Leaders voice concern over outlook for the nation’s battered economy
A panel of high-profile executives told The Australian’s Future Australia roundtable of fears for business survival.
Senior Australian business leaders have voiced their concern over the outlook for the nation’s battered economy amid fears the COVID-19 downturn may further roil the manufacturing and construction industries, with high gas costs also seen as a major impediment for growth.
A panel of high-profile executives told The Australian’s Future Australia roundtable that fears were growing over the ability of businesses to survive as Victoria struggles to fend off a second wave of the pandemic.
The Australian Constructors Association, representing big building companies including Lendlease, Downer and Laing O’Rourke, said a prolonged recovery would be especially tough for an industry already struggling with performance.
“Going forward the big challenge that we have is that as an industry we’re not in a very good space and we’re not very healthy at all,” Australian Constructors Association chief executive Jon Davies told the Future Australia Investment Environment and Recovery roundtable, hosted by The Australian and the Australian Petroleum Production & Exploration Association.
“We’re not making any money. You might have heard of the profitless boom and that is very, very true. We’re building all these great pieces of infrastructure and we’re not making any money out of them at all. And so the government is relying on an industry that’s inherently not in a good space to drive it out of recession.”
The National Farmers’ Federation said it was concerned about supply chains but hopeful that governments would use economic disruption as a chance to reassess how a recovery could take shape.
“We are really asking government to use this disruption as an opportunity to look at the challenges that have been in the supply chain in terms of value adding, processing and manufacturing,” NFF chief executive Tony Mahar said. “What is the government prepared to do to tip the balance in the favour of rural and regional communities that makes cotton, wool and food much more viable than it has been in the last couple of decades. We’re banging on the door of the government to say ‘if you want a growth sector, agriculture is it’.”
Stern test
The plight of the manufacturing sector also faces a stern test as current order books begin to dry up amid falling investment, according to the Energy Users Association of Australia.
“We think for some of our members and some of our sectors we’re going to see a longer term negative impact,” EUAA chief executive Andrew Richards said.
“If you look at for example building approvals and how they’re starting to flatten out or consumer confidence and spending. Companies like those who are making bricks and other building materials survive this sort of first wave on their current order book.
Starting to dry up
“But now that order book is starting to dry up and they’re seeing a much longer bottoming out of this curve than perhaps an industry that will bounce back quickly.”
The Australian Petroleum Production & Exploration Association, which represents the nation’s energy producers, will present a reform blueprint to Scott Morrison to kickstart an economic recovery amid fears the sector is struggling to recover from a COVID-19 oil crash.
APPEA chief executive Andrew McConville said it was focused on practical solutions, particularly for the smaller end of the industry.
“We haven’t come out and said well we need to be building new shiny pieces of kit or anything like that. It’s about how do we just make investment attractive. That’s reducing regulation, so we’re looking at the regulatory frameworks around the environment,” Mr McConville said.
APPEA’s ‘‘quick-start’’ initiatives include accessing government loan guarantees to gain added security for juniors to access debt financing, promoting short-term licence permits, expanding a mining exploration tax credit incentive to the petroleum industry and cutting overlapping federal-state environmental requirements.
Full coverage of The Australian’s Future Australia roundtable will appear on Thursday.
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