September 30, 2025 • 12 mins
We’ve heard a lot lately about Australia’s productivity crisis, and why reform is needed to boost our economic growth. But the solution doesn't just fall on the shoulders of government - it's up to business as well.
Innes Willox, Chief Executive of the Australian Industry Group, speaks to Sean Aylmer about the role of business in improving productivity. They also look at why the Optus crisis shows the importance of having a social licence to operate.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:05):
Welcome to Fear and Greed Q and A, where we
ask and answer questions about business, investing, economics, politics and more.
I'm Sean Aylmer. We've heard a lot lately about Australia's
productivity crisis and why reform is needed to boost our
economic growth. Today, I wanted to look at it from
the other side, rather than just waiting on action from
the government. What does business need to do in as
(00:27):
Willocks is the chief executive of the Australian Industry Group.
AI Group is a peak national employer organization representing thousands
of employers from large international companies operating in Australia through
to family run SMAs in it's welcome back to Fearing,
Greed Q and A.
Speaker 2 (00:41):
Hi Sean, great to talk with you again.
Speaker 1 (00:44):
Shortly we'll get to what you'd like to see from
government in terms of tax reform, red tape, et cetera.
But let's start with business itself. We've got a productivity
problem in Australia. How can business contribute to the solution.
Speaker 2 (00:57):
It's a great question because business just can't rely on
government and government alone, and nor should it. But government
has a big role here too, around the settings that
business can operate in. But notwithstanding that, there is a
big role for business, and businesses talking about it a
lot and is acting a lot. There's a three d's
(01:19):
we talk about sean one is decarbonization. Diversification is another
which is very important, and also digitalization is the third,
and businesses are heading down the track on all three
of those at the moment. Decarbonizing to fit in with
government policy, government approaches, but also good practice for customers,
(01:41):
for suppliers and the like very important for us to
help move towards our net zero by twenty fifty targets.
Diversification is looking at new markets, new products, new ways
of working basically, and digitalization fits into that. We all
talk a lot about artificial intelligence. We're also looking at
things like automation and robotics and the like. So business
(02:06):
is looking to become more productive in its own way
and in ways they can because the world around them
is changing. Global trade is changing. We've just got some
data out showing that we've seen a significant rise in
imports coming into Australia, which is part we believe of
the global of the implications of the global trade in
(02:26):
Brolio that we're seeing at the moment and changes there.
So business is having to adapt, whether large or small,
and of course business works from large too small and
small to large. So this pressure is being put on
right up and down supply chains for businesses to become
more productive and more adaptable. The final point I make
(02:47):
is that a lot of this is being driven by
labor and skill shortages. In Australia. We see significant skill
shortage across key areas of the economy, cross housing, across manufacturing, mining,
right across the economy. We're also seeing labor shortages and
emerging real issues around labor mobility in Australia, which is
(03:09):
all impacting on business, which is meaning business is going
to find new ways to get product to market quicker,
more cheaply, and more competitively.
Speaker 1 (03:18):
Okay, I like the three d's. I kind of understand
that is something I want to move on to now,
which some companies seem to have had problems within the
recent times, Optus being the most recent example. It's the
social license that a business has to operate. And I
don't know that we always think about it that much,
but from sort of Rio tinto a couple of years
(03:39):
ago blowing up minds through to optus. It's not just
the telcose, it's all business. How important is that.
Speaker 2 (03:47):
Oh, look, it's crucial. If you don't have what is
called social license to operate, it's very hard to get
traction and in fact, you're more likely to get opposition
and you're going to have difficulties trading. So a lot
of that is around getting involved in your community and
showing that, whether that is at the more basic level,
(04:07):
interacting with local schools in universities, particularly if you're in
a smaller town or regional center, getting the community on
board and aware of what you're doing, what you're providing,
the opportunities that you're giving to the community, whether it
be just local or regional, working with your supply chain
(04:29):
in an appropriate way. What we're seeing is community attitudes
have changed and very clearly changed, and business has to
be aware of that and keep up community attitudes towards
how business operates. Things like the modern slavery requirements that
businesses are working to at the moment, the workplace gender
(04:50):
equality agency work, A lot of that's a lot of
compliance work for business, but that's now expected from the
community to show that businesses are good corporate citizens. The
decarbonization component I talked about earlier as that's business demonstrating
that they are acting in an environmentally responsible way. So shareholders, customers,
(05:13):
communities all look at these sort of things for businesses
large and small to make sure that they are acting
in an appropriate way and that they're contributing to the economy. Undoubtedly,
business is still motivated by profit, by the need for
profit to grow and to expand and create jobs. But
there's also that community license which is incredibly important for
(05:35):
business to be successful and not to be targeted.
Speaker 1 (05:39):
Okay, what about the JEO political climate at the moment.
Clearly some industries are hit by tariffs more than others,
although even selling into the US, just the duties that
now have to be paid on smaller parcels, etc. We
hear a lot about it, I talk a lot about it.
But is it as big an issue for business as
it seems, or is it actually at the margins given
(06:02):
these other things we're talking about.
Speaker 2 (06:03):
It's a great question. It's multi layered and it's not uniform.
It's not across the economy. So at a headline level,
the US ten percent tariffs have different impacts on different sectors,
but overall I think you can make the claim that
it hasn't really made that much difference to Australia in
terms of the direct US ten percent tariff on Australia.
(06:27):
What's uncertain about the US is what happens around what's
called the Section two three two tariff's seeds are the
specific tariffs. You've seen some debate and discussion in the
past few days around pharmaceuticals for instance. Copper is another one,
steel is another. So there is about ten or twelve
quite clear components of the global economy which are going
(06:50):
to be impacted by quite specific tariffs, and they will
have impacts on different, quite distinct parts of the economy.
But overall, what is happening is in the Australian context
is the biggest impact is actually around our trading partners,
third party third country trading partners. So think of China, Thailand, Malaysia, Vietnam,
(07:14):
all of whom have been quite heavily hit by American tariffs,
and that's reorienting global trade. It's making business think about
who they partner with. This goes back to the diversification
d that I talked about earlier. That's where the biggest
impact directly at the moment is on businesses. The second
(07:35):
component of is that's just added incredible amount of volatility
and uncertainty into the equation. The old trading norms are gone.
We're now in a point where the trading system is
remaking itself, reinventing itself. Countries and nations are finding new
trading partners and new ways of trading, and businesses are
(07:57):
directly impacted by that. So we're in a period of
great uncertainty when it comes to global trade. Global shipping
has been impacted as well, and you know you mentioned
the small parcels, you know that got turned off for
a while, it's now turned back on. This adds into
the uncertainty and the unpredictability that business is dealing with
(08:19):
at the moment. But when you think Sean that one
in five Australian jobs is trade related, that broader impact
is where it's really been felt by Australian businesses and
they're just sort of, I would hesitate to say, muddling through.
They're doing better than that. There's been quite proactive, but
that uncertainty at the moment is really creating some difficulties and.
Speaker 1 (08:41):
I've been trying to stay away from government policy because
I think it's interesting to talk about non government policy
issues facing business. However, we are almost out of time.
But you know, in terms of government policy, be it
tax or I are what are the key things for
business that you'd like to see progressed.
Speaker 2 (08:57):
Well, I was at the Productivity round table held in
August and that progressed a few issues. So I'll just
quickly touch on a couple. One is government approach to tax.
You've already seen the government put out a request for
submissions around tax simplification, which is something we really push for.
An incredibly complex tax system that Australia has, which is
(09:20):
a disincentive to invest. Obviously, we want to look at
business taxes. We are at a headline rate about fourth
in the OECD on headline tax rates, but when you
take all taxes and business into account, payroll tax, land taxes,
insurances and the like, we're at number two behind Columbia.
So we need a big rethink around how we do
(09:43):
business tax and personal tax as well. Bracket creep is
a big issue for business because it's a disincentive for
people to work and work harder and strive to do better.
So tax forms a big issue, but we recognize no
quick fix. This is probably a three year project the government,
but will be heavily involved in that I do no
(10:04):
more harm proposition for business. Our business is absorbing massive
change in the industrial landscape over the past three years.
The government's got a couple of things that's working through
at the moment. We're consulting broadly around legislation of penalty rates,
around some more sort of what you might call paternity
leave arrangements, around noncompete clauses, and around pay Day's super
(10:26):
They're probably the four big issues that we're facing into
at the moment, apart from reviews of other legislation. But
let's try not to do more harm. And the third
one zero point two Sean is artificial intelligence on many levels,
where Australia gets to is going to be really important
for business. The guardrails that the government puts in place
(10:47):
around use of AI more broadly, that's a review that
we're involved in. Hopefully we're report by the end of
the year. AI from the industrial relations perspective as well,
where we get to into discussions with unions and government
around use of AI within workplaces. I think there's been
a pretty positive shift in that direction since the roundtable,
(11:09):
that's really important. And then the government's own use of
AI to improve business process from a business perspective, to
improve business processes, making regulation easier, things like tendering more streamlined.
All of those things are going to be incredibly important
for business. But look, there's a multitude of issues that
government is facing into that we're dealing with. I could
(11:32):
talk about energy costs all day and energy prices, but
i'd sort of point to those as things that are
front of mind at the moment at the moment for
business and trying to navigate those through pretty choppy waters
globally at the moment. We can't afford to be left behind.
We need to remain competitive and we need to be competitive.
A big parts of the economy are in recession or
(11:54):
have recession like conditions at the moment, so it's not
easy out there. So the role for where possible is
to enable business success and that's what we're pushing for.
Speaker 1 (12:04):
Inness. Thank you for talking to Fear and Greed.
Speaker 2 (12:06):
Thanks Sean.
Speaker 1 (12:07):
That was inners Willock's chief executive of the Australian Industry Group.
If you've got something you'd like to know, then sendsor
your question on LinkedIn, Instagram, Facebook, or at fearangreed dot
com dot au. I'm Sean Alematin. This is fear and
greed at Q and A
Welcome to Fear and Greed Q and A, where we
ask and answer questions about business, investing, economics, politics and more.
I'm Sean Aylmer. We've heard a lot lately about Australia's
productivity crisis and why reform is needed to boost our
economic growth. Today, I wanted to look at it from
the other side, rather than just waiting on action from
the government. What does business need to do in as
(00:27):
Willocks is the chief executive of the Australian Industry Group.
AI Group is a peak national employer organization representing thousands
of employers from large international companies operating in Australia through
to family run SMAs in it's welcome back to Fearing,
Greed Q and A.
Speaker 2 (00:41):
Hi Sean, great to talk with you again.
Speaker 1 (00:44):
Shortly we'll get to what you'd like to see from
government in terms of tax reform, red tape, et cetera.
But let's start with business itself. We've got a productivity
problem in Australia. How can business contribute to the solution.
Speaker 2 (00:57):
It's a great question because business just can't rely on
government and government alone, and nor should it. But government
has a big role here too, around the settings that
business can operate in. But notwithstanding that, there is a
big role for business, and businesses talking about it a
lot and is acting a lot. There's a three d's
(01:19):
we talk about sean one is decarbonization. Diversification is another
which is very important, and also digitalization is the third,
and businesses are heading down the track on all three
of those at the moment. Decarbonizing to fit in with
government policy, government approaches, but also good practice for customers,
(01:41):
for suppliers and the like very important for us to
help move towards our net zero by twenty fifty targets.
Diversification is looking at new markets, new products, new ways
of working basically, and digitalization fits into that. We all
talk a lot about artificial intelligence. We're also looking at
things like automation and robotics and the like. So business
(02:06):
is looking to become more productive in its own way
and in ways they can because the world around them
is changing. Global trade is changing. We've just got some
data out showing that we've seen a significant rise in
imports coming into Australia, which is part we believe of
the global of the implications of the global trade in
(02:26):
Brolio that we're seeing at the moment and changes there.
So business is having to adapt, whether large or small,
and of course business works from large too small and
small to large. So this pressure is being put on
right up and down supply chains for businesses to become
more productive and more adaptable. The final point I make
(02:47):
is that a lot of this is being driven by
labor and skill shortages. In Australia. We see significant skill
shortage across key areas of the economy, cross housing, across manufacturing, mining,
right across the economy. We're also seeing labor shortages and
emerging real issues around labor mobility in Australia, which is
(03:09):
all impacting on business, which is meaning business is going
to find new ways to get product to market quicker,
more cheaply, and more competitively.
Speaker 1 (03:18):
Okay, I like the three d's. I kind of understand
that is something I want to move on to now,
which some companies seem to have had problems within the
recent times, Optus being the most recent example. It's the
social license that a business has to operate. And I
don't know that we always think about it that much,
but from sort of Rio tinto a couple of years
(03:39):
ago blowing up minds through to optus. It's not just
the telcose, it's all business. How important is that.
Speaker 2 (03:47):
Oh, look, it's crucial. If you don't have what is
called social license to operate, it's very hard to get
traction and in fact, you're more likely to get opposition
and you're going to have difficulties trading. So a lot
of that is around getting involved in your community and
showing that, whether that is at the more basic level,
(04:07):
interacting with local schools in universities, particularly if you're in
a smaller town or regional center, getting the community on
board and aware of what you're doing, what you're providing,
the opportunities that you're giving to the community, whether it
be just local or regional, working with your supply chain
(04:29):
in an appropriate way. What we're seeing is community attitudes
have changed and very clearly changed, and business has to
be aware of that and keep up community attitudes towards
how business operates. Things like the modern slavery requirements that
businesses are working to at the moment, the workplace gender
(04:50):
equality agency work, A lot of that's a lot of
compliance work for business, but that's now expected from the
community to show that businesses are good corporate citizens. The
decarbonization component I talked about earlier as that's business demonstrating
that they are acting in an environmentally responsible way. So shareholders, customers,
(05:13):
communities all look at these sort of things for businesses
large and small to make sure that they are acting
in an appropriate way and that they're contributing to the economy. Undoubtedly,
business is still motivated by profit, by the need for
profit to grow and to expand and create jobs. But
there's also that community license which is incredibly important for
(05:35):
business to be successful and not to be targeted.
Speaker 1 (05:39):
Okay, what about the JEO political climate at the moment.
Clearly some industries are hit by tariffs more than others,
although even selling into the US, just the duties that
now have to be paid on smaller parcels, etc. We
hear a lot about it, I talk a lot about it.
But is it as big an issue for business as
it seems, or is it actually at the margins given
(06:02):
these other things we're talking about.
Speaker 2 (06:03):
It's a great question. It's multi layered and it's not uniform.
It's not across the economy. So at a headline level,
the US ten percent tariffs have different impacts on different sectors,
but overall I think you can make the claim that
it hasn't really made that much difference to Australia in
terms of the direct US ten percent tariff on Australia.
(06:27):
What's uncertain about the US is what happens around what's
called the Section two three two tariff's seeds are the
specific tariffs. You've seen some debate and discussion in the
past few days around pharmaceuticals for instance. Copper is another one,
steel is another. So there is about ten or twelve
quite clear components of the global economy which are going
(06:50):
to be impacted by quite specific tariffs, and they will
have impacts on different, quite distinct parts of the economy.
But overall, what is happening is in the Australian context
is the biggest impact is actually around our trading partners,
third party third country trading partners. So think of China, Thailand, Malaysia, Vietnam,
(07:14):
all of whom have been quite heavily hit by American tariffs,
and that's reorienting global trade. It's making business think about
who they partner with. This goes back to the diversification
d that I talked about earlier. That's where the biggest
impact directly at the moment is on businesses. The second
(07:35):
component of is that's just added incredible amount of volatility
and uncertainty into the equation. The old trading norms are gone.
We're now in a point where the trading system is
remaking itself, reinventing itself. Countries and nations are finding new
trading partners and new ways of trading, and businesses are
(07:57):
directly impacted by that. So we're in a period of
great uncertainty when it comes to global trade. Global shipping
has been impacted as well, and you know you mentioned
the small parcels, you know that got turned off for
a while, it's now turned back on. This adds into
the uncertainty and the unpredictability that business is dealing with
(08:19):
at the moment. But when you think Sean that one
in five Australian jobs is trade related, that broader impact
is where it's really been felt by Australian businesses and
they're just sort of, I would hesitate to say, muddling through.
They're doing better than that. There's been quite proactive, but
that uncertainty at the moment is really creating some difficulties and.
Speaker 1 (08:41):
I've been trying to stay away from government policy because
I think it's interesting to talk about non government policy
issues facing business. However, we are almost out of time.
But you know, in terms of government policy, be it
tax or I are what are the key things for
business that you'd like to see progressed.
Speaker 2 (08:57):
Well, I was at the Productivity round table held in
August and that progressed a few issues. So I'll just
quickly touch on a couple. One is government approach to tax.
You've already seen the government put out a request for
submissions around tax simplification, which is something we really push for.
An incredibly complex tax system that Australia has, which is
(09:20):
a disincentive to invest. Obviously, we want to look at
business taxes. We are at a headline rate about fourth
in the OECD on headline tax rates, but when you
take all taxes and business into account, payroll tax, land taxes,
insurances and the like, we're at number two behind Columbia.
So we need a big rethink around how we do
(09:43):
business tax and personal tax as well. Bracket creep is
a big issue for business because it's a disincentive for
people to work and work harder and strive to do better.
So tax forms a big issue, but we recognize no
quick fix. This is probably a three year project the government,
but will be heavily involved in that I do no
(10:04):
more harm proposition for business. Our business is absorbing massive
change in the industrial landscape over the past three years.
The government's got a couple of things that's working through
at the moment. We're consulting broadly around legislation of penalty rates,
around some more sort of what you might call paternity
leave arrangements, around noncompete clauses, and around pay Day's super
(10:26):
They're probably the four big issues that we're facing into
at the moment, apart from reviews of other legislation. But
let's try not to do more harm. And the third
one zero point two Sean is artificial intelligence on many levels,
where Australia gets to is going to be really important
for business. The guardrails that the government puts in place
(10:47):
around use of AI more broadly, that's a review that
we're involved in. Hopefully we're report by the end of
the year. AI from the industrial relations perspective as well,
where we get to into discussions with unions and government
around use of AI within workplaces. I think there's been
a pretty positive shift in that direction since the roundtable,
(11:09):
that's really important. And then the government's own use of
AI to improve business process from a business perspective, to
improve business processes, making regulation easier, things like tendering more streamlined.
All of those things are going to be incredibly important
for business. But look, there's a multitude of issues that
government is facing into that we're dealing with. I could
(11:32):
talk about energy costs all day and energy prices, but
i'd sort of point to those as things that are
front of mind at the moment at the moment for
business and trying to navigate those through pretty choppy waters
globally at the moment. We can't afford to be left behind.
We need to remain competitive and we need to be competitive.
A big parts of the economy are in recession or
(11:54):
have recession like conditions at the moment, so it's not
easy out there. So the role for where possible is
to enable business success and that's what we're pushing for.
Speaker 1 (12:04):
Inness. Thank you for talking to Fear and Greed.
Speaker 2 (12:06):
Thanks Sean.
Speaker 1 (12:07):
That was inners Willock's chief executive of the Australian Industry Group.
If you've got something you'd like to know, then sendsor
your question on LinkedIn, Instagram, Facebook, or at fearangreed dot
com dot au. I'm Sean Alematin. This is fear and
greed at Q and A
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