Shake off JobKeeper shackles to boost enterprise

It is vital that JobKeeper not be further extended. Picture: Alix Sweeney

It is now clear that the boom we have been watching in appliances, home renovations and new building is spreading through wider areas of the economy.

And that change will require different government and corporate strategies as unexpected challenges emerge from the swift turnaround.

This week National Australia Bank CEO Ross McEwan blew the starters gun on this new phase of Australia’s economic development as demand for corporate loans rise.

But, of course, our experience will be nothing like what will happen in the US, where the stimulus is many times the Australian level.

However as I pointed out last week enterprises in the UK and US are frustrated with what is happening in their countries including their chaotic new independent contracting rules. I learned today that many are now seriously considering moving their whole enterprises to Australia. We will need to get our migration rules correct but, if we do this, it will set Australia up to put COVID behind us and resume a strong growth path. But a real danger is the skills shortage that has suddenly emerged.

As I move around a number of smaller enterprises, the most common repercussion from this change in economic direction is a sudden emergence of labour shortages.

We are not just talking about carpenters, electricians and other tradespeople.

The local pizza shop and service station takeaway can’t find labour and they all have the same cry: “We are competing for labour against JobKeeper and JobSeeker.”

JobKeeper did a fantastic job in keeping a large number of enterprises intact so that they could surge forward in the current environment.

Well done, Josh Frydenberg and the Australian Taxation Office (they are not all bad!), for what was one of the best-executed COVID-19 programs in the world.

Higher JobSeeker payments picked up many of those who fell through the JobKeeper cracks.

But now it is vital that JobKeeper not be further extended.

Arguably JobSeeker should have been reduced further in the last round of change.

But there are still many areas of depressed activity, particularly in relation to overseas tourists and students, plus events.

Some of those enterprises will need help.

Others may simply not make it.

But overall the problem is going to be a shortage of labour and the fact that too many of our younger people have become hooked on the social services trap.

Michaelia Cash is right to extend the apprenticeship subsidy scheme, but her competitor is JobSeeker.

Last week, I was yarning to a young person who had registered for JobSeeker with his mates.

But before the paperwork went through he obtained an apprenticeship, with the help of family contacts.

There is no doubt he will take up that apprenticeship, but at least in the first year, there’s not a huge difference in income.

And getting up early every morning has its strains when your friends are surfing.

Many lost almost a year’s schooling as a result of the gaps in online learning that were provided by many schools, particularly in Victoria where the lockdowns were longer than other states.

Accordingly, we need to appreciate that the very necessary aid programs that have existed in the past year have had a population side-effect that will need to be addressed in this new environment.

I realise that remarks like the above will draw anger from a large portion of those who are closely linked to people who are genuinely poor and suffering.

As a community we will need to work out how to handle this situation, while at the same time not diverting able-bodied young people from work and contribution to the society.

These are not easy problems to solve, particularly from remote Canberra.

We currently try to overcome this conundrum by forcing those on Centrelink payments to make a minimum number of job applications.

Large amounts of time are spent sending out poorly crafted job applications which employers look at and simply shake their heads. I don’t have the answer but a better approach is needed.

There is no doubt that as we enter this new phase we will encounter skill shortages that will lead to higher wages in some areas.

Sometimes hours of operation will be reduced.

In the US, when the American boom takes hold, multiply our looming problem many times because the Biden stimulus is so much greater.

Last night, US shares soared on the expectation of much higher profits as part of the stimulation.

But the US 10-year bond rate moved up to 1.6 per cent as a signal that inflation was likely to break out and that bond interest rates would rise, which would spread to other areas.

Down the track as the American boom gathers momentum and pushes up those bond interest rates, similar pressures will emerge here.

At the moment, it is possible to lock in low housing rates for three to five years. Those who borrowed heavily to buy dwellings should take advantage of this for at least a portion of their debt.

Meanwhile, those enterprises looking to invest need to use this opportunity to embrace the new technologies to greatly improve their efficiency and productivity.

If we can direct investment in these areas it will take some of the pressure off inflation and interest rates.

By the end of the process it will create a very different society.

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