We believe that decisions about the how, when and where of work should be made by our people, in partnership with their team. Interactions that need to be in person and those that can be virtual will be different for each person
and team. We greatly value the importance of in-person connection, as well as flexibility in where people work, in ways that best suits them and the work they are doing. Flexibility isn’t new to us at Medibank and we’re constantly looking at ways to provide
even greater flexibility to our people and improve their health and wellbeing. What our people tell us on a regular basis is that they feel empowered and trusted to make decisions based on what’s best for them and importantly, for our customers.
Mirvac, Campbell Hanan
■ How is inflation and the prospect of higher for longer interest rates affecting your business? Importantly, is the behaviour of your customers changing?
Given the current conditions, we have tightened our lens on capital allocation, and we are increasingly selective in the new projects we commit to.
As the cost of doing business continues to increase, we’re focused on leveraging our in-house design, development and construction capability to find innovative solutions (such as prefabrication) and drive efficiencies and cost savings (for example, through procurement), while maintaining quality and value for our customers. The single biggest impact of inflation is on our construction costs, which affects the industry’s ability to bring new homes to market efficiently.
Our customers are taking longer to make purchase decisions, particularly within our Residential business. Retail sales growth has moderated, but remains supported by population growth in the catchments around our centres. While the impact of higher rates is translating into slower decisions from tenants in the uptake of new office space, we are seeing strong inquiry for our high quality, modern, and predominantly Prime-grade assets, and quality industrial precincts continue to see strong demand, driven by record low vacancy in Sydney.
■ How would you rate the shape of the Australian economy as we head into the New Year?
A tight construction labour market is putting pressure on costs and the rising number of insolvencies is putting pressure on tier 1 and 2 subcontractor availability. We currently have 89 per cent of costs secured for our construction projects in FY24, helping to mitigate the risk to our business.
The ability to adapt to the market and be flexible and selective in our deployment of capital is a key strength of our integrated model.
■ What do you think is the big area of reform needed to happen so the Australian economy (and your business) can sustainably reach full potential?
There is an urgent need for housing planning reform in Australia to help unlock much-needed supply into the market. Projected new apartment starts next year are at the lowest on record at a time when we need housing the most.
This year was a significant turning point, as we saw the Federal Government committing to clear housing targets alongside state governments, with incentives on the table, for the first time. The Housing Australia Future Fund and other proposed planning reforms and infrastructure funding commitments are critical, but action is needed on the ground to ensure new homes are delivered to meet record demand. It’s encouraging to see that all governments recognise the need for increased density around existing infrastructure to address our growing population.
■ Australia has six years to meet its 2030 targets for a 43 per cent reduction in baseline emissions. What needs to happen here?
The highest impact choice we can all make is to electrify. Homeowners can upgrade to electric as old systems reach their end of life. At Mirvac, we are doing the same within our high-performing, sustainable portfolio - designing out fossil fuels, buying 100 per cent renewable electricity to power our assets, and progressively removing gas from our operating assets. That’s how we achieved our net positive in scope 1 and 2 carbon emissions target in 2021.
■ What level of adoption is your business currently at with the use of AI technology?
We were early adopters of analytical AI (traditional AI) at Mirvac, which we used to enhance our business processes – for example, rent forecasting in market research, infrastructure optimisation across our commercial assets, and computer vision across the construction of a project.
We recognise the immense potential for AI throughout our value chain to create new revenue streams, while deepening customer loyalty. We’re experimenting with Generative AI across our business, with a focus on customer engagement, content creation, and qualitative data analytics. We have strict cybersecurity and privacy guardrails in place and protections around intellectual property. Importantly, we meticulously review AI outputs before commercial use to ensure accuracy and relevance.
■ What external issues do you expect to impact or disrupt your business within the next 12 months - the so-called 3AM thought?
The increased impacts of climate change are something we take seriously. We’ve seen the effects that extreme weather can have at our projects – for example, lost construction days to wet weather – and we’re now entering into a El Nino event, which we expect will put pressure on our communities and our assets.
We are also facing an aging construction workforce. Construction workers made up less than 2 per cent of all permanent migrants, and the number of completed construction apprenticeships in our cities isn’t rising in line with the volume of work. We need a greater focus on growing construction workforces through targeted skills programs and migration occupation intakes.
■ Is business getting the balance right between investor, customer and other stakeholder demands when it comes to ESG issues?
We know that stakeholder expectations are growing, particularly around scope 3 emissions and social sustainability, and we are adapting and refining our strategy based on input from our employees, customers and investors. We are also seeing increasingly more sophisticated reporting requirements and growing demands for data, along with better integration of ESG strategy into business processes, such as procurement, debt, and insurance.
There is an increased awareness around the value of trust and being trusted to do right thing in the community – trust is what will give businesses the social license to keep operating successfully into the future.
■ How has your organisation’s approach to staff working from home evolved since the pandemic?
Mirvac had flexible work practices embedded well before the pandemic and it remains a core part of our employee proposition. After lockdowns eased, we quickly realised that there is no one-size-fits all approach – particularly given the range of work sites and roles in our business.Instead of mandating that employees are required to come in for a set number of days, we’ve indicated that we expect all employees to work for some time at a Mirvac site/office each week. We encourage our leaders to have discussions with their teams to determine what works best, recognising that flexibility will vary depending on what’s best for our customers, teams, and individuals, as well as the mix of collaborative and focused work required.
National Australia Bank, Ross McEwan
■ How is inflation and the prospect of higher for longer interest rates affecting your business? Importantly, is the behaviour of your customers changing?
Inflation has hit our business like every other business and household this year. So keeping costs under control is very important. At the same time we’ll still be investing in our business where we choose to grow.
We are seeing Australians change their behaviour to respond to the rising cost of living. Our customers are more engaged in their finances than we’ve ever seen. There’s been a significant increase in budgeting and people are cutting back where they feel they most can afford to. That doesn’t mean all discretionary areas, but there is more prioritised spending. More than 1.5 million customers are using our online ‘spending’ feature to better track their expenses with usage up 62% in three months.
As the nation’s leading business bank, I have the chance to visit many customers across Australia. Most businesses are showing resilience. We take the time to know our customers to understand when they want to grow and when they need our help. They want banks and government to keep making things simpler and easier for them.
■ How would you rate the shape of the Australian economy as we head into the New Year?
The local economy is in good shape. We should avoid recession, but it is slowing and will feel tougher for some time yet. Retail has held up OK so far, but we need to see how Christmas trading goes.
There are big challenges, the rising cost of living and lack of housing to name two. But Australia is well-placed to rebound later in 2024. We have very low unemployment, strong demand for our natural resources, a growing education export market and high migration levels.
The skills and labour shortage issues haven’t gone away, but the pick-up in migration has certainly improved things. NAB research does show concern among businesses on labour shortages has eased this year after reaching a survey peak in 2022. But many business owners I talk to still have some challenges getting labour. There is more work needed to ease the red tape burden on small businesses, which adds complexity to the hiring and recruitment process.
■ What do you think is the big area of reform needed to happen so the Australian economy (and your business) can sustainably reach full potential?
There is still much more work to do on housing. It is Australia’s biggest issue. I worry that the great Australian dream of owning your own home is at risk. Affordability is at a 30-year low, and rental prices are rapidly increasing. That’s because we simply don’t have enough houses for our growing population, let alone enough affordable and social housing for people who need support. The gap between supply and demand has increased significantly. We’re building around 50,000 homes less than we need each year
It’s a disgrace that there are more than 175,000 people across the nation waiting for social housing alone. This issue will continue to have a disproportionate impact on young and vulnerable Australians if we don’t get the settings right now.
All levels of government urgently need to collaborate on simpler and faster regulations, while freeing up land suitable for building. There also needs to be more targeted government support for social and affordable housing and more innovative construction methods to meet supply targets, such as modular housing.
NAB wants to play its part and lend an extra $6 billion for affordable and specialist housing by 2029. We recently invested $67.5 million into a specialist disability accommodation portfolio through Lighthouse Infrastructure. We also support social and affordable accommodation projects through Nightingale and Good Shepherd.
This issue is not just for governments to solve. Banks, developers, builders and community partners can all move faster.
■ Australia has six years to meet its 2030 targets for a 43 per cent reduction in baseline emissions. What needs to happen here?
The short answer is we need to get building and fast. The scale, complexity and cost are significant, but Australia has plenty to offer in terms of natural resources. Some research we did this year with Deloitte Economics found Australia can add $435 billion to our economy by 2050.
Public and private planning and investment needs to be co-ordinated to take advantage of this opportunity. Investment and labour is needed to drive renewable projects, with shorter lead-times and a consistent national framework for green projects.
■ What level of adoption is your business currently at with the use of AI technology?
Artificial intelligence is rapidly changing the way we work and deliver services. The key is to do this safely and combine it with human intelligence to deliver the best results. At NAB we have already been using human-controlled AI, particularly in cyber security, fraud and financial crime, and will continue exploring how best to harness it. As a data-driven organisation, we want to be at the forefront, but only with the right guardrails in place. Making data available faster for bankers and customers is a great thing if it improves customer outcomes, but we’re making sure that we maintain a strong ringfence around our bank and customer data.
An example of this is our Customer Brain Initiative, which is helping deliver a more personalised service to our customers. We’re also using it to cut down tasks for our bankers, so they can spend more time with customers.
■ What external issues do you expect to impact or disrupt your business within the next 12 months – the so-called 3AM thought?
AI will continue to disrupt both how we work and how we deliver for customers. We want to be on the front foot.
The one thing that does keep me awake at night is the threat of cyber attacks. We’ve seen in Australia that impact this can have on a business and community and we’re constantly working to keep our bank and customers safe.
Along the same theme scams are becoming more common and sophisticated and every day I hear and see of the terrible toll this takes on customers. Multi-national criminals are targeting Australians every second of every day. Our job is to help protect customers and educate them about the red flags and how to stay safe. AI has a role to play in this too, we’re already using it to identify unusual behaviour and stop scams from happening.
■ Is business getting the balance right between investor, customer and other stakeholder demands when it comes to ESG issues?
Balancing across all areas of ESG requires a long-term view and commitment. Maintaining and promoting high standards of corporate governance is key to NAB’s performance while building and keeping the trust of our stakeholders. The Board has oversight of ESG-related matters and helps NAB have the right decision-making frameworks to prepare well for the future, help our communities prosper and build value for shareholders. That’s how we strive to get the balance right.
■ How has your organisation’s approach to staff working from home evolved since the pandemic?
We’re a relationship bank and I really do see the value of people working together while supporting flexibility. Following the pandemic we settled on our hybrid approach in 2022 which is a minimum two to three days a week for most office-based colleagues. Many of our bankers and customer facing teams spend more time in the office and out meeting with customers.
We found that our senior leaders needed to be there more to help our colleagues with their development. So the expectation for our most senior leaders is now five days, with flexibility, to build the culture of our organisation and lead our people.
We have a lot of new colleagues coming into the industry every year. They need to be sitting beside people that they can hear conversations, learn and develop in their careers. Office attendance has been rising and some days it can be hard to find a desk or meeting room, so that tells me our colleagues enjoy and get benefit from being together.
NBN Co, Stephen Rue
■ How is inflation and the prospect of higher for longer interest rates affecting your business? Importantly, is the behaviour of your customers changing?
In terms of our own capital management, and commitment to refinance our $19.5 billion Commonwealth loan by June 2024, we noted with keen interest in 2021 that bond rates were increasing and, given the Australian cash rate was still at emergency settings at that time, we were of the view that rates would go up in calendar year 2022 and 2023 and, of course, they did.
We have been active participants in the domestic and international debt capital markets via standard and green bond issuances, particularly throughout 2021 and early 2022. As a result, we were in a good position with high liquidity going into 2023.
We successfully raised more than $5.69 billion in bank and capital markets debt during calendar year 2023, which included raising EUR 1.35 billion ($2.13bn) from our debut European Green Bonds issuance in March 2023 and US$1.25bn ($2.0 billion) in September 2023. Due to our proactive approach to capital management, the weighted average interest cost for our $26bn balance sheet is currently sitting at under 3.3 per cent.
We also recognise, and have responded to, the cost-of-living challenges faced by many Australians. Our wholesale prices have resisted inflation and have not increased in real terms over the last ten years, despite most of our input costs being subject to inflation. Our average wholesale prices have not increased this year and we expect our Average Revenue Per User (ARPU) to remain flat in FY24.
Our new wholesale prices, which came into effect on 1 December 2023, have seen significant reductions in the wholesale prices of our entry level and higher speed tiers.
Australians are both early adopters of technology and becoming more tech-savvy, so are recognising the utility benefits and value presented by our range of broadband speed tiers. We have developed broadband speed tiers to suit every customer and budget, and ubiquitous access is so important for full social and economic participation when it comes to working from home, accessing online education, healthcare and other essential service, staying connected to friends and family and streaming entertainment.
We recognise that broadband affordability may be a concern for some low-income customers. So, we’re proud to support the delivery of the Australian Government’s School Student Broadband Initiative, which has been set up to provide free nbn home internet for one year for up to 30,000 families with school aged students who are not connected to services over the nbn network. The first families were connected at the start of the 2023 school year and there are now more than 5,000 families signed up, and more than 20,000 vouchers that have been distributed to eligible families to redeem. The government has recently announced additional funding to extend this important program and ensure eligible families remain connected to free broadband until 31 December 2025.
■ How would you rate the shape of the Australian economy as we head into the New Year?
We believe that interest rates will be elevated for longer and central banks will resist lowering rates ‘too early’ out of fear of inflation rising again.
Lead indicators suggest the Australian economy will slow in 2024, and our economy will remain susceptible to geo-political forces, most notably unrest in the Middle East.
The labour market remains tight, and that brings healthy competitive tension to acquire and retain talent, but it also puts upward pressure on wages growth, which obviously presents challenges in managing inflation.
We are at the dawn of the fourth industrial revolution worldwide, which is an incredibly exciting time to be involved in the telecommunications and technology sector. In Australia, and worldwide, big data growth is coming, driven by the rise of generative AI and the acceleration and commercialisation of cloud computing and new applications.
Our own important investment in ongoing upgrades to the nbn network plays a significant role in the money multiplier effect as well as directly supporting and enabling this digital future for Australia’s households, businesses and communities. Our investment now will underpin Australia’s global economic competitiveness and prosperity in the years and decades ahead.
■ What do you think is the big area of reform needed to happen so the Australian economy (and your business) can sustainably reach full potential?
There is no doubt in mind that the future is digital. We are living in the age of the internet of all things. And there is not a single social or economic endeavour that does not benefit from stronger, faster, deeper and more ubiquitous fixed line, fixed wireless and satellite broadband coverage.
After two years of consultation with the government, the ACCC and internet retailers, we recently landed a new Special Access Undertaking (SAU). The SAU heralds the start of a new era for wholesale broadband pricing, supporting faster broadband speeds, increasing data demand and improved cost certainty for retailers and consumers. Importantly, our industry can build on this over time as we continue to roll fibre deeper into the nbn Fixed Line network and upgrade our Fixed Wireless network.
Next on the government’s reform agenda is a thorough consultation and resetting of the Universal Service Obligation (USO) and Regional Broadband Scheme (RBS). These important pieces of legislation effectively guarantee that every Australian has access to telephone and broadband internet services, wherever they live or work.
We look forward to engaging with the government and key stakeholders on the important consultation process that was recently announced by The Hon. Michelle Rowland. We are committed to working with the government and industry to optimise the delivery of truly universal broadband services to metro, regional and remote areas of Australia.
■ Australia has six years to meet its 2030 targets for a 43 per cent reduction in baseline emissions. What needs to happen here?
Mitigating the effects of climate change requires immediate and sustained action by everyone. We have set near-term science-based emissions reduction targets, which have now been validated by the Science Based Targets initiative (SBTi). Achieving these near-term targets will support the Australian Government’s target of a 43 per cent emissions reduction by 2030. We have also committed to long-term greenhouse gas emissions (GHG) reduction targets and achieving net-zero emissions by 2050, or sooner, via the SBTi. The Company’s long-term greenhouse gas emissions reduction targets will be consistent with meeting and exceeding the Australian Government’s commitment to net-zero emissions by 2050.
■ What level of adoption is your business currently at with the use of AI technology?
AI is fundamentally changing the jobs we do, the way we work and the way we live.
We haven’t even scratched the surface when it comes to the capabilities of the nbn network, and the potential for AI to improve our business and operation and maintenance of our network infrastructure.
Before we fully harness these opportunities, we will first ensure it’s used responsibly and ethically. With this framework in place, there will be ample benefits in the adoption of AI that can be shared right across the industry.
Our vision is to use machine learning and AI to evaluate our network and operational data to find patterns, predict and detect events, so we can identify any areas of network degradation before the issue impacts the customer experience. We will then be able to intervene sooner and fix the source of the degradation using virtual assistants, supported by robotics, so the problem is resolved quickly and efficiently before the customer even notices.
Our goal is to create an intelligent, self-healing nbn network; one that leverages automation and uses AI to improve network reliability and the customer experience.
■ What external issues do you expect to impact or disrupt your business within the next 12 months - the so-called 3AM thought?
The greatest threat to any telecommunications company is a network outage. A key component of our mitigation strategy is to improve network resilience by rolling out more fibre across the country.
Fibre optic cables are more resilient, energy efficient and require less maintenance. Fibre not only delivers faster and more reliable broadband, it can also withstand extreme weather events and natural disasters better than copper-based infrastructure.
Maintaining and restoring the services that communities rely on to stay safe and connected with each other and with emergency services is our highest priority.
■ Is business getting the balance right between investor, customer and other stakeholder demands when it comes to ESG issues?
Our Sustainability Approach is informed by a materiality assessment, which identifies topics and related issues that have a significant impact on nbn or are impacted by the company’s operations (or both) and are considered important to both nbn and its stakeholders. Our Sustainability Approach has an Environmental, Social and Governance (ESG) objective in order to address the current and anticipated emerging expectations of stakeholders.
And for nbn, in additional to the moral imperative to operate our business in the most environmentally conscious and sustainable way, our ESG commitment also serves an important
commercial imperative. It effectively elevates the governance of our sustainability approach to investment grade reporting requirements – because we have monetised and commercialised our sustainability approach with the issuance of Green Bonds into the international private debt markets. As such, we have an obligation, not only to the government, our customers and domestic stakeholders – but to our international register of financiers and we now issue an Annual Sustainability Report, which tracks our green credentials, performance and progress.
It makes good economic sense to do so because international institutional investors also have targets for green investments – and are willing to pay a ‘greenium’ to achieve their goals, which can lower nbn’s average cost of debt.
Our Sustainability Governance Framework underpins the implementation of the Sustainability Approach by outlining arrangements across four governance levers - sustainability governance, sustainable finance, culture and capability and collaborative partnerships. This supports accountability for action, performance monitoring and reporting, and strengthening relationships between internal and external stakeholders.
Taking action on social and environmental risks, issues and opportunities creates and protects value for nbn and its stakeholders. Our Sustainability Approach enables social, economic, and environmental value now and over the longer-term for our stakeholders and supports our purpose to lift the digital capability of Australia.
■ How has your organisation’s approach to staff working from home evolved since the pandemic?
Working from home for a portion of the week is now considered ‘business as usual’ for most companies that have employees with job functions that can be performed from home. In the office and at home, broadband has become essential infrastructure for connecting staff, and most core work functions have moved to the cloud.
nbn has adopted hybrid working and most of our employees - with the exception of field technicians – are able to work from home up to 50 per cent of the time (5 days per fortnight).
News Corp Australia, Michael Miller
■ How is inflation and the prospect of higher for longer interest rates affecting your business? Importantly, is the behaviour of your customers changing?
Our business reports on, represents and reflects the trends of the nation, and our fortunes ebb and wane with the economy’s highs and lows.
While for many the year has been a tougher one with real pain of rising cost-of-living and cost-of-business pressures, many of our economic foundations, including interest rates are still firm.
The lifestyles and views of Australians are always changing and we are all embracing digital formats across most aspects of our lives, thus influencing our transition into a digital first business.
■ How would you rate the shape of the Australian economy as we head into the New Year?
There is much to be optimistic about in 2024 with unemployment and interest rates still low by historical standards, creating a solid foundation for the year ahead. Australia remains an attractive country to invest in with unique, highly valued natural resources and highly skilled workforce. We have a high standard of living, we are a smart country and we are a safe country. Poor planning for housing is impacting our population growth and therefore economic growth and it needs greater attention in 2024.
■ What do you think is the big area of reform needed to happen so the Australian economy (and your business) can sustainably reach full potential?
I’d like to call out three areas:
1) First, housing affordability and supply. Australians expect the option of owning their home, but home ownership is now beyond the reach for a generation of Australians. I would encourage all levels of government to follow NSW Premier’s Chris Minns’ push for denser housing without compromising quality, along with a willingness to cut red tape as a welcome intervention into fixing this national crisis.
2) Education. Education is an unambiguous positive for our society and critical to our nation’s long term prosperity. Our universities play a critical role but they need to recommit to being driven as institutions of ideas where world-class research is nurtured, rather than the pursuit of profits over people.
3) Social division. The things that unite Australians have always triumphed over those that divide us but our social fabric is under real strain, fracturing our sense of cohesion, identity and resilience.
Respect for other opinions has descended into outright hostility whether it’s over the Middle East, the Voice, the schools we send our children or the suburbs we live in and the gulf is getting wider and deeper and needs to be addressed otherwise it will become a distraction.
■ Australia has six years to meet its 2030 targets for a 43 per cent reduction in baseline emissions. What needs to happen here?
To remain a world leading economy we need to have the debate about alternative energy sources, and that includes the nuclear option which much of the world has successfully adopted in some form, yet our politicians have ruled it out with little debate.
It’s time to have an open and mature debate on the best outcome for Australia rather than unthinkingly hanging on and remaining hostage to policies older than many of those in parliament.
● Most Australians support transitioning to cleaner energy sources, however they want to understand the economic costs as inevitably such pain will fall on their shoulders with a need to adapt to new technologies and new skills.
■ What level of adoption is your business currently at with the use of AI technology?
Along with other leading media companies News Corp Australia has used AI for many years, mainly in terms of personalisation and in the back-end of our mastheads. We have worked with other digital companies for many years and as our chief executive Robert Thomson has said we have entered “a new phase of negotiations with the rise of “Generative AI”.
■ What external issues do you expect to impact or disrupt your business within the next 12 months – the so-called 3AM thought?
Identifying change is always tough however understanding whether it’s cyclical or structural can be a very difficult beast in this post pandemic period.
Consider the assumptions made pre-pandemic, mid-pandemic and post-pandemic around consumer behaviour and e-commerce, technology and advertising spend, most of which we now know were wildly different and often plain wrong.
■ Is business getting the balance right between investor, customer and other stakeholder demands when it comes to ESG issues?
ESG is inherently about individuals and companies “doing the right thing”.
“The right thing” evolves (and improves) over time and thus our policies and stakeholder expectations need to be undated accordingly. At News Corp Australia we have great professionals who are also great people.
■ How has your organisation’s approach to staff working from home evolved since the pandemic?
Pre-pandemic we moved to flexible working and our approach post pandemic has not changed greatly. We support flexible working and our expectation is for all staff to be in three-plus days weekly and leaders a minimum four days.
This of course changes according to function and role but the vast majority of our staff have shown support of this approach.
Northern Star Resources, Stuart Tonkin
■ How is inflation and the prospect of higher for longer interest rates affecting your business? Importantly, is the behaviour of your customers changing?
Our purpose is to deliver superior returns for our shareholders so we look at every business decision through this lens. We are fortunate to have several compelling, fully funded organic growth opportunities that offer quick paybacks and strong cash returns while we retain the ability to lock in some revenue through our hedge book to protect returns on our investment.
We are 100 per cent exposed to gold at a great time in the gold price cycle. This just strengthens our resolve to pursue value-adding, free cash-generating growth projects without compromising our strong balance sheet.
■ How would you rate the shape of the Australian economy as we head into the New Year?
I expect Australia’s GDP to continue to grow in 2024. Growth over the past year hasn’t been out of control so I wouldn’t expect a major correction in Australia’s economic fortunes. Having said that, I wouldn’t be surprised if the RBA again increases the cash rate.
Like other businesses in the resources sector, we are constantly striving to improve productivity while looking for ways to optimise without compromising our commitment to building a more sustainable business. This includes maintaining a laser-like focus on our cost base and conservative gearing levels at a time when the industry we operate in is exposed to a skills shortage and inflationary pressures. But we will not stop our pursuit of value-creating growth.
■ What do you think is the big area of reform needed to happen so the Australian economy (and your business) can sustainably reach full potential?
I would like the Federal Government to focus on industrial relations policies that improve productivity. Like most large organisations, Northern Star is concerned that the Closing Loopholes Bill will simply add more cost rather than deliver any productivity gains to our
business.
I would also urge the Government to continue with the National Cabinet so that States and Territories are heard, have that important level of representation in Canberra and maintain
alignment with the Commonwealth.
On an investment front, I would like to see the Commonwealth maintain its spending on infrastructure that enhances the economy, and we need to continue to take in skilled migrants.
■ Australia has six years to meet its 2030 targets for a 43 per cent reduction in baseline emissions. What needs to happen here?
As a company, Northern Star has a clear pathway to our decarbonisation goals. We are
committed to the Paris Agreement and a net zero carbon future and are working hard to deliver on our 2030 Emissions Reduction Targets of a 35% cut in Scope 1 and Scope 2 emissions.
Northern Star does not rely on the grid getting greener to meet our decarbonisation targets though the resources sector could and should complement efforts by the States – and the Commonwealth – to achieve a green grid. It is all about working together and aligning
outcomes.
I also think nuclear power needs to be part of the conversation around a carbon-free world. It’s a conversation that should have started before now in Australia.
■ What level of adoption is your business currently at with the use of AI technology?
Northern Star is a modern mining business that views technology and innovation as keys to
unlocking our full potential. AI fits into that category and – as a business – we are excited about the opportunities that could result from a considered, appropriate introduction of AI into our operations.
We are evaluating what benefits we can derive from the application of AI. I think it can be used effectively on the significant datasets of our geological information, which in turn should
enhance traditional techniques to assist our geologists in their work to find gold.
■ What external issues do you expect to impact or disrupt your business within the next 12 months – the so-called 3AM thought?
External factors have depleted skills across the sector in recent years. Without continued
investment in training we risk the impacts of a deterioration in safety performance or productivity.
This is a key area of investment and effort for Northern Star to maintain a sector-leading safety performance and enhance our skills base to deliver our strategic growth objectives. Northern Star is built on a foundation of caring for the physical and mental wellbeing of our people as well as the communities in which we operate. Maintaining this approach will ensure our continuing success.
■ Is business getting the balance right between investor, customer and other stakeholder demands when it comes to ESG issues?
For us, governance is easy to address. We have a very mature organisational structure to
support high levels of governance, compliance and corporate oversight, with an independent
board that encourages and stimulates robust boardroom discussions and probes but also guides
our executive leadership team.
The environmental and social aspects of our business involve multi-year initiatives and actions and continued review to ensure they remain relevant to community views. These aren’t static – societies’ expectations continually evolve and increase the value that corporates need to provide back to communities. We strive to be ahead of these trends and lead the sector on these issues.
■ How has your organisation’s approach to staff working from home evolved since the pandemic?
Our primary staff activity is at our mining operations, which by necessity limits opportunities to work from home. Having said that, we are constantly looking for ways to add more flexibility to rosters and work arrangements as part of our drive to attract, retain and
reward our people at the same time as removing obstacles to productivity gains.
Northern Star has applied flexible work arrangements throughout the company’s history. We
appreciate that today’s – and tomorrow’s – workforce expects flexibility in their work arrangements. Seeing that we want to attract and retain the best workers, being as flexible as
possible with our workplace arrangements is something we focus heavily on. We believe we have struck a healthy balance with regards to flexible work though it is something we will continue to work on.
Orica, Sanjeev Gandhi
■ How is inflation and the prospect of higher for longer interest rates affecting your business? Importantly, is the behaviour of your customers changing?
In my view, we are at the interest rate peak, but will experience a longer period of inflationary pressures. As a key driver of volatility and uncertainty for the global economy, we must prioritise productivity initiatives to mitigate inflationary impacts.
This needs to be supported by effective monetary policies and targeted funding, balanced labour relations, and tax incentives for innovation, research & development, and rapid adoption of digital and automated technologies. Skilled migration is critical to fill the labour-gaps that exist across manufacturing and resources industries – this in turn will drive economic growth for Australia and see productivity increase to combat inflationary pressures.
Looking longer term, Australia should focus on diversifying its earnings and export profile and continue to invest in domestic industrial and manufacturing base. Investment in infrastructure to facilitate an orderly energy transition is critical to ensuring the Australian economy is resilient into the future.
We remain cautious of external challenges, and are committed to continuing ongoing cost efficiency initiatives and commercial discipline, while diversifying our commodity and customer portfolios to reduce the impact of these external factors
■ How would you rate the shape of the Australian economy as we head into the New Year?
Multifactor productivity must be a focus for the federal government. As wages and inflation rise, we must ensure that the efficiency of our economy is improving or else we will face a loss of global competitiveness and real living standards. A comprehensive Carbon Border Adjustment Mechanism (CBAM) policy to protect domestic heavy manufacturing is critical. A CBAM will ensure a level playing field and avoid unfair competition with imported products from countries with less mature carbon pricing regimes.
■ What do you think is the big area of reform needed to happen so the Australian economy (and your business) can sustainably reach full potential?
Multifactor productivity must be a focus for the federal government. As wages and inflation rise, we must ensure that the efficiency of our economy is improving or else we will face a loss of global competitiveness and real living standards. A comprehensive Carbon Border Adjustment Mechanism (CBAM) policy to protect domestic heavy manufacturing is critical. A CBAM will ensure a level playing field and avoid unfair competition with imported products from countries with less mature carbon pricing regimes.
■ Australia has six years to meet its 2030 targets for a 43 per cent reduction in baseline emissions. What needs to happen here?
With a global footprint, Orica’s emissions reduction targets are underpinned by credible, evidence-based decarbonisation projects all around the world. We are focused on what we can control and are continuing to successfully execute against our plan. Scope 1 and 2 emissions fell nine per cent this year compared to 2022., and 22 per cent below 2019 baseline levels.
As we look to the future, I firmly believe collective action is required. Orica is a good example of the challenges faced by Australian-based manufacturers and producers in hard to abate industries. In the short and midterm, we confront geopolitical disruptions, inflation, and uncertainty in climate and energy policy, adding to the volatility of input costs and fluctuating demand. In the longer term, we must make investments in decarbonising our operations and our supply chains – often these will be capital-intensive and high-risk. We will need government collaboration and policy support to help industry to navigate these challenges, and make Australia an attractive destination for capital investment in the manufacturing industry.
The inflationary and supply chain pressures on capital costs are escalating. Capital investment in large scale decarbonisation projects, including for renewable hydrogen projects, will need public funding and further policies which help to incentivise local and international demand.
■ What level of adoption is your business currently at with the use of AI technology?
Artificial intelligence has the potential to drive significant efficiencies across enterprises, presenting great opportunities for our industry to increase productivity, accessibility of knowledge and address business challenges at scale.
Innovation is at the core of Orica’s strategy, and as we continue to build and invest in the next generation of digital technologies and solutions, we are focusing on artificial intelligence-based solutions to support our customers.
For example, Orica’s Digital Solutions team is building sophisticated AI and machine learning solutions to enhance our service offering to our customers across the value chain. The commercialisation of large language models and generative AI is allowing us to improve productivity across the business, and we’re already using AI to run preventive maintenance predictions across equipment at our own manufacturing plants.
We’ve also recently been accepted into the early adopter program for Microsoft Co-Pilot, which embeds the power of Generative AI into the Microsoft Office 36 suite to improve day-to-day productivity of our teams, while protecting Orica’s data through in-built engineered security controls.
■ What external issues do you expect to impact or disrupt your business within the next 12 months – the so-called 3AM thought?
A critical consideration to maintain Australia’s competitiveness as we continue to decarbonise, is the introduction of a CBAM. There are presently carbon leakage risks associated with ammonium nitrate, due to differences in emissions reductions policies between Australia and key trading partners.
Australia must act to protect its domestic industry, and a CBAM will ensure a level playing field and avoid unfair competition with imported products from countries with less mature carbon pricing regimes.
■ Is business getting the balance right between investor, customer and other stakeholder demands when it comes to ESG issues?
The ESG risks and opportunities facing our industry are transformational. Companies are grappling with tensions to reduce fossil fuel use and emissions, and minimise the environmental footprint of operations while maintaining community acceptance, productivity and profitability.
Our focus remains on anticipating and improving performance ahead of regulation, addressing material ESG issues and maintaining accountability and transparency in regard to our performance.
■ How has your organisation’s approach to staff working from home evolved since the pandemic?
In a post-Covid-19 era, we’re finding employees have different expectations of their work environment, and we’re committed to adapting to these to ensure an agile and evolved workplace while balancing business requirements and ensuring employees stay engaged and collaborate to solve shared challenges.
Orica’s Flexible Working policy has been in place in Australia for quite some time, covering different ways flexible work arrangements can be facilitated across the many different roles we have in our business. We encourage our people to work with their Managers to determine flexible work arrangements that best work for them, so that we can continue to operate productively and efficiently.
Pilbara Minerals, Dale Henderson
■ How is inflation and the prospect of higher for longer interest rates affecting your business? Importantly, is the behaviour of your customers changing?
Demand for the spodumene product from our Pilgangoora Operation hasn’t changed and in visiting and talking to customers recently in China and South Korea, it was clear there is an extremely strong long-term outlook for battery materials. It’s true that there has been some tempering of global demand for electric vehicles. But dynamics differ between markets and, while inflation may be a factor, it’s not definitive. If you look at the lithium sector, it’s going through a process of establishment, which naturally involves some volatility. Historically, we have witnessed the market turning very quickly. What’s most relevant is the long-term trajectory over the next few decades, which is incredibly positive.
In terms of direct impact to our business, Pilbara Minerals is a low-cost operator with a strong balance sheet. We’re certainly not immune to the impacts of inflation and the rising cost of doing business but we are fortunate to be in a strong position to weather any storms that may arise. Pilbara Minerals is in a unique position as an Australian lithium producer. We’re well-entrenched in our operational know-how and performance, we’ve got scale with more to come, we’re integrating downstream through our partnership with POSCO and our ownership structure means there is also the potential to access Inflation Reduction Act funding from the US.
■ How would you rate the shape of the Australian economy as we head into the New Year?
Similar to how Pilbara Minerals is in a strong position, I think the Australian resources industry as a whole is well-placed to continue to be a backbone of the national economy.
The investment outlook for the sector is strong, with demand for critical minerals as part of the global energy transition being a central aspect of that. Ongoing investment will drive economic development, growth and diversification, including for regional communities.
That said, Australia can’t afford to rest on its laurels. In Western Australia, for example, there are $148 billion worth of projects in the pipeline. Opportunities, especially in critical minerals, won’t realise themselves. It’s an extremely competitive global space and to capitalise the sector needs to continue to improve productivity, remain cost competitive, invest in innovation and develop the workforce of the future.
Tightness in the labour market is one of the challenges and it’s essential that we can access the skilled workers we need now and in years to come. There’s no magic solution in this area but a combination of investment in education, training and development and targeted migration initiatives can help alleviate some of the pressures.
■ What do you think is the big area of reform needed to happen so the Australian economy (and your business) can sustainably reach full potential?
A lot has been said about Australia’s opportunity to capture more value onshore and expand downstream processing capabilities, particularly in critical minerals. There is a huge amount of potential and Pilbara Minerals is excited to be taking steps down that pathway through our midstream refining joint venture with Calix.
Again, domestic downstream opportunities need to be viewed in the context of global competition. Government support is essential, including faster approvals, a stable regulatory environment, investments in energy security and skilled workforce development, and providing financial incentives such as production tax credits, which incentivise both private sector investment and rapid project delivery. Without these, there’s a danger investment will be lost to countries which have bolder ambitions and more progressive support regimes.
Australia’s geography also needs to be considered in relation to downstream processing.
Our mining and processing operations are in the Pilbara. The idea of producing lithium hydroxide close to our operations is of interest to us but it’s not currently feasible without significant investment in the Pilbara’s transport, power and water infrastructure among other needs.
One thing I’d add to the discussion on downstream processing is that Australia’s success in the spodumene industry – and in many other commodities – has largely been based on strong trading relationships with Asia, and particularly North Asia. These trading partners underpin many project investments through offtake agreements which are vital to getting projects off the ground. It’s imperative these relationships are maintained, even as our industry diversifies.
■ Australia has six years to meet its 2030 targets for a 43 per cent reduction in baseline emissions. What needs to happen here?
At Pilbara Minerals, we see ourselves as key enablers of the global energy transition. We’re producing the very materials that will help contribute in the journey to net zero. Operationally, we’re focused on reducing carbon intensity through production efficiencies, better resource utilisation and bringing on lower emission power sources. We are also developing a new, innovative processing method that will produce a higher lithium content product at our mine site, which has the potential to reduce the overall carbon intensity of the battery materials supply chain.
For Australia more broadly to meet its 2030 targets, there needs to be increased co-ordination among the private and public sector to bring power infrastructure together and increase energy security, while investing more in renewable energy generation.
■ What level of adoption is your business currently at with the use of AI technology?
One thing that is always certain about the resources sector is that there is going to be continual innovation. When you think about the level of technology in operations compared to 20 years ago or even 10 years ago, it’s quite remarkable.
AI isn’t something we’re currently employing in our operations but it’s certainly a technology we monitor to see where it might provide value. We’re open to all technology that has the potential to make our operations more efficient, more cost-effective and, most of all, safer.
■ What external issues do you expect to impact or disrupt your business within the next 12 months – the so-called 3AM thought?
In the short term, our business will continue to ride the establishment of the lithium sector that has had a level of volatility. However, the long-term prospects of this emerging industry are incredibly positive. It is exciting to be part of an emerging sector that is supporting the adoption of new technology and enabling the clean energy transition.
■ Is business getting the balance right between investor, customer and other stakeholder demands when it comes to ESG issues?
Governance might carry less public profile than the other components of ESG. But from an industry perspective, I don’t think there’s any chance of the G being left behind. It’s a key driver of value creation and for Pilbara Minerals, responsible business practices, robust systems and meaningful stakeholder engagement are essential to how we do business.
Governance disclosures will be strengthened for the investor community as Australia adopts global standards around disclosure of sustainability and climate-related risks and opportunities. Boards will need to continue to evolve their understanding of sustainability and guide the maturing of practices for the businesses they are involved in.
■ How has your organisation’s approach to staff working from home evolved since the pandemic?
The Covid-19 pandemic forced pretty much every business to reconsider how it operated and where its employees needed to be at any given time. Global acceptance of hybrid working models was a significant benefit that came from this.
However, the nature of our 24/7 operation means a large portion of our workforce doesn’t have access to this benefit. As a company, it’s important that we focus on a range of initiatives to support the mental wellbeing and work-life balance of all our people. An 8/6 roster means our operational workforce is home every other week with families, and our strong focus on culture and competitive salaries helps to attract and retain our great people.
There’s an important balance to be struck between the flexibility some of our people enjoy through working-from-home arrangements and the benefits in collaboration, mentoring and knowledge sharing that come from face-to-face work.
We continually review our workplace conditions to keep pace with industry standards and the expectations of our workforce.
Qube Holdings, Paul Digney
■ How is inflation and the prospect of higher for longer interest rates affecting your business? Importantly, is the behaviour of your customers changing?
We need to look at this impact from both the cost perspective and the demand perspective.
There is no question that the higher inflationary and interest rate environment has resulted in higher operating and funding costs for our business and we don’t expect this to change in the near term.
As a business, we are well positioned to manage these costs through a combination of existing mechanisms in the majority of our contracts which enable us to recover cost increases, rate increases where appropriate and productivity improvements.
On the demand side, Qube is fortunate that we are well diversified across a range of markets, most of which are not significantly impacted by inflation or higher interest rates. We are therefore continuing to see healthy demand across most of our markets.
Some parts of our business are impacted by changes in consumer demand and we have seen some weakness in these areas albeit it is not significant to Qube overall. We will continue to work with our customers that are affected, including looking at refinements to their overall logistics activities to deliver efficiencies and cost savings for them.
One of the many benefits of Qube’s diversification and the strong positions we maintain in our chosen markets, is the resilience this provides against economic cycles. It means that not all of our markets are exposed to the same economic cycles and we have the agility and capability to effectively mitigate the impact of downturns in any one sector or market.
■ How would you rate the shape of the Australian economy as we head into the New Year?
We remain cautious on the economic outlook. While the recent cooling in inflation in Australia was welcome, inflationary pressures remain both in the domestic economy and internationally and we expect they will continue for some time.
Uncertainty in the geopolitical landscape could further exacerbate that, and of course there is the small matter of a significant election in the US next year!
While we have started to see some easing in labour shortages, we continue to struggle to fill roles in remote and regional locations and that weighs a little on our forestry and resources operations particularly. We’re working through those challenges and have a range of programs and initiatives in place to demonstrate the value of Qube as an employer of choice.
■ What do you think is the big area of reform needed to happen so the Australian economy (and your business) can sustainably reach full potential?
One word – productivity. We have to address the slump in Australia’s productivity levels if we are going to reach our full potential as a nation.
As Paul Krugman said, “productivity isn’t everything, but in the long run, it’s almost everything.” It will be key to further alleviating pressure on inflation and interest rates and it will be key to unlocking business investment. And it will be key to driving non-inflationary wage growth.
It used to be that wage negotiations were accompanied by negotiations over productivity offsets but that seems to have fallen by the wayside. Indeed, there is almost nothing about productivity in the Government’s proposed labour reforms which run the risk of skewing the other way.
We have to start restoring that balance and refocussing on unlocking productivity as a driver of our economy and of our future prosperity.
■ Australia has six years to meet its 2030 targets for a 43 per cent reduction in baseline emissions. What needs to happen here?
Major structural reforms never occur in straight lines and the energy transition was always going to be bumpy. But we are not alone in the challenge and we have to look to the experience of rest of the world and ensure that we don’t cut ourselves off from technology solutions that may help make the difference.
From a business point of view, I think we all understand that we have to play a role in driving down emissions, even in hard to abate industries like those Qube operates in. We’re certainly making the investments and trialling the technologies that will help us do that but we need governments to work in partnership with us to help address issues like heavy vehicle regulations, fuel standards and to help make alternate energy sources, like hydrogen and biodiesel, commercially competitive.
As an integrated logistics provider, we also believe that rail has a significant role to play in helping drive down emissions. Rail freight produces 16 times less carbon pollution than road freight for every tonne kilometre travelled, so getting freight off road and onto rail makes sense and we’re investing to support that transition.
■ What level of adoption is your business currently at with the use of AI technology?
Qube has long focused on innovation and technology as a key competitive advantage and we’ve been working with AI for some time to improve safety, optimise processes, labour and staff allocation and to help us redefine supply chain dynamics. For example, we have in cabin AI monitoring in Qube vehicles, feeding back directly into our monitoring centres. We use AI cameras at key sites to enhance safety and security. And we are mapping workflows using AI to find opportunities for optimisation and improvement.
Properly managed, integrated and controlled, we can see a range of potential applications for AI across our supply chain.
■ What external issues do you expect to impact or disrupt your business within the next 12 months - the so-called 3AM thought?
Fortunately, our diversification means we are well placed to ride through the ups and downs in any one sector or market because they are generally offset elsewhere. So we don’t expect any particular external issues to significantly impact our business within the next 12 months.
Probably, the main thing that we are wary of is the weather and a changing climate, as this can have a meaningful impact on our business.
We saw that in New Zealand last year when Cyclone Gabrielle caused significant disruptions to our forestry business. And the forecasts for a long, hot and dry summer are concerning for our agricultural business in Australia.
Major weather events like floods and fires can also disrupt key links like road and rail networks and that can significantly disrupt our business and supply chains that consumers rely on to get food on shelves and products into stores.
However, in our experience, some adverse weather event in at least one of our markets tends to occur most years and our ability to mitigate this through our diversity, breadth of operations and incredibly dedicated workforce, means that it typically doesn’t have a material impact on our group.
■ Is business getting the balance right between investor, customer and other stakeholder demands when it comes to ESG issues?
Certainly the disclosure requirements across ESG are getting more onerous and they are creating significant challenges in terms of the resources required to monitor and report everything from carbon emissions to modern slavery risk and everything in between. It is a delicate balance and it is already evident that mandatory reporting is going to put an even bigger burden on business. It’s certainly going to create significant competition for sustainability and reporting roles and provide a real boon to the audit and assurance industry.
■ How has your organisation’s approach to staff working from home evolved since the pandemic?
We have a number of policies in place which allow for office-based staff to build in some flexibility, including working from home, in consultation with their manager. That’s now part of business as usual but in the vast majority of cases we now have office-based employees in the office more days than not.
That produces all sorts of benefits for the business and for the individual. The reality of office life is those incidental conversations in the tea room or the lift are the ones that open new doors and create new opportunities. They’re next to impossible to replicate on a Zoom call.
The bulk of our workforce are in operational roles so working from home is not really an option for a train driver or a truckie. Those men and women are the ones keeping supply chains moving every day and often sight unseen. Too often they’re undervalued and underappreciated. But Australia notices when they don’t turn up!
REA Group, Owen Wilson
■ How is inflation and the prospect of higher for longer interest rates affecting your business? Importantly, is the behaviour of your customers changing?
The property market remains healthy with record employment, high levels of immigration and limited new housing supply all contributing to strong demand. While higher interest rates are likely to moderate recent price growth in the year ahead, the broader context is that rates at current levels remain relatively low by historical standards. These conditions will continue to support positive sentiment in the property sector.
After the rate increases of the past 18 months, the Reserve Bank needs to be careful that higher interest rates targeting inflation don’t compound mortgage stress or deter investment in new rental properties.
Both Federal and State governments should be mindful that large scale infrastructure investment will make it harder to keep inflation in check in the housing sector. Infrastructure spending needs to be targeted carefully to areas of greatest need, and ultimately curtailed, so that inflationary impacts are reduced. We need to prevent construction costs spiralling as the country tries to increase the number of homes being built to meet severe housing shortfalls.
■ How would you rate the shape of the Australian economy as we head into the New Year?
The economy is fundamentally healthy, and we don’t see a hard landing ahead. Growth is slowing however, and we expect this will continue into the new year as the impact of higher interest rates flow through the economy and cost of living pressures impact sentiment.
Labour and skills shortages in key sectors need to be addressed. The most pressing of these are in the housing industry where labour shortages coupled with the impact of infrastructure investment are increasing the costs of construction.
Together with higher capital costs this means fewer homes are being built at a time when there is a significant shortfall in supply. We have the opportunity to address labour shortages with immigration and training programs that target specific skills, particularly in construction, and we’d encourage the federal government to focus on these.
■ What do you think is the big area of reform needed to happen so the Australian economy (and your business) can sustainably reach full potential?
Delivering adequate affordable housing to our growing population is key to the well-being and future prosperity of Australians. Inadequate supply is showing up throughout the property sector but nowhere is it more apparent than in the rental market where vacancies are at historical lows and rents are increasing rapidly. This is placing a huge amount of pressure on those who can afford it least and while the issue is often in the headlines effective reform is lagging.
We must make owning rental properties attractive for investors. Landlords are continuing to leave the market and are not being replaced by enough new investors. This is occurring at a time when very high levels of immigration are increasing demand. Governments need to ensure that property investment is an attractive proposition for Mum and Dad investors as well institutional and professional investors. And they need to avoid knee-jerk reactions to the rental crisis, such as rental freezes and higher land taxes, which only drive landlords out of the market.
We also need to stimulate mobility in the housing sector to enable better utilisation of existing housing stock. Our regressive stamp duty regimes stop people from moving to homes that better suit their current needs and mean our suburbs are full of empty bedrooms. For first home buyers, stamp duty also remains a significant barrier to entry. It’s time to re-look at stamp duty and deliver tax reform that will encourage both mobility and new supply in the housing sector. While some state governments have explored transition away from their reliance on stamp duty, this area of tax reform is slipping from the agenda which is hard to understand given the positive impacts it would deliver.
■ Australia has six years to meet its 2030 targets for a 43 per cent reduction in baseline emissions. What needs to happen here?
These are ambitious targets and the federal government’s challenge will be implementing the policies necessary to achieve them without emissions reductions becoming a political football. Keeping energy costs for both the community and business under control and ensuring stable supply during the transition to a greener grid will be key to securing alignment.
Australian businesses are relying on the government to meet its commitments so that we can achieve our Scope Three emissions targets.
This simply won’t be achievable if the electricity grid is not converted to a largely renewable supply.
At REA we have strengthened our own commitments in 2023 building on our existing 2030 emission reduction targets, with a new target of net zero by 2050 across Scopes One, Two and Three.
■ What level of adoption is your business currently at with the use of AI technology?
We see AI as a major opportunity for our business and will continue to invest heavily as generative AI technology develops.
We are building on a strong base. Machine learning is already core to our consumer personalisation strategy on realestate.com.au while our data business PropTrack leverages AI to power our Automated Valuation Model (AVM). We’re also unlocking new value for customers through powerful AI driven propensity models. Our list, sell and refinance propensity models predict the likelihood of a consumer refinancing their mortgage or listing their property within the next three months.
■ What external issues do you expect to impact or disrupt your business within the next 12 months - the so-called 3AM thought?
Every business should be focussed on cyber security and increasing data privacy obligations and expectations from consumers. As we’ve seen this year, anyone can be targeted. Businesses also need to think beyond their own operations to include third party suppliers in their planning and mitigation of potential exposures.
Our investment in cyber security capability has increased significantly in recent years with the heightened threat landscape and we have also established an Enterprise Privacy Program focussed on continually enhancing consumer privacy and protections. These areas remain a top priority.
■ How has your organisation’s approach to staff working from home evolved since the pandemic?
We see hybrid working as a clear win-win situation for employees and the business. Prior to the pandemic flexible working practices were well established at REA Group and we have continued to evolve and formalise our model. Enabling our team to achieve an optimal work life balance with additional flexibility is a key part of our proposition and important as we compete for talent.
Our engagement scores have only increased since hybrid working was introduced. A recent survey showed that 92 per cent of employees view our hybrid working model as effective, an increase of 2 per cent on the year prior. We haven’t seen any impact on productivity, and we will continue to assess our hybrid approach based on both employee feedback and business performance.
Rio Tinto, Jakob Stausholm
Australia has six years to meet its 2030 targets for a 43 per cent reduction in baseline emissions. What needs to happen here?
Australia needs to maintain and improve its competitiveness at a pivotal time for the world and the resources industry due to the global energy transition.
Commodities demand is growing and shifting to energy transition materials, and Australia needs to make sure it grasps opportunities and does not price itself out of the market. Clear priorities include:
The need for competitive firmed energy to underpin the industrial base of Australia and the transition to cleaner energy. You cannot have industry in the longer term without a competitive and effective power grid.
Reforms to ensure a productive and flexible labour market – not the increase in complexity, costs and uncertainty we see in the current Industrial Relations Bill.
Efficient and streamlined permitting to underpin Australia’s investment, future prosperity and protection of Australia’s amazing natural environment. Changes to the EPBC Act must strike the right balance between high standards of environmental protection and achieving an efficient, streamlined approvals system at Federal and State levels.
Overall, we remain positive about Australia as a place to do business and we have future investment plans across the country, but the global conditions are increasingly competitive and economic reforms must drive productivity.
Finally, we commend the Australian government for its efforts to stabilise diplomatic relations and trade with China.
What level of adoption is your business currently at with the use of AI technology?
We gather vast amounts of data from our autonomous fleets of trucks, trains and drills. We only use a fraction of it in real-time decision-making, but even that has made our operations much safer and more efficient. Imagine what we could do if we tapped into more – or all – of that data. For example, you can see a world where we use data to connect international customers’ needs with the orebody and how it is being mined at that point in time. There’s real potential in AI to help us get even better at providing customers with the right product, right when they need it.
What external issues do you expect to impact or disrupt your business within the next 12 months – the so-called 3AM thought?
Decades of extraordinary globalisation have left the world with a serious dislocation between geology, processing, manufacturing, and consumption. Many governments want to re-industrialise and secure their supply chains. We can support them.
How has your organisation’s approach to staff working from home evolved since the pandemic?
Obviously, a lot of our work needs to be done on-site so there it’s not an option.
In jobs that allow it, our people decide with their leaders the most effective way of working in the office and at home. I think there is growing acknowledgment of the real benefits of a certain amount of face-to-face contact and collaboration with colleagues.
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