Westpac CEO Anthony Miller: Inflation fight is not over yet

Anthony Miller warns cost pressures are still simmering through the economy and could change the timing for rate cuts.

New Westpac CEO Anthony Miller says Donald Trumps planned tariffs could have an impact on global inflation. Picture: NewsWire/Nikki Short

CEO SURVEY 2025: FULL COVERAGE

Economy

How would you rate the momentum of the Australian economy as we head into 2025? Official forecasts have Australia trimming interest rates from the first half of calendar 2025, is that consistent with your view? What are you seeing around inflation in your own business?

We don’t believe there will be any rate cuts in the first few months of 2025. At this point it is more likely in the second half.

I think there’ll be two cuts at best but of course it will depend how inflation, unemployment and the slowing economy pan out in the new year.

Our economists expect the rate to find its way down to 3.35 per cent by the end of 2025. However this will depend on the impact of a Trump presidency and I do think that poses inflationary risk. The actions of the new administration could be quite impactful.

Across the economy, cost pressures have moderated slightly but they will persist through 2025. The moderation was obviously off a decent run up as inflation climbed around the world. With the change in leadership in the US, we expect some inflationary pressure to remain and we’re watching it closely. Across the banking sector in Australia, costs remain a key focus and an ongoing challenge in this environment.

Outlook

What excites you heading into 2025? Are you likely to increase, hold steady, or trim your investment spend?

I’m incredibly excited to be taking over as Westpac CEO as we come into 2025. Westpac is at a turning point after several important years of simplification and transformation and we are very focussed on serving our customers and improving returns in 2025.

It’s my job to lead the company forward and ensure everything we do revolves around the customer.

At a company level we’re focused on two big priorities heading into 2025. The first is really embedding our improvement in risk management. The second is our business and technology simplification program UNITE.

I see this as the most important initiative undertaken at Westpac in the past 20 years.

Our priority with our investment spend is getting value for what we spend.

Reform

As we move into an election year, in your mind, what’s the single biggest lever that can/should be used to lift Australia’s competitiveness or productivity?

This could be across any area from labour market, tax reform, training or other areas to encourage investment. Consistent, focussed investment in skilled migration combined with skills development.

I think we can more actively manage the migrant intake to target the skills we need. So many mid-size commercial businesses, especially in regional areas talk to us about the need for more skilled workers. We can grow skilled migration aligned with areas of national interest – regional roles and businesses, housing construction, energy transition, advanced manufacturing and infrastructure.

The Government’s move to bring in more construction workers is welcome, but they should also be added to the fast-track list.

Food security, food quality and primary produce are also big opportunities. Australia is in a privileged position in this region and we should be thinking more about how we can amplify that advantage and capitalise.

This involves investing in regions, investing in opportunities to value-add. The quality of our beef industry is a good example. We have an exceptional opportunity to develop a better agricultural base in northern Australia. If we get the infrastructure right up there and grow the region I think its potential is enormous and important in reinforcing our leadership role in the Asia Pacific region.

Another opportunity is going further and doing more in advanced manufacturing, anchored around the localisation of the significant defence build-out in the next 30 years. As a nation, we need to go after that. The expertise and number of people needed if we are to meet our AUKUS commitments alone is extraordinary. There is a very big opportunity for Australia if we can get this right. If we are to spend $300 billion building and servicing submarines as part of an AUKUS ecosystem then the cornerstone to that will be a more sophisticated high-end manufacturing capability and service skill set in Australia.

Geopolitics

Will a Donald Trump presidency have a potential impact on your business or sector (tariffs or streamlined regulation)? Does geopolitics drive a bigger part of your decision-making?

The Trump presidency will certainly make things more challenging than usual. I think we will have to navigate that incongruent setting of growth in the US potentially stimulating economic activity in Australia, but against this we have potential risks to the China/US relationship and of course that could have very serious knock-on impacts to Australia too.

So there are growth opportunities on the one hand and the risk of slowdown challenges on the other.

The key is finding the balance if we have trade disputes between China and the US. As this plays out, Australia will need to respond to protect our economy and industries. I think it presents as an opportunity to find more balance in our approach. We need to find new ways to grow, new products to export (for example critical minerals and other key components needed for the global transition) and markets to export to. ASEAN, for example, is the likely home to a lot of relocated supply chains with countries in those regions needing a lot more of our primary commodities to support their expansion plans.

We’ve also got to ensure we continue to participate in the growth and expansion which was already underway in the US prior to President Trump’s election, with opportunities like the Inflation Reduction Act driving investment for Australian firms.

People

Has your organisation’s approach to flexible working - including working from home - evolved during the year. Is this likely to change further into 2025?

At Westpac we’re asking our people to come into the office at least two to three days per week.

This is the right balance for now, but we do recognise that teams often work better when they are together and it will remain a focus heading into 2025.

Our magnificent branch staff are in “the office” five days a week. In fact their busiest and most intense periods of the week are Friday afternoons and Monday mornings - both periods when many others work from home.

We are one team and so my challenge to all who work from home is to continue to deliver great outcomes no matter where they work.

Technology

Where is your organisation along the AI journey – is it in the developmental stage, or are you now using the technology at scale across your business? If so, are benefits matching the promise?

We are experimenting and finding ways to deploy that are both safe, sustainable and scalable. Some very promising results in some areas but we have much to still do and prove to realise some of the hype. Importantly it is challenging us to look at what we do and ask can we do it better or differently and how can AI assist or augment what we might do. It is challenging us to think about things differently. That is an immediate benefit.

We’ve been using traditional AI for many years to drive better performance and customer experiences. With the recent arrival of generative AI, we’ve been experimenting, learning and deploying new use cases.

The most valuable use of Gen AI for us is to make it easier for our people to get things done – delivering better results faster to our customers.

So far the safest, most scalable and sustainable use cases are where Gen AI is used to process and synthesize a raft of information across various policies and procedures to ensure our teams are looking at the right things to get to the right answer for our customers.

Its capacity to enable our people to make smarter and quicker decisions to help our customers is what we are most pleased with. One example we are pleased about is in mortgage lending. There, our use of traditional and generative AI helps the team collate documents being sent through from brokers and pull out the information we need quickly and efficiently. As a result, our mortgage processing times have halved.

Our software engineers are also using AI in coding and it’s making them up to 25% more productive. We’ve also started to use AI to help support the data migration in our UNITE programme.