Wesfarmers CEO Rob Scott says RBA doing what is needed to beat inflation after Jim Chalmers attack

The boss of one of Australia’s largest employers says the RBA is on track to beat inflation as he calls on the Labor government to overhaul the economy.

Wesfarmers chief executive Rob Scott has defended the Reserve Bank.

One of the nation’s largest employers, Wesfarmers, says the ­Reserve Bank has adopted a responsible and prudent approach to tackling stubborn inflation, as chief executive Rob Scott called on the government to overhaul regulation.

The RBA has come under attack from senior Labor figures this month including Jim Chalmers, who has accused the central bank for “smashing the economy” with its aggressive run of rate rises in comments that shift blame on to central bank governor Michele Bullock.

Mr Scott defended the RBA, telling Bloomberg on Tuesday that the central bank was mindful that inflation was still running high, and it had adopted a responsible and prudent approach to returning inflation to target before interest rates were cut.

“There are many things that can be done on the policy side however, certainly around the supply side issues to help improve housing affordability,” Mr Scott said. “We need over a million new homes in Australia, and there are many supply-side challenges that are preventing people from investing in new homes and undertaking renovations that goes to availability of skilled labour.

“Some of the challenges are with planning approvals. These are all issues that I think could be enhanced, to be improved with good policy, and that ultimately will improve the inflationary pressures, improve the housing ­affordability and improve the economy over time.”

The nation’s per-capita recession deepened in the June quarter, as tepid growth failed to keep pace with a migration-fuelled jump in the population. While overall economic growth was positive, albeit weak as it expanded by just 0.2 per cent in the June quarter, Australians’ share of economic output reversed for a sixth consecutive quarter.

Mr Scott said that, while the economy had slowed, low unemployment, which was 4.2 per cent in July, was a positive and suggested there was still strength.

“If people want work, they basically have work now, but we are seeing skill shortages in some key areas,” he said. “We are developing a state-of-the-art lithium refinery in Western Australia and have had to fly labour in from the east coast just to meet some basic roles around welders and electrical contractors.

“That goes to show that there are still some significant labour shortages in key areas that are critical to Australia’s future and the future investment here.”

Mr Scott said that the nation needed to be mindful that many industries were internationally competitive and that there needed to be policies in place that allowed for businesses to attract top talent from overseas.

“We have seen some projects start to slow down in the areas of lithium and other value-added production, certainly here in Western Australia,” he said. “So we do need know that we are well positioned to attract the investment, that we have the skills that are necessary to drive this value-added investment, or things could turn if we’re not careful.”

Mr Scott said Bunnings was a tale of two halves, with DIY consumer spending holding up reasonably well due to a range of affordable options, while spending from builders was soft as many looked to delay big, costly projects.

“We are seeing softness in residential construction that only accounts for about 10 per cent of our overall business, but it is quite frustrating because we’re seeing very strong demand on the renovation side and the housing side,” he said.

“We are facing these skill shortages in trades and a lot of builders are still lacking confidence to lock in fixed price contracts and in an inflationary environment. These challenges are also putting upward pressure on rents and housing prices.”