In the space of a month, Judo Bank CEO Joseph Healy went from “never seen it so good” to “concerned at the outlook”. The latter is now the prevailing wisdom on the economy for business.
The commentary was in headlines attached to interviews in December and then January, but away from the news pages the reality is that business is struggling. And it’s a lot more than just Omicron, Healy says. It’s labour shortages and rising costs.
That sentiment has changed is reflected in the recent NAB monthly business survey which said confidence has slumped and conditions are worse. This is not the message Prime Minister Scott Morrison wants broadcast, but the Reserve Bank of Australia meeting tomorrow is widely tipped to be taking the first step to raising rates by winding back quantitative easing measures.
Recent inflation and other numbers are widely expected to result in some extensive upgrades in the RBA’s projections. The facts have changed.
The RBA has been buying back bonds as part of official measures to boost the economy, and this might stop.
The US Federal Reserve has said it will raise short-term rates in mid-March, and although the RBA was meant to sit on its hands this year the recent inflation figures and international rate moves will force its hand.
NAB chief economist Alan Oster said on Friday: “We now see the first RBA rate hike occurring in November, with follow-up hikes in December 2022 and February 2023.” He expects a 15 basis point move in November and then 25 basis points a month for the next few months.
An end to easy money is not unexpected. The Fed has long made clear it was taking away the stimulus.
Healy says it’s time for the federal government to actually do something to help business: fast-forward administration of the temporary skilled worker visas.
There is a chronic shortage of skilled labour compounding the known supply chain issues which means basic building materials like steel and timber, are in short supply.
The Immigration Department says it processes 50% of skilled workers’ visas in four months, but administration of the test takes 11 months. Healy (and others) argue this is simply not good enough: better administration shouldn’t cost anything. It is just basic good governance.
But this is not always the Morrison government’s strong point. He is far better at the marketing, throwing a few dollars here and there as he does the rounds. While that goes on, business is grinding to a halt. The current stage of the pandemic has caused a shadow lockdown.
Talk of a fast recovery is, in essence, a better presentation of the numbers, comparing 2021 with 2020 when the country was shut down at the onset of COVID-19. If you take the comparisons back to 2019 levels, the numbers don’t look so good — and back then the economy was perceived to be crawling.
Oster has said: “The Omicron outbreak had a significant impact on leading indicators … While the economy was still going OK in December, it was clearly slowing and the warning lights were coming on.
“Purchase costs have lifted to near-record highs, and that pressure is flowing through to strength in output prices.
“With significant disruption to supply chains and labour markets, price pressures are to be expected, and the key question will be how quickly (if at all) these pressures abate over coming months.”
Business is looking not for handouts but basic good government. In an election year that might be too much to hope for.
Is your business feeling the pinch? Do you blame Scott Morrison? Let us know your thoughts by writing to letters@crikey.com.au. Please include your full name if you would like to be considered for publication in Crikey’s Your Say column. We reserve the right to edit for length and clarity.
They only have themselves to blame.
If you want skilled workers you have to train them and then you should pay them properly.
The reliance on migration and temporary workers is lazy and selfish but very profitable, which is why they are so desperate to restart it.
Hit the nail on the head. The Coalition Government has been giving Businesses an armchair ride with a few different categories of Visas, with the end aim of reducing Business’s costs, as they don’t need to train or mentor, and they can easily acquire “skilled” workers who are happy to work for the minimum wage, or lower.
Every time the magic ‘market’ does not deliver business essentially risk-free profit it engages in increased rent-seeking. Having said that, the point is that we will all suffer from business difficulties and it is that commonality on which business relies to lobby for more government largesse.
Further, the sudden realisation that things are crook is disingenuous. It was business I recall, that has for a long time argued for a let-it-rip social and economic response, despite all the health advice and modelling saying that what is now happening would happen; ie worker and materials shortages.
And the solution here? Skilled worker migration. Effing spare me. Has the author noted the global nature of the pandemic? That the same thing is happening everywhere. And the Australian business solution: let’s exacerbate the misery of other countries by pinching their workforces. This sort of stupidity, regrettably, characterises ‘thinking’ in Australian business.
Swings and roundabouts, it’s a two way street, at any given time there are estimated to be 1 million Australian citizens and/or PRs living and working outside of Australia; should we demand they return to plug gaps (and prop up the property market)?
Big Busines needs better leaders. The world is approaching the tipping point and our politicians and their business supporters look at profits today and ignore the future.
Our business leaders love that you can exploit overseas workers as much as you want and the government will help you do it. Blackbirding used to be illegal. Now its government business.
“Buy Buy Blackbird”.
BUsiness only want three things from govt and they get it in spades from both parties. Hand outs, less regulation and less unionism.