22/02/2024
CEDA's ECONOMIC AND POLICY SERIES 2024
In 2024, CEDA examines setting Australia up for long-term success, why the labour market must work harder this year, working from home and productivity, and the energy transition.
THREE POLICY AREAS FOR ACTION IN 2024
ABOUT THE ECONOMIC AND POLICY OUTLOOK SERIES
Running for more than 30 years, CEDA’s annual Economic and Political Outlook (EPO) report and series provide analysis from leading economists and political commentators on the economic and public policy environment business will be operating in for the year ahead.
DRIVING PRODUCTIVITY IN THE WORKFORCE
Danielle Wood, Chair, Productivity Commission
Matthew Cleary, Regional Director, Victoria, Urbis
Facilitated by Urbis Regional Director – Victoria, Matthew Cleary, this session focused on the many different aspects of productivity and the gains Australia can benefit from through strong policy responses, including housing.
Other aspects of productivity like tech uptake, the services sector, and construction were also discussed, highlighting the need for a wide-ranging review of the opportunities for greater productivity in these areas, as well as how greater diversity and inclusion can lead to better productivity through remote working arrangements. This reflected a theme across all discussions on the long-term benefits of Work From Home for Australia.
PRODUCTIVITY AND WORKFORCE: GLOBAL INSIGHTS
Professor Nicholas Bloom, William D Eberle Professor of Economics, Stanford University
Ming Long AM, Member, CEDA Board of Directors and Chair, Diversity Council of Australia
“Employees value hybrid – so, the ability to work from home two to three days a week – the same as about an eight per cent pay increase on average.”
The insights from EPO 2024 indicate that remote work levels are likely to stay the same in the future and this was the theme of the discussion between William D Eberle Professor of Economics and facilitator, Professor Nicholas Bloom and Diversity Council Australia, Chair, Ming Long AM.
With rarely discussed benefits like a boom in weekday leisure, also known as the golf effect, hybrid work appears to be the working style organisations may need to adopt to remain competitive and retain employees in the long run, Professor Bloom said.
AUSTRALIA'S PLACE IN THE GLOBAL ECONOMY
Bert Colijn, Senior Economist, Eurozone, ING
Paul Bloxham, Chief Economist Australia, New Zealand and Global Commodities, HSBC Bank Australia
Andrew Boak, Managing Director and Chief Economist, Goldman Sachs Australia
Melissa Wilson, Senior Economist, CEDA
Paul Blokham, Chief Economist Australia, New Zealand and Global Commodities, HSBC Bank Australia, spoke on the looming US Election and the impact Donald Trump's possible return would have on fiscal policy, specifically in terms of taxation. There was also discussion around whether the Federal Chair would continue to be run independently and if excessive defence spending would continue to compromise pricing and housing affordability. He also indicated that the risk of US trade protection in the medium term is something to watch out for.
Bert Colijn, Senior Economist, ING went on to explore how the ongoing Russia-Ukraine war has highlighted the urgency for clean energy, particularly in Europe, along with how its labour markets have suffered significantly following the pandemic. “Europe, for a long time, was relying on cheap gas through Russian pipes. We don't have any sustainable alternative energy source at that price, there is deep urgency for the transition...the ripple effect of Ukraine war is even greater than the impact of COVID.”
Andrew Boak, Managing Director and Chief Economist, Goldman Sachs Australia, then made the case for technological change and how Artificial Intelligence would allow Australia to boost productivity growth. He also touched on how high immigration levels influence inflation and the effect of this on house prices in Australia.
“While hybrid arrangements can deliver
benefits by balancing productivity, participation and
employee preferences, employers will need to
continue to experiment with different approaches to
find what works best for them and their employees, while noting
the best approach may change over time.”
CEDA Senior Economist, Melissa Wilson
“While hybrid arrangements can deliver
benefits by balancing productivity, participation and
employee preferences, employers will need to
continue to experiment with different approaches to
find what works best for them and their employees, while noting
the best approach may change over time.”
CEDA Senior Economist, Melissa Wilson
ECONOMIC OUTLOOK: DOMESTIC ECONOMY
Professor Markus Brueckner, Professor in the Research School of Economics, Australian National University
Cherelle Murphy, Oceania Chief Economist, EY
Luci Ellis, Chief Economist, Westpac
Andrew Barker, Senior Economist, CEDA
Against the backdrop of inflation and cost-of-living pressures, this discussion focused on Australia’s economic performance over the next year and the trends likely to affect that. Westpac Chief Economist, Luci Ellis, discussed how some of the challenges Australia is facing now can be offset by encouraging greater mobility outside of major cities – and the role remote work can play here.
EY, Oceania Chief Economist, Cherelle Murphy also touched on the theme of productivity, highlighting its importance for strong economic growth and greater mobility, specifically within the workforce.
“You need employees to be able to move around the economy more easily than they do – and we’ve put in place a number of impediments to that. We have stamp duty, which means it’s very hard to physically move locations. We have non-compete clauses in various employment agreements, which means that a lot of workers can't work with a new employer for a period of months...really, do we need that?”.
Australian National University, Professor in the Research School of Economics, Professor Markus Brueckner, also joined the discussion and analysed Australia’s public debt rating, providing key insights into future economic performance.
POLICY OUTLOOK: INDEPENDENT VIEW
Dr Monique Ryan, Federal Independent Member for Kooyong
Zoe Daniel, Federal Independent Member for Goldstein
Allegra Spender, Federal Independent Member for Wentworth
Melinda Cilento, CEO, CEDA
Presenting an independent view of policymaking, CEDA’s EPO 2024 featured Federal independent members Dr Monique Ryan for Kooyong, Zoe Daniel for Goldstein, and Allegra Spender for Wentworth. The conversation centred on the importance of understanding the community, building a relationship with them, and creating constructive dialogue.
Climate change and productivity also featured heavily in the discussion, highlighting the need for thoughtful and nuanced debates for better long-term economic health. That, however, doesn’t happen overnight, Ms Spender shared.
“You stand on the shoulders of everybody else and they stand on your shoulders too. I don't think it’s about one person making a change," she said.
POLICY OUTLOOK: EXPERT VIEW
Patricia Karvelas, Presenter Radio National Breakfast, ABC
Clare Armstrong, National Political Editor, News Corp Australia
Cassandra Winzar, Chief Economist, CEDA
Featuring News Corp Australia National Political Editor, Claire Armstrong, , The Australian, Washington DC Correspondent, Adam Creighton, and ABC, Presenter Radio National Breakfast, Patricia Karvelas, explored the political and policymaking landscape in Australia.
With a focus on the cost-of-living crisis, housing, Stage 3 tax cuts, productivity and other key themes discussed throughout the day, the panellists examined what effects these would have on the Dunkley election, parliamentary debate, and public perception of the government. The conversation also examined how the performance of the US economy – and its upcoming election – would have on Australia.
Speaking of the media’s role in shaping policy in the country, Patricia Karvelas said, "I am troubled by the hyper-polarisation of the media...you need independence and impartiality, and obviously that’s key to call out bad behaviour, bad policy based on evidence, regardless of what your perspective is.”
In view of other trends like the influence of TikTok and populism, there was a consensus that responsible reporting and good policymaking are crucial in driving the nation forward.
