More sense of urgency is needed to fix nation’s productivity malaise, forum hears

Heavyweight companies BHP and Lendlease share concerns about the nation’s falling productivity levels.

BHP Australia president Geraldine Slattery and Women's Economic Equality Taskforce chair Sam Mostyn at the forum on Wednesday. Picture: John Feder

There’s a sense of urgency in the Australian business community that the country needs to address key issues holding back the country’s productivity.

As BHP Australia president Geraldine Slattery told The Australian’s Competitive Advantage forum on Wednesday, “we have to get our skates on”.

She cited key areas of reform needed, such as getting faster permits and approval processes for new mining and construction projects, having more access to skilled labour, and policies which can facilitate the energy transition.

As both Ms Slattery and Lendlease Australia chief executive Dale Connor alluded to in the discussion, Australia is in a global competition for both talent and capital.

Both are operating in global businesses and they know that capital can go elsewhere – even within the one company – as can talent, if other countries are moving faster in key areas of reform.

Australia’s falling productivity level is an issue much debated around political, economic, and executive tables.

But the problem is that Australia has shown itself to be slow to reform in areas such as getting approvals for new projects.

Even more serious is the prospect of new industrial relations legislation which could further tilt the playing field against Australia in this globally competitive world.

As Ms Slattery told the forum, BHP is looking at a significant investment in the copper industry in South Australia, but she estimates that the new industrial relations legislation being proposed by the federal government could add as much as $200m more to the annual operating cost of the project.

BHP Australia president Geraldine Slattery and Lendlease chief executive Dale Connor at Wednesday’s forum. Picture: John Feder

“That’s a drag on the investment case there,” she said.

As she outlined, BHP is already in the copper business through its giant Escondida mine in Chile which produces a million tonnes of copper a year.

Copper is one of the minerals which is key for the energy transition and BHP is keen to see development of copper assets in South Australia which could make the nation an increasingly significant global player.

But with much tougher industrial relations laws ahead in Australia, it is getting harder to make the economic case for the investment needed.

As Ms Slattery said, there were some good measures in the legislation to help lower-paid workers.

But she said the company was concerned about the proposals which she said would “break the link between the cost of labour and productivity”.

She said one section of the law would allow for the same rate of pay for people doing the same work – but who had vastly different ranges of experience.

This meant that workers with one year of experience could be paid as much as workers with 10 years’ experience, discouraging investment in training employees.

“We have been pushing, along with many other sectors, to have the bill brought back to the drawing board,” she said.

Mr Connor was more reserved with his words on the issue, but expressed his concern that the legislation could add another level of “complexity and bureaucracy” to doing business in Australia.

The chair of the federal government’s Economic Equity Task Force, company director Sam Mostyn, argued that more needed to be done to encourage women to participate more fully in the workforce.

She said that Australia should be prepared to make the investment in developing its human capital – encouraging women and other “minorities” in the workforce in the same way as it was spending billions of dollars on major infrastructure projects like Snowy 2.0.

Migration policy was another issue discussed, thanks to a question by the former head of the Tourism and Transport Forum and Infrastructure Partnerships Australia, Chris Brown.

She said Australia needed to be able to compete against larger countries which had much greater access to talent.

“We need to be open to all opportunities (for talent) including migration levels,” Ms Brown said.

Mr Connor said Australia was competing against cities such as Singapore, Jakarta, Shanghai, Hong Kong, Seoul and Tokyo for talent.

“It’s a competition for international capital, it’s a competition for international skills,” he said.

He said global capital was positive about the potential of investing in Australia, because of its growing population and other aspects such as the rule of law.

“More people produces more capital and grows the country,” he said.

“The opposite, I don’t want to think about it.”

The issues around improving Australia’s productivity in a world where it has to compete for capital and talent are well known. But as the debate at the forum highlighted, there are some big differences between business and government on how to get things done.