Resurgence poses challenges

While the government’s mid-year economic and fiscal outlook presented an overview of Australia’s recovery from the Treasury perspective, The Weekend Australian’s annual CEO Survey, published on Saturday, does so from the standpoint of boardrooms, offices, mines and shop floors across the nation. The messages are similar, providing reassurance and challenges. Emerging from the pandemic, Telstra chief executive Andy Penn said, was a “once-in-a-century opportunity to reset and build back stronger in a way that is more sustainable and equitable than before”. Economic activity is roaring back, but governments must keep borders open, avoid lockdowns and address some significant challenges. The most pressing and the one that most troubles business leaders, judging by a record 85 responses from chief executives, is the nation’s serious skills shortage. The top three risks to growth, EY’s David Larocca said, “are skills shortage, skills shortage and skills shortage”. Toll Global Express chief Christine Holgate could employ an additional 1000 people immediately if she had access to them. “There is a real, immediate demand for workers, and with no migrants entering Australia, no working holiday visas, coupled with fewer international students, this problem is likely to get worse,” she told Ticky Fullerton.

Concern about skills shortages was listed not only by chief executives in construction and technology, where demand for skilled workers is well known, but also across companies as diverse as BHP, Bank of Queensland, Crown Entertainment, Cochlear, Endeavour Drinks, GrainCorp and insurer IAG. The leaders of Commonwealth Bank, Bunnings and Newcrest concentrated on potential solutions, urging governments to deliver better and more skills training and to keep borders open to attract highly skilled migrants.

After almost two years of closure, the international border reopened to fully vaccinated skilled migrants this week. The migration program is planning for 160,000 arrivals this financial year, including 79,600 skilled workers who will fill shortages in the labour market. Others arriving on family visas also should increase the workforce. The opposition will seize on the CEOs’ concerns about skills shortages to emphasise its election policy of 465,000 free TAFE places, including 45,000 new places. TAFE training geared to the trades and skills in greatest demand and university short courses enabling students and graduates to boost their skills and job prospects should be part of a better-integrated tertiary education system. Closer ties between universities and industry, recommended in the report by former vice-chancellors Peter Dawkins and Martin Bean released this week, are essential. Another facet of the skills shortage that governments must address through their education systems is the crisis in basic literacy, especially among boys. Skills shortages will remain a serious unresolved problem while one in five 15-year-old boys and one in 10 girls, according to NAPLAN results, is semi-literate after nine years of education. Such young people have been short-changed and are poorly equipped to undertake workplace training.

Aside from skill shortages acting as a brake on growth, the CEO Survey reflected much of the confidence and optimism that infused Josh Frydenberg’s MYEFO presentation. National Australia Bank chief executive Ross McEwan confirmed the surge in business investment cited by the federal Treasurer as an indicator of a business-led rebound. Mr McEwan said NAB was “consistently lending more to businesses every month than we have in a decade – we recently had our largest business lending month on record”. Most businesses wanted to borrow and invest to create opportunities.

The chief executives stressed the importance of avoiding further knee-jerk responses to Covid. Qantas chief Alan Joyce, whose airline has just lodged the biggest aircraft order in Australia’s aviation history, said the greatest challenge to recovery was the patchwork approach to reopening as states and territories put their own twist on travel requirements. Mr Joyce’s warning was borne out by West Australian Premier Mark McGowan on Friday when he announced his state would close its border to Tasmania on the weekend, formally cutting off the state to quarantine-free travel from everywhere in the world. Scott Morrison was correct on Friday when he said Australia was now in a “different phase of the pandemic” and “we can’t go back into lockdowns”. Case numbers were no longer the trigger, he said. The real concerns were serious illness, intensive care units, hospitalisation and pressure on the hospital and health systems.