by Ashley Gardiner | Mar 26, 2024 | Media Release
Australia’s largest and most representative business network has acknowledged the government’s reconsidered approach to the introduction of a New Vehicle Emissions Standard.
“The government has listened to some of the concerns raised by the business community about its ambitious approach to vehicle emissions reduction,” ACCI chief executive officer Andrew McKellar said.
“Business supports the introduction of a New Vehicle Emissions Standard (NVES), but the method of its implementation is critical.”
Changes to the earlier NVES standards announced by the government today will address some earlier business concerns.
“Recategorising 4-wheel drives as light commercial vehicles will extend access for tradespeople and regional Australians to these vehicles for a period,” Mr McKellar said.
“Few large 4-wheel drives, utes and light commercial vehicles available in Australia will meet 2025 CO2 targets, let alone the far lower 2029 targets,” Mr McKellar said.
“These vehicles are essential tools for tradespeople and those working in agriculture, tourism, utilities and emergency services.”
Under the current approach to the NVES, some of Australia’s most popular vehicles, including the Ford Ranger, Isuzu D-Max, and Toyota Hilux and Landcruiser, will steadily disappear from the market over the next five years.
There are currently no alternative low- and zero-emissions vehicles in the Australian market that provide the same performance as utes and large 4-wheel drives.
“While the revised approach has given manufacturers a little more time to prepare for the NVES, ultimately the result will still be the same, with some of the most popular vehicles pushed out of the Australian market, leaving less choice of vehicles, not more,” Mr McKellar said.
“In principle, the government should be pursuing a ’least cost, economy wide’ approach to carbon abatement. The NVES does not achieve this.”
by Ashley Gardiner | Mar 26, 2024 | Transcripts
ABC News Breakfast, Tuesday 26 March 2024
E&OE
Emma Rebellato: Andrew McKellar joins us from Sydney. Andrew, thanks for joining us this morning.
Andrew McKellar: Good morning, Emma. Great to be with you.
Rebellato: What’s your submission to the Fair Work Commission? What increase would you be happy with and the business sector?
McKellar: What we’ve said is we think an increase of not more than 2 per cent is justified and look at the things that we put behind that. On the one point we have just released yesterday, our Westpac Industrial Trends Survey, it does show that in the March quarter, business conditions have weakened significantly. We’re seeing orders dropping away, we’re seeing investment going sideways. We’re seeing capacity utilisation down, and most importantly, we’re starting to see that employment and hiring decisions dropping off as well. And I think this is the real concern. We don’t want to see employment going backwards. We don’t want to see unemployment rising at this point in time. We want to keep Australia at or near full employment for as long as possible. Now, beyond that, we are seeing inflation also falling away. It’s at 4.1 per cent in the December quarter. We expect that it will drop further in the March quarter. Productivity has been extremely weak over the past 12 months. In fact, if you look at the national accounts, it’s gone backwards when you add all of that up. When you look at what the Fair Work Commission granted last year, an 8.6 per cent increase, well above inflation, and also the fact that there are other cost of living relief measures in place and coming into place from mid-year, we think that an outcome of 2 per cent will help inflation continue to fall and will take the pressure off interest rates more rapidly.
Rebellato: Andrew, the unions today has described your submission of 2 per cent as pretty sad and appalling, and the lowest paid workers will go back even further if they only get 2 per cent. How do you respond to that?
McKellar: I’d expect nothing different from the ACTU. Regrettably, they have learned very little in the past 12 months and they’ve remembered even less so. I think if you look at their submission of 5 per cent, I mean that is basically an open letter to the Governor of the Reserve Bank saying that they would be happy for interest rates to remain higher for longer. I did see some comments from one of the union leaders saying that business has the flexibility to put up prices. Well, that is to absorb the cost of higher wage increases. Now, that is basically, again, inviting or suggesting that inflation will continue to remain higher for longer. I can’t remember the last time that I heard an Australian union leader using the word productivity. They simply don’t have it in their vocabulary. And that’s the critical thing if we’re going to have higher wage increases.
Rebellato: Andrew, it sends you at odds with the federal government as well because the federal government is putting a submission that it thinks the wages should go up in line with inflation, which would be more than 2 per cent. Why has the government got it wrong?
McKellar: I think here again, a number of factors, at 3.5, 4 per cent. I think one of the things you’ve got to take into account is the fact that those economic conditions are coming off At the moment, productivity has been weak or negative, and if productivity has actually been going backwards, then that is another factor that the government really should be taking into account. Let’s see where the commission judges all of this over the coming months, and let’s see what the outcome is.
Rebellato: Andrew, if the commission comes back and sets the increase higher than 2 per cent, which is what you are calling for, what would be the outcome? How would businesses wear that?
McKellar: It will be very difficult for many businesses, particularly small and medium-sized businesses at the moment. They have been struggling with supply chain issues with cost pressures over many months. Now we’re starting to see that ease off a little bit, but wage pressures are still there, an average of around 4 per cent at the moment. If we were to push that up higher, then there’s no doubt that that would even more rapidly impact hiring decisions, and we are starting to see that. We’ve got to look beyond the labor force figures that came out just recently for February, a very strong employment result. But we think that’s distorted. We think that’s an aberration, and our concern is that we will see weaker employment in the months ahead.
Rebellato: We’ve got a little while to find out where the Fair Work Commission lands on this one. Andrew McKellar, thanks for joining us this morning.
McKellar: Thanks very much.
by Ashley Gardiner | Mar 25, 2024 | Media Release
New orders lodged with Australian manufacturers have fallen to levels last seen during the Global Financial Crisis, excluding the 2020 lockdown period, the latest ACCI-Westpac Industrial Trends survey has found.
Westpac senior economist Andrew Hanlan said that manufacturers experienced a particularly weak start to the 2024 year, as conditions deteriorated from an already soft end to 2023.
“The Westpac-ACCI Actual Composite weakened in the opening quarter of 2024, shifting down from a break-even mark of 50.1 at the end of 2023, to a reading of 43.1,” Mr Hanlan said.
“That sub-50 result suggests that conditions in the manufacturing sector deteriorated in the period. The March quarter survey reported a decline in new orders, a fall in output, a reduction in overtime and a material downsize to employment.
“The mood of manufacturers about the general business outlook for the next six months moved deeper into pessimistic territory. Those expecting a deterioration shifted from a net 41 per cent to a net 56 per cent.
“New orders weakened from already soft results for the past three quarters, when they were broadly flat, to an outright decline. In the March quarter, a net 13 per cent of respondents reported a decline in new orders. Falling new orders speaks to the combined impact of soft underlying demand and an apparent slower than usual return to business from the summer holidays.
“This is the largest share of respondents reporting declining new orders since the GFC (excluding the 2020 COVID-19 lockdown), albeit it is well above the GFC low of –37 per cent.
“Official data confirmed that domestic demand all but stalled at the end of 2023, led by consumer spending softness as household incomes were squeezed by high inflation, higher interest rates and additional tax obligations.
“The Expected Composite Index improved to 54.9, up from 52.4 the period prior.
“The March quarter weakness in new orders was likely exaggerated by a slower than usual return from summer holidays. A net 13 per cent anticipate new orders will rise next quarter. However, this is coming from a low base following the significant decline in the March quarter, pointing to only a modest increase in output over the first half of 2024.
“That said, expectations have been over-optimistic for the past three quarters. Whether that over-optimism is also boosting the latest result is a key source of uncertainty in the current soft economic environment.
“Cost pressures facing manufacturers, while still elevated, are trending down from recent historic highs. This is alongside the softening of demand. The number of respondents reporting a rise in average unit costs moderated from a net 60%, on average for the past two years, to a net 29 per cent in March.
“Profit expectations weakened further. The number of respondents expecting a decline over the next year deteriorating from a net 4 per cent to a net 11 per cent, speaking to the ongoing challenging backdrop for the sector. A pivot towards to less contractionary macro policy settings, which is expected to emerge mid-year, would be welcomed by the sector.
ACCI chief executive officer Andrew McKellar said wages were the most significant cost pressure on manufacturers.
“Forty per cent of businesses surveyed expected the next wage agreement to deliver an outcome above the last,” Mr McKellar said.
“With the Annual Wage Review currently underway, ACCI is of the view that another large increase in minimum and modern award wages, untethered to productivity, could delay the expected decline in inflation.
“ACCI believes that the challenges for businesses will be compounded by inflexible, productivity-sapping industrial relations legislation recently passed by Parliament.
“In the upcoming budget, ACCI urges the government to do more to address the cost of doing business to ensure businesses remain viable.”
by Ashley Gardiner | Mar 21, 2024 | Media Release
A surge in employment reported today highlights the need to address Australia’s skill shortage urgently.
“Employment bounced back strongly in February, rising by 116,000 people, and hours worked grew by 53 million hours, following declines in December and January,” ACCI chief executive officer Andrew McKellar said.
“More than two-thirds of the new jobs created in January were full-time. Employers who had been recruiting in earnest in January have been able to tackle the backlog of vacant positions.
The labour market remains tight, with unemployment dropping back to its August 2023 level of 3.7 per cent.
“Job vacancies remain at almost double their pre-COVID levels, with employers continuing their struggle to find people with the right skills to fill unfilled positions,” Mr McKellar said.
“The return to work in February is welcome and highlights the continuing need to address skills shortages and ensure that employers have access to employees with the necessary training and experience to fill vacant positions.”
by Ashley Gardiner | Mar 21, 2024 | Media Release
Investment to expand Australia’s gas supply is urgently needed and governments need to end the roadblocks to securing reliable energy supply.
“There is a looming crisis, with shortfalls likely to bite as early as next year. Years of policy mismanagement and obstruction are coming to a head,” ACCI chief executive officer Andrew McKellar said.
The Australian Energy Market Operator has issued the warning today in its Gas Statement of Opportunities.
“Our existing gas fields, particularly in the south, are running out, but not enough is being done to replace this supply,” Mr McKellar said.
“New investment in gas supply is urgently needed to meet future gas demand for homes and business, as well in ensuring the reliability and security of the renewable electricity network.
“The situation is particularly dire in Victoria. The gas supply from Bass Strait is rapidly depleting. Victoria needs a new source of gas, yet the state government is actively blocking new gas field development.
“Governments need to abandon their ideological opposition to new gas field development. Gas is essential during the transition to renewables.
“Investment in new distribution infrastructure to improve the efficiency of supply is welcome, but we still need gas to send through the pipes.
“Gas will play a key role in stabilising the variability of electricity supply in renewable energy networks as coal-fired power stations are retired.
“More gas, not less, is needed to ensure the stability and reliability of the electricity network over the next 25 years.
“It is farcical that gas power generators may need to supplement gas usage with liquid fuels, such as diesel and petrol, which produce significantly higher emissions, to meet peak demands if there are not any new supplies of gas by 2028.”
