Andrew McKellar interview with Greg Jennett, ABC News Afternoon Briefing

Event: Andrew McKellar interview with Greg Jennett, ABC News Afternoon Briefing.
Speakers: Andrew McKellar, chief executive Australian Chamber of Commerce and Industry; Greg Jennett, host ABC News Afternoon Briefing.
Date: 8 May 2023
Topics: Federal budget 2023-24; energy price relief; inflation; interest rates; petroleum resource rent tax; budget repair; passenger movement charge; labour and skills shortages; Migration Review.


Greg Jennett, host ABC News Afternoon Briefing: Well, outside of energy bill relief, it’s not apparent that there’s any large scale handout in store directly for business. Nor have the main big business lobby groups actually been asking for much either – they’ve read the signals from the Reserve Bank on inflation. Andrew McKellar is chief executive of the Chamber of Commerce and Industry and he’s explained why they’ve chosen a more restrained approach this year. Andrew McKellar, it’s budget eve, so you are back with us once again. Welcome to Afternoon Briefing, as always. Energy price relief, we’re told will be a centrepiece of the budget for households and for business. Is it clear to you how all this money, it could be about $3 billion state and federal, can be delivered in a way that is not inflationary.

Andrew McKellar, chief executive Australian Chamber of Commerce and Industry: Hi, Greg. Great to be with you. Look, any form of relief on energy prices for households and for small businesses particularly, it’s going to be welcome, that’s the first thing. How it will be delivered, I think here, one of the important things is it needs to be delivered in a way which doesn’t cut against what the Reserve Bank is doing with interest rates. So, if it’s adding back into demand, if it’s holding demand up for longer, if it’s adding to those inflationary pressures, then the risk is that we have fiscal policy pushing in one direction and monetary policy going the other way. We don’t want to see an outcome where there’s likely to be a reaction from the Reserve Bank to push interest rates higher again. That would obviously be very counterproductive.

Greg: And there are live risks here out there, on the demand side, not only just in demand for power, I suppose, but there are also schemes that create deductions for small business to go and invest in new kit or to better insulate their buildings for instance. That is all generating demand, isn’t it?

Andrew: Well, those things are very important, and the reason for that is at the moment, one of the biggest constraints the economy is facing is really on the supply side. So, I think anything here which focuses on adding to that supply, undertaking more investment, encouraging business to be more efficient, adding to productivity, then I think that is going to be consistent with the objective of keeping inflationary pressures in the economy lower. So, I think those sorts of things are very positive and constructive, and we would support them.

Greg: More broadly, because the word surplus keeps coming up, it’s very much in our expectations for the current financial year. Do you think the temptation to spend some of that does in fact do what you said shouldn’t happen? That fiscal policy might be pulling against monetary policy by the Reserve Bank?

Andrew: Well, again, I think here the government is going to have to get the balance right. So, it’s a wonderful thing if we are to go into surplus, and a lot of that is driven by windfall revenues that have come about as a result of much higher commodity prices. That’s great. What we’ve got to ensure is that as much as possible of that extra windfall is turned back into paying down debt. The projection over the life of the forward estimates is over $100 billion worth of interest payments are there. It’s moving up from about $20 billion a year. That’s a huge cost to the expense of other programs. We’ve got to reduce that if possible.

Greg: And that will be a wafer thin surplus anyway by all accounts.

Andrew: Absolutely.

Greg: Business appears to, on what we know already, be spared any large nasties. In view of the fact that this is a Labor government, do you think that would be a relatively painless outcome for business if it’s not going to be hit with new taxes?

Andrew: In advocating in front of this budget, we, amongst other business groups, I think have been very careful. We’re not saying that we want particular special programs. Our emphasis has been on recognising that the government needs to get the budget back into order. It needs to undertake that process over the medium term of budget repair. We’re supportive of that process. We say there’s a lot they can do on the expenditure side to achieve that discipline. We certainly don’t want to see new taxes or significantly increased taxes coming in as part of that strategy. If they can achieve that balance, then business will be very positive, will be very supportive.

Greg: There might be some things at the margins though. For instance, in the tourism sector, I think everyone’s on high alert for an increase in the departure tax, so-called, or passenger movement charge is its technical name. Is that fair enough in view of the large number of overseas trips that Australians are now taking after the pandemic?

Andrew: We are cautious about that as well. I mean, if there’s one sector that’s been absolutely pummelled in the past several years through the pandemic and through other economic circumstances, it’s been the tourism and the hospitality industry. So, I think we would be very cautious about any increase in that charge. The other thing here is this is not a general revenue charge. Any increase in the revenue should be fed back into the purposes that it’s intended for. It really should be about supporting more effective borders, the movement of people across those borders, and in particular, the industries that are linked to that, the tourism and hospitality industries.

Greg: Well, it could actually become an incentive for people to holiday at home, domestically, couldn’t it?

Andrew: Look, I think at the margins, Australia obviously needs to remain competitive. There needs to be a clear justification between what that charge is for and where that money’s been spent. And I think at the end of the day, that’s the test.

Greg: All right. At the other end, really big business and big investments, the petroleum resource rent tax for offshore gas primarily is going up. I don’t think that really speaks to your membership necessarily, but do you welcome that?

Andrew: Look, we’re cautious about it. So here, there’s been some consultations with the industry, with the major gas producers. I think in the main, this represents a pull forward to some degree of the revenues that might have been further down the track. That said, it’s essential in this space that what we’ve got to be encouraging is exploration and production of gas in Australia. It’s very clear we have a critical situation with energy supply at the moment. Gas is an important part of the solution to that for the foreseeable future. We’ve got to maintain and attract those major investment projects to keep that part of the energy equation going. It’s vitally important to business.

Greg: And just finally, Andrew McKellar, population growth can’t continue at the rate that it’s been running at in recent years. Do you accept that? And what implications are there on the skills and labour side for that?

Andrew: Well, I think here we’ve just seen the government produce a major migration review. It was a very constructive review, and one of the most important things coming out of that we hope we will be that the temporary skilled migration intake will be better focused in the future. If that means that we can be more effective about attracting and retaining people to fill critical skill shortages, then that will be a better result. So, we’re encouraged by that, and I think businesses are looking forward to working with government to get those outcomes in place.

Greg: Plenty to look out for come tomorrow night. No doubt we’ll get a readout from you before too long. Andrew McKellar, thanks again for joining us.

Andrew: Perfect. Thank you.

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Andrew McKellar interview with Ross Greenwood, Sky News Business Now

Event: Andrew McKellar interview with Ross Greenwood, Sky News Business Now.
Speakers: Andrew McKellar, chief executive Australian Chamber of Commerce and Industry; Ross Greenwood, host Sky News Business Now.
Date: 21 March 2023.
Topics: ACCI-Westpac Industrial Trends Survey, interest rates, labour shortages, energy costs, next RBA rates decision, industrial relations changes.


Ross Greenwood, host Sky News Business Now: Today, the index of the country’s longest-running business survey, that’s run by Westpac and the Australian Chamber of Commerce and Industry showed a little bit of an uptick in March, but it’s an uptick off a very low base. So, let’s bring in here Andrew McKellar, chief executive of the Chamber of Commerce and Industry. Andrew, always good to talk to you. It’s a sobering reality, just the challenges that face most Australian businesses right now.

Andrew McKellar, chief executive Australian Chamber of Commerce and Industry: Hi, Ross. That’s exactly right and, look, I’d summarise it by saying that the cost crisis continues. What the latest survey shows is that businesses really face a cocktail of higher inflation, they’re dealing with spiralling energy costs, they are dealing with continuing shortages in terms of labour supply. So look, it’s a difficult mix and I think as we look forward, the outlook, the level of pessimism in business about some of the challenges that they’re likely to face over the next one, two, three quarters really is, cause for concern.

Ross: Okay. So we’ve seen collapses in the construction industry. We’ve seen the same thing in the transport industry. And we understand what’s been seen publicly is only a glimpse of what’s happening at the lower end of many of those industries. Is the same fear there for our manufacturing industries, for many of our services industries as well?

Andrew: Well, it is, and I think particularly this survey reflects the situation facing manufacturing, so they are under pressure. Certainly, the outlook is not optimistic. I think one of the most worrying things here, Ross, is that in particular it’s around investments. So we are seeing the impact of higher interest rates coming through. We’re seeing the fact that margins are being squeezed. Businesses are facing significantly higher input costs. They can’t pass that fully through. And as a result, investment is being wound back. Now, that is not a good recipe if we’re going to build confident, productive, efficient, profitable companies for the future.

Ross: What about the Reserve Bank right now due to make another decision in just two weeks’ time? What about its role in the conditions that companies are currently facing?

Andrew: I do think here they’ve got to take stock. There are real concerns that over the next couple of months we could start to see some of the chickens come home to roost. We don’t want to see firms going to the wall as a result of the pressures of higher interest rates adding to what is already a pretty dangerous mix. I think it would be time for the Reserve Bank to take stock, to pause, not increase interest rates at its next meeting. If you put that back-to-back with what we’ve seen around the world in terms of some of the pressures that are emerging in financial markets over recent days, then really I think we would be urging caution ahead of that Reserve Bank meeting.

Ross: Is the federal government adding to that concern to the uncertainty by its industrial relations reforms, trying to consolidate some of those awards and the collective bargaining and then, on top of that, even in regard to the way in which businesses might even operate in the future?

Andrew: Look, I think that’s hard to say. I mean, there are things that the federal government can do here as it prepares the ground for its budget. It’s got some big challenges there. Of course, business has some concerns about the industrial relations reform agenda. We don’t think that the reforms that were passed late last year went in the right direction. Those haven’t really had effect yet, though most of them will come into effect in the second half of the year. There are more changes in the pipeline. We’re yet to see the detail, but obviously, these are issues. If we’re going to really address the productivity challenges, if we’re going to be able to sustain a strong labour market, keep the economy at or near full employment, then the way we take that forward with the future industrial relation changes, that will have an important impact.

Ross: Andrew McKellar, chief executive of the Chamber of Commerce and Industry, always good to chat to you. Many thanks for your time today.

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Andrew McKellar interview with Patricia Karvelas, ABC RN Breakfast

Event:  Andrew McKellar interview with Patricia Karvelas, ABC RN Breakfast.
Speakers: Andrew McKellar, chief executive Australian Chamber of Commerce and Industry; Patricia Karvelas, host ABC RN Breakfast.
Date: 10 March 2023.
Topics: Indian trade delegation, Reserve Bank, interest rates.


Patricia Karvelas, host ABC RN Breakfast: The chief executive of the Australian Chamber of Commerce and Industry, Andrew McKellar, is part of the business delegation traveling with the Prime Minister, and he’s our guest. Welcome to the program.

Andrew McKellar, chief executive Australian Chamber of Commerce and Industry: Hello Patricia. Good to be with you.

Patricia: The prime minister and this delegation you’re part of have received what appears to be an extremely warm welcome. How would you describe the reception, and does it reflect a sense of optimism about the future of the relationship? Can you draw a link between that level of pomp and ceremony and colour, and commitment to this relationship?

Andrew: Look, it’s been an extraordinarily warm welcome, as you say, and I think there is a sense of optimism. I think it’s very clear that there are huge opportunities between Australia and India to develop the economic partnership, the relationship that the two countries have. And moving forward there are going to be very significant trade opportunities. So I think there’s a clear commitment from the business communities in both countries to try and see where those opportunities are and to certainly build on the base that we have at the moment.

Patricia: A new four-year agreement between Australia and Indian business groups was announced overnight. It brings together the largest investors from both nations. What can you tell us about the deal? What does that actually mean?

Andrew: It’s a signal of the goodwill that’s there, the intent for the business communities in both countries to identify where some of the obstacles are at the moment, and to then really try to address those and accelerate the trade relationship between the two countries. Just in December, of course, we had a new trade agreement come into effect. We’ve already seen very tangible results from that. And if we can build on that, if we can make agreement in place, then really, we should be able to grow that trade, not just in goods, but also in exchange with people and services, in the years ahead.

Patricia: While in Mumbai, the PM attended a chief executive round table attended by more than 45 business leaders. What messages were delivered to him?

Andrew: I think it’s really a case of looking at how we address some of the barriers that are in place at the moment. I think one would have to say we haven’t in the past really optimised the potential for trade between Australia and India. We’re starting to see that really growing. But as we look ahead, India’s a huge economy, it’s growing very rapidly. They will have very significant demands if they’re going to develop some of the emerging industries that they want to develop. And I think here there’s big opportunities for Australian industry, with not just raw materials and food products, but smart innovations, the knowledge economy, that we can really take advantage of.

Patricia: Businesses pushing the Albanese government to finalise the India-Australia Comprehensive Economic Cooperation Agreement. Bit of a mouthful we got there. What would that deliver beyond the existing trade agreement negotiated by the former government?

Andrew: Well, it does take us into some of those emerging areas. So, where we have technological capabilities, digitalisation of healthcare, the skills economy, building on the education links that we have, critical minerals, developing the processing capabilities in both economies, then I think that will add value. And we should be able to dramatically increase the level of economic dividends that we’re seeing from the current trade relationship.

Patricia: Do the Indian business leaders you’ve been meeting with share the desire also to finalise that deal? Are they pushing their prime minister for the outcome? Is there a sense of urgency among the different communities?

Andrew: Look, that’s part of the purpose of the mission, is really to deepen the exchange that we have. Of course, there are a number of companies that are on this mission who have had longstanding links with India. Many of them see that the chance to deepen those linkages and to really increase the benefits for both economies. So look, I think on balance, many of the Indian business people that are meeting with us do see those benefits, really. We hope that the governments can now make progress on those negotiations.

Patricia: You’re also calling for a streamlining of visa processes for people coming from India. The High Commissioner and I also talked about changes to the way that we do people to people traffic, essentially the way that we operate that. What do you want to see in that space?

Andrew: The relationship in terms of the people to people links between the two countries is very important. So at the moment, India is a very rapidly growing tourist market for Australia. So if we can get more people coming to Australia, that will benefit our tourism industry. We want them to be able to have very simple visa arrangements. International students are another area. Exchange in terms of skilled labour. If we can improve those processes, then of course, I think it will deliver benefits for both economies.

Patricia: Just finally, Andrew McKellar, ACCI has been critical of the RBA’s interest rate hikes. Do you believe the economy can weather another one without being pushed into negative territory like recession? Or are you worried about the consequences?

Andrew: Look, I think we’ve seen a very significant series of interest rate increases over the last 10 months. Our sense is that we’ve got to the point where it is starting to have a real impact on a number of sectors in the economy, in particular for small business. So at this point, we’re saying it is time to pause, to take stock. Many of the inflationary pressures that we’re feeling in the economy at the moment are coming from overseas, they’re not domestically originated. And in those circumstances, just continuing to push interest rates up as aggressively as the Reserve Bank has been, if that keeps going, it runs the risk that it will do real damage to some sectors in the economy. We think it’s time to take stock, see where things go over the coming months, before considering whether they need to raise rates further at this point.

Patricia: Thank you so much for your time.

Andrew: Thank you, Patricia.

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Andrew McKellar interview with Greg Jennett, ABC News Afternoon Briefing

Event: Andrew McKellar interview with Greg Jennett, ABC News Afternoon Briefing.
Speakers: Andrew McKellar, chief executive Australian Chamber of Commerce and Industry; Greg Jennett, host ABC News Afternoon Briefing.
Date: 9 March 2023.
Topics: Indian trade delegation.


Greg Jennett, host ABC News Afternoon Briefing: Andrew McKellar, good morning there in Mumbai. Afternoon Briefing time as normal here in Canberra. We’ve heard a lot from the political representatives, the prime minister and others, about their purpose. Take us inside the business delegation of which you are a member. What is the program to pitch team Australia to India?

Andrew McKellar, chief executive Australian Chamber of Commerce and Industry: Hi, Greg. Great to be with you. Look, it’s a busy program over a couple of days. We have, I think, a very strong delegation of Australian business representatives here. It’s great to have the support of the Australian government, as you say, it really is about team Australia. India is a very rapidly growing market. It’s an essential part of Australia’s strategy to diversify its trade and economic relations in the region. Of course, we’ve seen the difficulties that have been encountered in recent years with China. But an important part of diversifying our opportunities is to build this relationship with India. So, it’s a rapidly growing market for us. We are here really to engage over the next couple of days to see how we can grow Australia’s exports, deepen that trade and investment relationship between the two countries, and it’s also about people as well. That’s an important part of the objective here.

Greg: And is it your expectation as a sort of down payment of good faith in this developing trade relationship that actual, tangible commercial deals will be clinched as part of this visit?

Andrew: Well, I think there are some very important things that can come out of this. As I say, on the people side, I think that’s one of the most fundamental things. India is a very rapidly growing source of tourism for Australia, a major export industry for us.  And international students, the number of international students coming back into Australia now has risen again very rapidly, and it’s continuing to grow. So, things that we can do here, I think, over the next couple of days are agree how we can make it easier for that exchange of people between the two economies. Recognition of things like qualifications and skills, that’s going to be fundamentally important. I know that the governments have been talking about these issues and let’s see if we can make some progress again in the next couple of days.

Greg: So is this a reference to streamlining visa processes or permanent migration arrangements? What sort of things are you looking at there?

Andrew: Certainly, I think both of those things are important. So the visa processes, streamlining that, making it easier for the exchanges between the two countries. That’s something that’s very much on the agenda. I heard one of the significant business leaders here this morning talking about exactly that issue with the Trade Minister, Senator Farrell. So it’s very much on business’ agenda to be pushing forward on those issues because it’s a huge opportunity and we’re seeing that market growing very rapidly.

Greg: I think overwhelmingly, and this wouldn’t be a surprise to anyone, the 25-member business delegation on this trip represents the larger end of the business scale in Australia, top end of town almost, blue chip companies, major educational institutions. As you take it down a level to medium or even smaller sized enterprises in Australia, do they need to increase their outreach to India as a market?

Andrew: Well, that’s one of the reasons that I’m participating so we have that coverage. The Australian Chamber of Commerce and Industry, we are working with our members, with business, in terms of the trade that has been underwritten and particularly the exports into India. In the period since the free trade agreement came into force at the end of December last year, just in one month, $2.5 billion worth of trade was underwritten in that period of time. It is important that we do look at how those opportunities can flow through, not just at the big end of town, but for a range of smaller, medium-sized businesses that are looking to open up some of those export opportunities. And again, this is where the human dimension: skills, access to labour that we critically need, this is where those opportunities exist.

Greg: Well, that’s your purpose for being there on what I understand is a very hectic day taking in two Indian cities. So, Andrew McKellar, on that note, we better free you up to get on and pitch for team Australia. Thanks for joining us.

Andrew: Great, thanks very much, Greg.

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Andrew McKellar interview with Greg Jennett, ABC News Afternoon Briefing

Event: Andrew McKellar interview with Greg Jennett, ABC News Afternoon Briefing.
Speakers: Andrew McKellar, chief executive Australian Chamber of Commerce and Industry; Greg Jennett, host ABC News Afternoon Briefing.
Date: 31 January 2023.
Topics:  May budget, fiscal consolidation, Safeguard Mechanism amendment, Treasurer Jim Chalmers MP essay in The Monthly.


Greg Jennett, host ABC News Afternoon Briefing: Andrew McKellar, it must be that time of year again. You are back along with many organisations starting to lay down a few markers for the budget that’s being prepared in May. From a business perspective or for every perspective, there’s not much room for the government to move on spending, so tight is the budget. What are you telling government to do?

Andrew McKellar, chief executive Australian Chamber of Commerce and Industry: Thanks, Greg. Look, I think for us, it is going to be a challenging budget. I think our top-level message to the government is that now is the time to really begin to address that process of budget repair. We’ve got to get things into a more sustainable position over the medium term, reducing that cash deficit, starting to address the build-up of net debt against GDP. So really, I think a lot of focus on the expenditure side of the budget is going to be essential.

Greg: Which might pay dividends with the inflation problem as well. Now, a few bills are going to start emerging out of the pipeline as we move through this year, and probably none more important to the government’s climate objectives than the safeguard mechanism. And yet, already there are noises coming from the Greens and the Coalition that cast into doubt political support for that bill. What’s your attitude to what the parliament should be doing on that?

Andrew: What we’re encouraging here I think is as much as possible, we’d like to see a bipartisan approach. The government has set out objectives, targets to 2050 and interim targets in terms of how we transition towards a net-zero emissions economy. So that’s something that business supports. If we’re going to get there, if we’re going to get there sustainably, structuring that energy transition is an important part of that. The model that the government’s put forward on the safeguards mechanism – they’ve consulted closely. We think there’s a lot of good material in there. So, I think as much as possible, we’d like to see a bipartisan approach that supports investment, continuity, and certainty for business.

Greg: All right. But as ever, the details seem to trip people up here because it’s a matter of record, of course, that the Coalition itself invented the safeguard mechanism. Where the dispute might lie is over whether the price per tonne of carbon is too high or too low. The Greens say one thing, Coalition says another. What are your observations about $75 a tonne, which notionally is where it could land?

Andrew: Well, I think that’s been an important feature that the government’s brought forward. It is something that a number of those heavy emitters were looking for, I think it will help underpin certainty. So, the fact that they’ve put that cap in there, I think provides some reassurance to those sectors and those largest facilities that are going to be affected by this scheme.

Greg: Do you think it’s affordable for them either to lower their emissions or to buy the credits to offset them?

Andrew: Well, that certainly is the indication we’re getting back. There are still some challenges out there. If we look at emissions intensive, trade exposed sectors and the government’s still consulting on those aspects. But for this first stage, we would think that this is the best option that’s on the table. I do encourage a bipartisan outcome. If the government’s forced back into a corner negotiating with the Greens, then the risk is that this becomes much more difficult, and we end up losing some of that certainty and potentially interrupting very critical investment.

Greg: So, your message is bypassing the Greens and your message is really to Peter Dutton?

Andrew: Well, I think let’s try and get the best result that we can. I think we want to avoid an outcome that creates or increases the level of uncertainty.

Greg: All right. Changing topics, it’s not every summer that the treasurer of Australia sits down and pens a 6,000-word essay, a thesis if you like, on remodelling some would say the entire Australian economy, the market operations within it. Some people seem to be almost suggesting that what Jim Chalmers has done here has written a doctrine about socialism with Australian characteristics. Has he?

Andrew: I think he’s been careful to clarify some of that in what he’s written again today. Look, honestly, I think it’s a very positive thing. I think it’s great to see the treasurer of Australia, a very senior minister in the government, coming out, articulating something of the underpinning behind his views, what’s influencing him. That doesn’t make it government policy. But look, I think the note of caution here from a business perspective is the economic fundamentals don’t radically change. We still have to put an emphasis on how we increase capacity in the economy, deal with the challenges that we’ve got in front of us. If the government is going to be able to afford to pay for some of the things that the treasurer is writing about, that we must have stronger living standards, stronger incomes, that can only be achieved if we’ve got that agenda for productivity reform, increasing the capacity in the economy. That’s the challenge at the moment.

Greg: But is his prescription radical change, particularly as it pertains to freedom of markets in this country?

Andrew: I think there are flaws in the way in which markets operate, and I don’t see what he’s saying has necessarily been a radical departure. I think it’s an evolution. I think the broad direction of past reforms in the eighties and nineties in particular was correct. How we learn from that experience, how we craft the new generation of reforms, which will be different, I think that’s the fundamental challenge. Now, I think it’s very important that the government is thinking about those challenges. It needs to have a dialogue with business and other stakeholders, and then I think we’ll get a better outcome.

Greg: Yeah, it’s quite unclear, isn’t it? Just where the rubber hits the road in practical government policy making from the sort of lofty height that Jim Chalmers has started from. But anyway, we’ll probably talk about that and more issues this year. Andrew McKellar, thanks again for joining us.

Andrew: Thank you, Greg.

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Andrew McKellar interview with Kieran Gilbert, Sky News Afternoon Agenda

Event: Andrew McKellar interview with Kieran Gilbert, Sky News Afternoon Agenda.
Speakers: Andrew McKellar, chief executive Australian Chamber of Commerce and Industry; Kieran Gilbert, host Sky News Afternoon Agenda.
Date: 31 January 2023.
Topics: ABS retail trade figures, Treasurer Jim Chalmers MP essay in The Monthly, RBA review, Safeguard Mechanism amendment.


Kieran Gilbert, host Sky News Afternoon Agenda: We’ve got the chief executive of the Chamber of Commerce and Industry, Andrew McKellar, live in the studio. It’s not obviously what many had anticipated, but I don’t think you’d be too surprised given our recent discussion where you said that a lot of your members were reporting a softness in the economy already at the end of last year.

Andrew McKellar, chief executive Australian Chamber of Commerce and Industry: Well, that’s exactly right, Kieran. I think it does gel with some of the business surveys that we’ve seen coming out of the December quarter. There was an appreciable softening of business conditions, and I think it goes to what we were saying previously. I think here we’ve got to urge the Reserve Bank to take account that some of these indicators in the real economy are turning down a bit. They’re showing signs of softness. So, as it considers what it’s going to do in terms of its next step on interest rates, I would urge them just to pause for a moment and let’s not do too much damage to the economy.

Kieran: Do you think that this will help in that regard?

Andrew: Look, I think it’s another piece of evidence. Let’s hope that inflation has peaked. Obviously that’s higher than anyone would like, but let’s hope that we can start to see that pulling back in the months ahead. In the meantime, let’s not take a risk damaging the economy.

Kieran: When you look at the situation with retail trade, that’s even before all of those mortgages that have been on the fixed rates. I know it’s been described as a cliff, but essentially it is a cliff, isn’t it? When you look at the impost on those homes and those households, I should say, to deal with the variable mortgage rates that they’ll face soon enough.

Andrew: Well, that’s right. There are many people out there that had locked in those fixed rates. A lot of them will be up for review at various points through the course of this year, and for some people it will be a very substantial change. It could be in some cases, a doubling. I think we’re going to see all of that flow through in the coming months. A lot of what the Reserve Bank has already primed in terms of its interest rate increases over the previous eight months, that impact will still be feeding through.

Kieran: The treasurer, in his essay this week has argued a number of things. He’s generated a lot of reaction to it. One of the things that he did propose is a renovation of the RBA. There is a review underway. What do you think about this idea that he discussed, essentially is changing the rate, inflation target rate of 2-3 per cent, to maybe increase that to give the RBA more scope? Has that got any merit?

Andrew: I think that there’s a lot of merit in the fact that the treasurer is out there articulating some ideas around the direction of economic policy. On that point, I think we’ve got to be careful now. I think the Reserve Bank should have independence. Whether or not simply pursuing an interest rate target at this point in time or an inflation target at this point in time is the only way to go, there are other options on the table. There’s a review in place. Certainly, I think it is time to revisit some of those aspects and the parameters that the Reserve Bank is pursuing in its mandate. Look, I think that’s something that realistically is going to happen.

Kieran: Now, my colleague, Andrew Clennell, mentioned earlier in the hour as well, that the Reserve Bank review had flagged the possibility of potentially having two boards. One RBA board that looks after managing the bank, the other which sets interest rates, which opens up the option of having more economists determine where rates go. Again, is that a reform that appeals to you?

Andrew: Well, I think these are all ideas and you’ve got to look at some of the precedents around the world as to how this has been approached. Look, clearly one of the issues that’s been raised in that review is how we ensure that there is strong and independent economic advice influencing the setting of monetary policy. That needs to be brought to the RBA board in some form or other. Look,, let’s see where the review lands on those sorts of issues, but I think this is a constructive debate to have.

Kieran: Your reaction to the treasurer’s discussion more broadly about values-based capitalism? Do you welcome it?

Andrew: Look, I welcome the fact the treasurer is out there articulating something of a narrative about the underpinnings that the government’s approach to economic policy will have. From a business standpoint, I don’t think we can lose sight of those economic fundamentals. If we’re going to be able to make some of the choices that the treasurer is saying the government wants to make, then we must have a very strong reform agenda, which is based around boosting productivity. It’s been stalled for nearly a decade. If we’re going to have higher living standards, if we’re going to be able to afford to pay for some of these things, then we can’t lose sight of those economic fundamentals.

Kieran: One of the areas where he talks about reform in that piece is on energy policy, particularly the energy transition. The safeguard mechanism that the government has released, you are very strongly supportive of that and the related laws passing the parliament, aren’t you? Why is that?

Andrew: Well, I think from a business standpoint, we need to have certainty in this space. The energy transition is an important part of that. Having a clear pathway to meet the targets in terms of getting to a net zero emissions outcome by mid-century and having the interim steps along the way, this is very important, and I think the government has put a lot of work into the safeguard mechanism. They’ve consulted closely. I think they’ve come up with some good options, which business is supportive of, including those largest emitters who will be most affected by that mechanism. I think we’ve got a pathway forward here that will help secure investment, underpin the transition that we need to make on energy to get to that lower emissions future. We’re strongly urging that there is a bipartisan approach on this and that we get a reasonable outcome that will encourage investment. We don’t want to end up with a situation where the government’s forced into a corner negotiating with the Greens on something that will probably end up being more destructive.

Kieran: It doesn’t look like there will be bipartisanship on it. The Liberal Party described the increased carbon mechanism or the safeguard mechanism as a carbon tax. Are you concerned by that?

Andrew: The safeguard mechanism is something that originated during the Abbott government. It is originally a construct of the Coalition’s. It’s been strengthened in the consultations that government’s now been undertaking. I think we’ve got to have a realistic outcome here and I would really encourage them to try and be bipartisan on this issue.

Kieran: Andrew McKellar from ACCI, appreciate your time as always. Talk to you soon.

Andrew: Thanks, Kieran.

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