WA business leaders have backed national calls for measures to drive economic growth and supercharge productivity following a confronting economic update by the Federal Treasurer.
Jim Chalmers on Thursday warned the latest prediction of inflation reaching 7.75 per cent leapfrogs earlier forecasts by a significant margin. He also revealed economic growth had been pared back in his ministerial statement to Federal Parliament.
The economic forecasts come as businesses feel the sting from higher costs, interest rate rises, labour shortages and prolonged supply chain disruptions caused by the pandemic and the war in Ukraine.
Business Council of Australia chief executive Jennifer Westacott said “unnecessary friction” in the economy was adding to costs and called for reductions to red tape, including expedited visa processing, in a checklist of reforms to boost growth.
John Van Der Wielen, the new non-executive chairman of Crown Perth, agreed this was a priority — “especially in Western Australia when unemployment is heading below 3 per cent”.
“We’ve got to bring in more backpackers,” Mr Van Der Wielen said.
“We don’t have enough people around Western Australia to provide good services to, so we’ve got to speed it up. . . and even develop some new visa programs to make it simpler for people to get out here and work.”
While agreeing with Dr Chalmers that many of the challenges were external, Ms Westacott said that made pulling the levers Australia could control “more important than ever”.
“Every layer of complexity that slows down our ability import or export goods and services, get them through ports or move them around the country adds to household bills,” Ms Westacott said.
“We’re backing the government’s ambition to get wages growing but to deliver on this goal and keep unemployment low Australia must pull out all stops, supercharge productivity and make itself a magnet for investment.
“The government’s Jobs and Skills Summit is a chance to reset Australia’s direction and put us at the front of the pack, but that doesn’t mean we can’t act on the little things before it.”
Australian Chamber of Commerce and Industry chief executive Andrew McKellar said that while the strength of the economic headwinds “must act as a wakeup call” the challenges also represent “an enormous opportunity for government to make bold, productivity-enhancing policy commitments”.
“With inflation expected to continue climbing, higher interest rates to restore price stability, and more pessimistic growth forecasts, there is a clear risk of severe economic pain for businesses and for households,” Mr McKellar said.
“The upcoming jobs and skills summit must be a catalyst for a bold agenda for workforce reskilling, migration, and bargaining reforms.
“Now is the time for government to take on a revitalised and ambitious agenda for reform. While we must not underestimate the challenges of building consensus, business is ready to play its part.”
CreditorWatch chief economist Anneke Thompson said the digital credit reporting agency’s business risk index showed the probability of default over the next year was likely to rise by one percentage point to 5.8 per cent.
The food and beverage and arts and entertainment sectors, which rely on discretionary spending, are most exposed to the deteriorating economic conditions, Ms Thompson said.
“With inflation rising in the non-discretionary sector much faster than the discretionary (7.6 per cent vs 4 per cent over the year to June 2022), consumers have less to spend on non-essential items.”