Strong Australia Bendigo panel interview with Kieran Gilbert, Sky News20 June 2022
Event: Jennifer Westacott and Marnie Baker interview with Kieran Gilbert, Sky News
Speakers: Jennifer Westacott, Business Council chief executive; Marnie Baker, CEO and Managing Director of Bendigo and Adelaide Bank; Kieran Gilbert, host
Topics: Strong Australia, economic outlook, skills, energy and climate
Kieran Gilbert, Sky News: We're here for Strong Australia in Bendigo, and I'm delighted to be joined by Jennifer Westacott, the chief executive of the Business Council of Australia and Marnie Baker, chief executive officer and managing director of Bendigo and Adelaide Bank. It's great to be here with you both, as we explore the opportunities for Bendigo and surrounding regions. Jennifer, first to you, this is the BCA's series looking at how we recover from the pandemic. What are the prospects like for a place like Bendigo?
Jennifer Westacott, Business Council chief executive: I think it goes beyond recovery. This, to me, is about how we thrive, how we now prosper as a country. I come to Bendigo a lot and we've been talking to the community for years, this is the first time we've been able to get here physically for a while. You've got this incredible agribusiness opportunity here, you've got an airport that could actually go straight to Asian economies. You've got this incredible manufacturing base here, we went to a family manufacturer today making those really specialised parts for the big defence giant Thales. You've got a lot of local manufacturing, very high end food production, a health precinct. You've got great educational facilities, a terrific TAFE. You've got obviously Bendigo Bank, one of the biggest banks in the country, here in Bendigo employing heaps of people. You've got a new gold rush employing nearly 1,000 people. So you look at this and you say, this is the sort of frontier for Australia. If we could really get this organised and get this coordinated it would actually not just allow this region to thrive, it would allow the country to thrive.
Kieran: And Marnie let's touch on your businesses. The only major bank headquartered in the regions, you've got a branches in every state and territory and customers right across the country, all out of this from the city of Bendigo. Can you explain that story, but also how you connect to the business community here?
Marnie Baker, Bendigo and Adelaide Bank: Yeah. So we're an organisation that is 163 years old. So, were actually born out the gold era and gold rush times. We are a really good example of, you know, a business that can thrive in the regions. Like I said, we've been doing that for over 160 years now, from what was a very localised organisation to now a national organisation represented in every state and territory. I think the key to that is really the grassroots nature of regional Australia. It's actually living and working and knowing the community that you're operating in. We've always spoken about, in our organization, that unless you actually have, successful customers and a successful community, you can't be a successful business and you're not to thrive unless your community is thriving. So it's that connection, that local connection, that you have that I think is the secret to businesses like ours, that really thrive in regional Australia.
Kieran: Bendigo seems like there's got so much going for it, whether it be the culinary scene, to the arts, to the agriculture, the high end manufacturing/engineering you're talking about, but it seems that it needs just a little of governments to assistance, to get some of the roadblocks out of the way. Is that fair to say?
Jennifer: Yeah, I think that's right. There's just got to be a bit of long term planning and a bit of government partnership. So you need something that allows all that manufacturing to come together. You see things around the world in places like Sheffield in the UK, where they put a facility there that allows small enterprises to prototype things, to gear them up, introduces them to large companies to start to create that ecosystem of advanced manufacturing. Then you've got the potential to get those high end agriculture products out, not through Melbourne, but straight out into those big Asian markets. Straight through Bendigo airport and maybe an integrated logistics hub. You need a different sort of skills system because you need to skill people faster. Maybe we need a migration system here where you kind of put people on faster tracks to permanent residency. So, they're the sorts of things government can do. Then there's the sort of long term planning around industrial land, land for housing, fast tracking land release, getting incentives in place. You've got to get it all working together and then the private sector says, "actually that is a place where I can get the skilled people I need, I've got reliable access to labour, I've got connectivity," and then the equation about staying somewhere in Asia or coming to Bendigo and other parts of Australia starts to stack off
Kieran: Well, we know that through the pandemic don't we Marnie, I'm sure it's the same in Bendigo, a lot of people leaving the capitals chose to go to the regions for the lifestyle during the pandemic. I think what was highlighted more than ever was the need for space and it's very attractive but you can't do it unless you've got houses to go and live in. And that's a real problem here, isn't it? We talk about bottlenecks, that's a big one here?
Marnie: Yeah. And that's a pressure that we've seen, not only here, but across many regional centres as well. People are coming and we have seen net migration into regional Australia and especially to those regional cities that are within an hour or two hours of the capital cities. But it does actually put some pressure on the infrastructure and housing is an example of that. So, you do need to have somewhere to live. In somewhere like here in Bendigo what we've seen is quite an influx of people coming and living here and working here in the local region, and that we just haven't been able to keep the housing supply up. You know, one of the things that we've spoken about today, while we've been together, is that it just takes too long sometimes for developments to get underway and the processes to go through, the planning processes. They're the sort of things that we do need to really address and we are seeing. And I think it is a more permanent move of people actually discovering just how good it is to be living and working in regional Australia.
Kieran: Well, you get a lot of your life back don't you? Less time, all the traffic, all the rest of it. Jennifer, if you look at where we are at the moment in terms of our economy and the global economy, it's a precarious time, it's an inflationary environment, interest rates on the rise, it's uncertain. But what we are talking about, I guess, is the productivity driving reforms that outsee the turbulence?
Jennifer: Absolutely. That's a really good way of putting it. There's no doubt that I think we expected a smoother landing from COVID and it's much more bumpy than we expected. We've got the combination of inflation, energy problems, our price problems, obviously global uncertainty, supply chains. Some of that you can control for, some of that you can't. So what can you do? Well, you can start to lay the seeds to make the economy more productive. You can start to lay the seeds to be the at the frontier of where growth is going to come from. And you can start to control as many of the controls as you can. These things, these cycles, do end and where you want be at the end of those cycles, is in a strong position because you took the decisions in an emergency to position the country in a different way. They're the sorts of decisions we need to take, and they do come to things like, obviously we've got to fix our energy problems and we've got to fix our disincentives to invest, but if we really focus as well on places and getting places going, I think we'll come out of this much stronger.
Kieran: Marnie Baker in terms of what Jennifer saying there about some of these changes, it seems to complement what Bendigo has already got in terms of the high speed broadband and very good medical services. It seems like some of the pieces already in place to attract the right businesses and skills, but it's just a few other pieces that need to go into to make it actually surge ahead as a city and a region.
Marnie: Yeah, I think we're just on the cusp of our next step as a region. We do have all of those foundational pieces like you and were just referring to, and Jennifer was talking about before. So it's a really attractive place to call home here. Sometimes I think we're a bit humble as a city too and perhaps we don't promote ourselves to the extent that we actually could. So there's a number of things. There's one, being really sure about the things that we need to be doing here and getting through some of that red tape that we've spoken about, making sure that we have the infrastructure that actually is available to support a healthy way of living here in city like Bendigo. And then just promoting and promoting, you know, just all the virtues that we do have in this local area,
Kieran: Jennifer, taking a sort of helicopter view now, do you think we'll avoid a recession?
Jennifer: Well, I think you'd rather be here than anywhere else in the world. I mean your starting point here is so different. I know people are concerned and they should be concerned about some things that we're seeing but I think if you are going to avoid a recession anywhere in the world, you'd avoid one in Australia. You saw in the jobs numbers this week, we're still creating new jobs, I think it was 50,000 in the last data. You've still got unemployment rate at 3.9 per cent, you've still got the economy growing really strong. You've still got the banks with incredibly strong balance sheets and most households have got strong balance sheets. You've got very resilient businesses. So I think you are going be anywhere in the world facing these crisis, you'd be in this country. But we've now got to start to make really careful, thoughtful decisions. Whether they be about our energy situation, whether they be about driving productivity through skills, through a reimagining in the industrial relation system so that it drives innovation and productivity. Through reducing the red tape that Marnie is talking about. Now's the time to lay the groundwork so that you come out of this in a different way. You'd rather be here, Kieran, than anywhere else.
Kieran: On the energy the situation, first of all, I guess we have a sense of how got here, there's been quite a bit of dysfunction in that space for more than a decade. This week you backed the Labor government's framework and it's UN commitments on emissions reduction, is part of your and BCA's motivation to give business a bit more clarity on that?
Jennifer: Yeah. I was proud to stand behind the Prime Minister yesterday and the Energy Minister Chris Bowen and watch them sign that commitment to 43 per cent. I really urge parliament, I don't urge them, I'm pleading with them now, let's get it done. Because what I think Australians want to see is progress, they want to see substantial progress. They don't want to see another year of arguing about the target, they want to see that we've got a direction. The government got a mandate for that target, it's an ambitious target but it's a doable target. And what business wants is an ambitious target that's doable, not an ambitious target that cannot be done. So we've got to get out of this terrible cycle that we've been in where you've got one side saying you've got to do everything all once, which is just not doable and then someone saying don't do anything. What business wants to see is practical, sensible ambition but also now we've just got to get on it, we've got to design the safeguard mechanism, we've got to get the capacity market working so that we're driving reliability and affordability, we've got to get the system working effectively. I think another six months of arguing will just take us back to ground hog day. I think what business wants to see this is, let's just get on with it, I think the community wants to see that.
Kieran: Do you think domestic gas reservation is an idea that would fly?
Jennifer: Yeah. The problem is whether you're talking prospective or retrospective? If you start retrospectively reserving things, you've got a problem because where do you stop with that in a whole lot of commodities and also what does that do to investment certainty? You know, what we need in this sector is investment, it needs $60 billion worth of investment. So I'm not sure that's the solution. Prospectively, you can't reserve things you don't have, so if you constrain supply. I mean, one thing we've got to get over - you need gas. For manufacturing, which we've been talking about here in Bendigo, you need gas. There is not an easy substitute for gas as a feed stock for manufacturing. So we've got to get rid of these moratoriums, these blockages, the red tape. That have really just hampered things like Narrabri, and try to make sure that we are building the new system while we're replacing the old system.
Kieran: Marnie Baker, we heard from Jennifer about this view on recession or no recession, you'd rather be here. Is that what your read is when you look at the strength of your customers and the broader economy?
Marnie: Yeah, absolutely. It's interesting hearing the conversation that is sort of playing out especially in the media, you know, at the moment. As we sit here today and we look at all the metrics, if you look at it from a financial perspective, spending is continuing. The fact that, for example, on our balance sheets we've got 43% of our customers are at least a year ahead on their housing repayments, a third of our customers are two years ahead on repayments. So there's a buffer that has been built there over the last couple of years, it holds them in really good stead. So in the immediate it's not looking too bad, I'm sure it's actually going to get a little bumpier but we can't lose sight of just how good a position we're actually in. If you think back two years ago, what we were potentially looking into, and how we are sort of coming out of that now, we're in a much better position. And the bit that's different than what I think you could expect, if you look back retrospectively in other periods of time, is that we're getting close to full employment and while people are people have jobs, they will pay their house loan and they'll be able to actually invest in businesses, et cetera.
Kieran: Marnie Baker, chief executive and managing director of Adelaide and Bank, thank you very much. And Jennifer Westacott, chief executive of the Business Council of Australia, thank you both.