Economy // Government | Regulation

State of the Nation day one: national cabinet, labour market and PM address

Reflecting on day one of State of the Nation, CEDA CEO Melinda Cilento was joined by AlphaBeta Director, Dr Andrew Charlton; CEDA Board Member, Dr Gordon de Brouwer PSM; and RBC Capital Markets Chief Economist and Senior Relationship Manager, Su-Lin Ong.

CEDA Board Member, Dr de Brouwer discussed the Environment Protection and Biodiversity Conservation Act and approval times, mentioned by Prime Minister the Hon. Scott Morrison in his earlier address.

“It’s an important issue, one that’s been around for a while. This will be the third time this decade that a streamlined process for both assessments and approvals for environment decisions under the EPBC Act will be on the table,” he said.

“It was under Prime Minister Gillard and under Prime Minister Abbott. Ultimately (with) this one, it's a decision that has to go to the Senate and so it's really a matter of how does the Government then get those numbers in the Senate, that's what killed it last time under Prime Minister Abbott.

“It is noteworthy that the Prime Minister’s using different language, ‘single touch environmental approvals process’ not the ‘one stop shop’ so the language has changed a bit.

“It's potentially very significant in terms of cost savings.  

“If the streamlining of assessments is done between the Commonwealth and the states, that itself is very significant in providing the cost savings.

“The real issue is the political one, or the difficult one or contentious one, has been around the streamlining of approval decisions.

“The opportunity is to focus on how you work with companies to secure environmental outcomes rather than specify a whole range of conditions that may or may not help you meet an environmental outcome which is for example around a threatened species, but to focus very much more specifically how does the firm manage that risk, how are they responsible for it and accountable so that can lead to an improvement.”
Speaking on the national cabinet, AlphaBeta Director, Dr Andrew Charlton spoke on what will be important moving forward to ensure its continued success.

“The critical question here is did the National Cabinet perform well because it is a fundamentally superior organising body to COAG, or did it perform well because of the context of the crisis, in that the crisis delivered urgency?’ he asked.

“It caused people to put politics aside. It removed fiscal constraints. The answer to that question is probably a fair bit of the second one, that the success of the forum was context dependent.

“If we want a better Federation and a better decision-making forum for the Federation, it won't come from renaming the forum and switching the meetings to Zoom.

“It will come from doing the hard work of fixing those reforms, the hard work of dealing with overlapping responsibilities between states and the Commonwealth in education, health and so many other areas, and addressing the persistent problem of vertical fiscal imbalance, which creates such issues in negotiating funding agreements between the states and Commonwealth.

“It will (also) involve generating consensus on the problems that we're trying to solve,” he said.

Referencing the Prime Minister’s presentation on Australia’s economic recovery from COVID-19, Dr Charlton said consumer confidence will determine the recovery.

“Confidence is the absolute key part of all of this and will determine this recovery. Not just consumer confidence, but business confidence as well,” he said.

“The consumer confidence numbers that the Prime Minister referred to were quite instructive. We are back to almost pre-COVID levels…but we'd probably point out two things.

“Outright levels are still below the long run average. So we've bounced from extraordinarily depressed levels. I think the other part is confidence and how consumers feel and what they actually do.

“I think the challenge is now we have to create an environment, whether it's through the reform process or through actual policy that encourages that confidence.”

In another element of the recovery, RBC Capital Markets Chief Economist and Senior Relationship Manager, Su-Lin Ong spoke about Australia’s labour market.

“The labour market really is front and centre both for policymakers and also for us as economists because we know that going forward it will be really key in terms of what this recovery looks like,” she said.

“I think the positive is that probably maximum job shedding is behind us. We can see from some of the partial incoming data that we're starting to see early signs as the restrictions have lifted in terms of the start of return to work and rehiring and that's consistent across a number of indicators so the worse may be behind us.

“But we know that the replacement of the jobs is going to be a significant task going forward. That will demand strong sustainable growth and so I think for us that's really the key challenge.”

Ms Ong said this should be reflected is policy responses including targeted assistance to certain industries or a focus on infrastructure.

“Infrastructure ticks a number of boxes from both a political perspective, as well as an economic one,” she said.
“It will help create a substantial number of jobs.

“It also helps from the supply side for the economy to lift potential growth and capacity and so from a longer-term perspective, it also ticks a number of boxes.

“It is a welcome part of the overall strategy going forward and helps in terms of fiscal policy continuing to lend support to the economy and we're very much of the view as we come out the other side that there will need to be underlying fiscal stimulus to get us through.”