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Speech delivered at the UBS Australasian Virtual Conference on 15 November 2021. 

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I extend my respect to Aboriginal and Torres Strait Island people, the world’s most ancient continuous civilisation on Earth. It is a privilege to begin by acknowledging the traditional custodians of the land on which we all stand today and I pay my respects to elders past, and present. My thanks to Anthony Sweetman, joint country head and CEO of UBS Australia for the invitation to join you today. 

Good morning honoured guests, ladies and gentlemen. 

 

SETTING THE SCENE

On my way back from COP26, which I attended as a member of the B-Team, I was reflecting on what I saw as a significant shift - the scale of engagement and involvement by the business community. It is clear to me that action on climate change, keeping warming to below 1.5 degrees and reaching net-zero as soon as possible and no later than 2050 is now a pillar of business strategy. The climate crisis is bad for business and business has now stepped up to solve it. 

On Monday in the United States, President Biden will be signing the Bipartisan Infrastructure, Investment and Jobs Act delivering 1.2 trillion US dollars of investment into the US economy. This investment in 21st-century infrastructure is not only an investment in hard infrastructure. It is also an investment in the digital infrastructure that marries technology, data, robotics and cyber security to bring the hard infrastructure into the 21st century. 

This is momentous, and it was made possible, because over the past 24 months, leaders of businesses and sectors trusted by Democrats and Republicans came together as the Build Together Coalition which I co-led,  to call for both sides of politics to unite in the best interest of the country. 

And Washington answered the call. In the last year or so I worked with the BIden Team to put together a business supported policy. And in the last few years I’ve been dedicating a fair amount of my time to the subject of the energy transition and modern manufacturing. 

 

I have been spending a lot of time with key leaders such as Prime Ministers, Ministers from the G20 Countries and CEOs of leading US and global companies and recently with Climate Envoy John Kerry. And as I met with climate activists, global researchers, economists and leaders of global public and private institutions, three themes emerged consistently - the need for leadership, innovation and the need to take action on the climate. While it was accepted that the transformation of the global economy to keep our planet from warming no more than 1.5 degrees and reaching net zero as soon as possible and not later than 2050 is an wicked challenge. 

I regard it as the most significant opportunity in the world today. 

EMERGENCE OF GLOBALISATION 2.0

As we enter globalisation 2.0, it is time to see the ambition of our business leaders writ large. It is time to see leaders grab the opportunities hiding in plain sight and accelerate the transformation of their businesses. I want to see leaders doing good and doing well for their stakeholders and the environment. While at Cop26 with the B-Team, I noticed I was among business leaders who are comfortable with risk. Those who knew how to assess it and those who knew how to take it. It is time for the risk takers to lead. 

It is time for boards to promote leaders who are prepared to take a risk and give them incentives to do this important work. We need leaders who will contribute to building a new sustainable economy. One that reuses and replenishes and one that can lead the transition, justly. 

This work is not for the faint-hearted. There’s a great deal of uncertainty - and as we are reminded constantly, business hates uncertainty. This work is not for the risk-averse - and with a few exceptions,  Australian boards and c-suite are not known for being risk-takers in the face of business disruption. This work requires courage.

A QUESTION OF COURAGE

 

Just like the courage shown by  Dr Albert Bourla, the Chairman and CEO of Pfizer. Dr Bourla faced a global challenge the likes of which no one had encountered. A global pandemic. 

He was running a pharmaceutical company at the very time the world needed a vaccine. He was faced with a simple question to a complex challenge - if not Pfizer, then who? 

During his conversation with me recently for The Hellenic Institute, Dr Bourla shared his experience. He could see people dying, economies straining and he knew that he had the scientific capability, the scale and resources at Pfizer to act. His message to the team at Pfizer was to focus on coming up with a solution that worked - fast. 

Not to focus on the USD2 billion he was investing to produce it. 

He said that at the time he thought “If we fail, we have bigger problems to deal with than writing off two billion dollars”.

Dr Bourla showed the leadership required by taking action. He didn’t wait for the government to ask. He didn’t wait for the consultants to prepare the deck. 

He did what leaders do. Dr Bourla rallied his team to create a plan and advised his board. He knew from experience that people have a tendency to severely underestimate what they can do and aim for incremental change. 

But the goal of creating a vaccine in record time required a transformational approach. Not one that was incremental. 

The team at Pfizer were forced to think out of the box. They needed to take a vaccine that would normally take eight years to create and make it in months and ensure that it worked. Otherwise, people would die in large numbers. 

The Pfizer team realised that it wasn’t about them. It was about finding a way to solve the problem for the world. 

Failure, as they say, was not an option. To their credit, after a number of iterations of their plan, they delivered - in quantities, we have never seen before - in the billions of doses. 

And when the Pfizer vaccine was developed, they had to ensure that it could reach those who needed it as quickly, equitably and justly. Pfizer delivered the vaccines at a price that everybody could afford. It was the cost of a takeaway meal for wealthy countries. Half that for middle-income countries and at cost for the developing world. 

Dr Bourla and his team showed the type of leadership we needed. And the world is grateful they did. 

THE NEXT GLOBAL PROBLEM

The threat posed by the climate crisis is no less significant a challenge and its impact on humanity a greater threat than we have just faced. Especially for older generations, the poor and those with a disability. We need the same determination, the same will and the same courage as that displayed by Dr Bourla and his team at Pfizer to limit the planet’s warming to create more sustainable economies. So what does that look like now? 

THE OPPORTUNITY

I made a case for change in my book “Make it in America” which was published in 2011 - 10 years ago. 

An important feature of the book was an All of the Above Energy Transition Strategy. President Obama with whom I worked for 8 years, President Trump and now, President Biden embraced the approach and the transformation of the US economy began in 2014. This All of the Above Energy Transition Strategy, has 4 key phases, that are designed to run simultaneously (in parallel):

  1. First, a focus was put on making best in class energy efficiency standards ubiquitous 
     

  2. Second, the fossil fuel mix was then to be optimised to lower emissions as we headed towards eliminating them from the mix completely. This must be done without disadvantaging those who can least afford to pay. 
     

  3. Third, a move to renewables was to be accelerated and for investments to be made in solar and wind and geothermal and hydro and nuclear. I called for innovation hubs that worked with the universities and national labs on technologies like lightweight metals, batteries, fuel cells, etc.  
     

  4. And finally for financial markets and regulators to put in place the rulebooks to do this with:

  • a price on carbon and removing fossil fuel subsidies  - this is now a subject that is a real-time discussion with the G7 plus 4 (including Australia). 

  • Appropriate research and development incentives

  • appropriate and transparent metrics, such as those developed by the Task Force on Climate-related Financial Disclosures and MSCI.

 

All four phases began in 2014 - seven years ago. And the final phase derailed although it is now back on the table.

It is 2021. The problem hasn’t disappeared, as we saw during Cop26, the challenge has become more pressing. The opportunities, however, with the advancement of research and technology have only increased. So what is our current challenge?

 

It is the speed of transformation. Like the challenge faced by Dr Bourla, we don’t have time for incremental change.

The change I’m talking about is transformational and it comes with greater risk and greater cost. That’s the price of delaying action until now. 

CARBON PRICE
 

I mentioned the fourth phase of - setting a price on carbon was derailed. 

 

Doing the hard things is not a choice, it’s a necessity, so let me talk about the need for a market-based carbon price for a moment. I fully appreciate Australia’s fraught history with a carbon price. I recognise that it is one of those issues that, if not well explained, meets a great deal of resistance. 

If a carbon price is interpreted as an increased cost to the consumer, that’s a non-starter. And if a carbon price mechanism is seen as enriching bankers, that’s a non-starter, too. 

 

While it is not low hanging fruit, it is now worth the effort. Businesses need a price on carbon to inform investment choices. And so, for those who choose to frame the carbon price as a tax let me say this as clearly as possible - a carbon price set by the market is not a tax. 

Let me repeat that - a carbon price set by the market is not a taxNo sensible business person would agree to a tax on carbon. What business is looking for is a mechanism to set a price to incentivise behaviour not more penalties to the cost of doing business. To frame it as a tax again is disingenuous and dangerous to the future success of the critical global economic transformation on which we are embarking in order to achieve our climate targets. 

I will call out the strategy that was employed to scuttle the price on carbon to win an election. I don’t have to win elections. I have been a businessman for more than 45 years. And while business is unfairly regarded as leaning right in Australia, I have always positioned my conversations as a centrist. 

 

I have worked with prime ministers in Australia from both sides of politics for the past 17 years. I’m interested in what’s good for the country. And in this instance, what’s good for the planet. California has had a model that is working, Europe, has had a carbon price for 16 years. Australia had one 12 years ago. It’s time we had one again. 

You would think that the economists might be split on the issue? Interestingly, they’re not. 86% of those surveyed were for an “economy-wide carbon price…". I will do everything I can to support those prosecuting the case for a market-based price on carbon, including OECD Secretary-General, Mathias Cormann who has recently come to the same conclusion. 

To build consensus in the United States, Australia and other Western democracies around carbon pricing, we may need to look at establishing a business-led coalition similar to the Build Together coalition that we put together to get the historic 1.2 trillion dollar Bipartisan Infrastructure Investment and Jobs Act across the line for President Biden. 

As I said recently, my convening power is known by the government, and I repeat that if I’m asked to please help get the private sector to lead on carbon pricing, then I’ll say yes.

REMOVING FOSSIL FUEL SUBSIDIES

Another feature of the All of the Above Energy Transition Strategy is the removal of 1.8 Trillion US dollars in fossil fuel subsidies and the implementation of appropriate and transparent metrics, such as those developed by the Task Force on Climate-related Financial Disclosures and MSCI.

FINANCIAL REPORTING STANDARDS

And I am pleased to say that progress on financial reporting standards was made at COP26. In response to what chairman Erkki Liikanen described as an ‘overwhelming global demand’, the International Financial Reporting Standards Foundation Trustees announced at COP26  the development of a comprehensive global baseline of sustainability disclosures for financial markets.

That work is to be undertaken by the new International Sustainability Standards  Board. The Board will focus on meeting the sustainability information needs of investors for assessing enterprise value and making investment decisions. These standards will help investors understand how companies are responding to ESG issues, like climate, to inform capital allocation decisions.

INVESTMENT

In the All of the Above Energy Transition Strategy, there’s a case made for changing the investment mix. 

As many of you know, I chair Blackrock’s Long Term Investment Fund, so I was particularly pleased to hear Larry Fink, the CEO and Chairman of Blackrock, reflect on the response to climate change as creating a massive opportunity.  

He thinks the next 1000 unicorns will be developing businesses that bring to market: 

  • clean hydrogen - yes, you heard me right, clean hydrogen, both blue and green

  • advanced agriculture

  • green steel 

  • green cement. 

 

We are already seeing the greening of entire industries. Trillions of dollars of investment will be made in low carbon projects in emerging markets. It’s not just Larry Fink who can see the opportunity. John Doerr also picks up on the opportunity for investment and innovation. He is doubling down on investing in cleantech to tackle the climate crisis. 

John is an engineer, a venture capitalist, the chair of Kleiner Perkins, and the author of the #1 New York Times bestseller Measure What Matters. Speaking around the arrival of his new climate book Speed and Scale: An Action Plan for Solving Our Climate Crisis Now, John identified  six steps to solve the climate crisis:

  1. Decarbonise the grid

  2. Electrifying transportation

  3. Fix the food system 

  4. Protect nature

  5. Clean up industry

  6. Remove carbon

 

My view is that we need to double down on certain technology pathways that can be accelerated if we set up an efficient market-based carbon trading system. 

Those technologies are pretty much what John Doerr and Bill Gates have outlined: 

  1. Carbon Capture and Storage to enable clean hydrogen from natural gas

  2. Blue and Green Hydrogen

  3. Low carbon fuels for Aviation. 

  4. Nuclear Energy - specifically next-generation distributed nuclear

  5. Direct Air Capture Technology

  6. Battery materials and next-generation batteries for more efficient ESS and EVs

By creating these technologies we are able to solve a number of problems and create better paying jobs. We can substantially reduce emissions and introduce more options for abatement where emissions are inevitable. 

Most importantly we can build these companies with an eye to understanding the provenance of their inputs and a commitment to the circular economy so that our economy becomes more sustainable. 

CARBON CAPTURE AND STORAGE

CCS technologies play four strategic roles in the transition to net-zero:

  1. Tackling emissions from existing infrastructure

  2. A cost-effective pathway for low-carbon hydrogen production

  3. A solution for the most challenging emissions

  4. Removing carbon from the atmosphere

After years of a declining investment pipeline, plans for more than 30 new integrated CCUS facilities have been announced since 2017. The vast majority are in the United States and Europe, but projects are also planned in Australia, China, Korea, the Middle East and New Zealand. If all these projects were to proceed, the amount of global CO2 capture capacity would more than triple, to around 130 Mt per year.

Almost USD 9 billion in CCUS support was included in the USD 1.2 trillion Infrastructure Investment and Jobs Act passed by the Senate in August 2021. And one Australian company has attracted the attention of Marc Benioff’s TIME Ventures and investors including Main Sequence Ventures, the Clean Energy Finance Corporate, Grok Ventures and others as investors in agri-tech startup Loam Bio has raised a $40m round to develop its carbon capture and storage capability. 

Loam Bio was developing a microbial seed application to boost crop yields and help sequester carbon in the soil. They are aiming to have a product widely available on the shelves by 2023. 

CLEAN HYDROGEN

Let’s talk about clean hydrogen. Dr Alan Finkel – the federal government’s special adviser on low-emissions technology and a former chief scientist has observed that  “The world’s going to need a lot of hydrogen, and so the more ways we can get that hydrogen the better”. Finkel said CO₂ from hydrogen production will need to be captured and stored – in fact, he argued, importing countries would insist on it. This, Finkel says, means hydrogen from fossil fuels would be “clean hydrogen”.

Clean hydrogen can be produced from different sources, including renewable electricity (green hydrogen) and natural gas reforming with carbon management technologies (blue hydrogen). If hydrogen is produced with biomass or biogas with carbon management technologies, this would result in negative emissions, removing CO2 from the atmosphere.

The clean hydrogen industry for Australia, as examined in the National Hydrogen Strategy will create an estimated 8,000 jobs and $11 billion a year in GDP, and result in avoided greenhouse gas emissions equivalent to a third of Australia’s current fossil fuel emissions by 2050. 

Global demand is projected to increase to 100 million tonnes by 2030 and exceed 500 million tonnes by 2050. 

Demand for clean hydrogen will partly be driven by its capacity to replace grey hydrogen in existing processes, the greatest contributing factor to future hydrogen demand is forecast to be in emerging uses as a replacement for carbon-based fuels, including petrol, diesel, natural gas and bunker fuel. 

Japan and South Korea have clearly indicated their ambitions to transform themselves into hydrogen-fueled societies by 2050 through their national hydrogen strategies, and are substantiating these ambitions through significant investments into research, development and commercialisation of green hydrogen technologies and by developing international supply chains.

Platts hydrogen price assessments show northwest European and Japanese markets as price takers, with Australia one of several lower-cost renewable hydrogen production sources well placed to develop future exports.

Breakthrough Energy, co-founded by Bill Gates, has invested in a new green hydrogen research and development venture - the European Green Hydrogen Acceleration Centre with the aim of closing the price gap between current fossil fuel technologies and green hydrogen. 

Fortescue Future Industries is establishing a global portfolio of renewable green hydrogen and green ammonia and plans to supply 15 million tonnes globally per year of renewable green hydrogen by 2030.

And every Australian state government has now made an investment or has signalled making an investment to support the development of a clean hydrogen sector. Because certain sectors such as aviation and heavy industry are difficult to decarbonise, carbon removal technologies can offset their emissions and support a faster transition. Carbon removal is expected to be key in the transition to a net-zero energy system in which the amount of CO2 released into the atmosphere is equivalent to the amount being removed. 

DIRECT AIR CAPTURE

Direct air capture is one of few technology options available to remove CO2 directly from the atmosphere. The CO2 can be permanently stored in deep geological formations (thereby achieving negative emissions or carbon removal) or it can be used, for example in food processing or combined with hydrogen to produce synthetic fuels.  

Greater attention and backing for DAC is coming from both the private and public sectors and there is funding in the Bipartisan Infrastructure, Investment and Jobs Act for 4 DAC projects. 

NUCLEAR ENERGY

It is worth observing that nuclear energy presents a strategic regional opportunity.  I recognise Australia is not yet ready to have this discussion. When it is, it will see that nuclear energy can be used as electricity and heat, it is uniquely capable of allowing businesses to add value to our raw materials in a zero-carbon way. 

Our ability to repurpose coal-fired power plants with nuclear plants utilising existing infrastructure and job-for-job creation. To do this, action is required now and for the next decade because nuclear energy is not an overnight proposition. We need time to develop the institutional structures, talent pool, infrastructure, legal framework, and market to be ready to successfully procure and deploy Small Modular Reactors. 

This will improve the flexibility and resilience of our power networks during anticipated extreme weather events or international energy supply chain disruption. The price of nuclear heat and electricity is highly insensitive to nuclear fuel prices and distributed nuclear, in the form of micro-reactors, can provide high reliability, low cost, readily scalable power to remote communities and mining operations so that fragile electricity lines and expensive networks can be decommissioned. 

But first there needs to be agreement that nuclear power is an option. 

BATTERY MATERIALS AND NEXT-GENERATION BATTERIES

Now to batteries. Overall investment in battery storage increased by almost 40% in 2020, to USD 5.5 billion. Spending on grid-scale batteries rose by more than 60%, driven by the push for renewables investment and the growing presence of hybrid auctions with storage. 

And, investments in behind-the-meter storage fell by 12%, as these assets are generally financed by households and small and medium companies, which were generally more affected by the Covid-19 crisis. 

Rapidly scaling up energy storage systems will be critical to addressing the variability of wind and solar PV, especially as their share of generation increases rapidly in the Net Zero Emissions by 2050 Scenario. A key speculation for the future of energy storage is the extent to which EV technology developments can “spillover” into grid-scale batteries. 

Given that the market for EV batteries is already ten times larger than for grid-scale batteries, the indirect effects of innovation and cost reductions in mobility applications could provide a significant boost. We are expecting over 240 million EVs to be on roads by 2027. India alone will be adding 23 new EV car models in the next 18-24 months. 

The Indian Government’s Shared Connect and Electric target is to reach 100% by 2030. There is more than 26% EV organic growth, and the government of India has shared an EV vision of investing USD 206 bn. That’s just in one developing nation. 

CRITICAL MINERALS

Critical to the success of EVs is the need to make energy storage more efficient and accessible, for automakers as well as other vehicle manufacturers and power companies. Critical minerals are used to manufacture batteries, turbines, solar panels and power cables that will underpin a decarbonised energy system. 

As IEA executive director Dr Fatih Birol, observed recently: “Critical minerals are not a sideshow in our journey to reach climate goals – they are a part of the main event.” 

A shortage of critical minerals is on the horizon that threatens to jeopardise the low-carbon transition and destabilise global energy security unless immediate efforts are made to safeguard future supply chains. The good news is that Australia currently controls a sizable portion of global output, according to the IEA, while China dominates refining.  

There are significant opportunities for Australia if we can produce critical minerals in a sustainable and responsible manner. An effective recycling industry could stabilise global lithium supplies to meet consumer demand. This is important, because electrification and the switch to renewables will create unprecedented demand for products like lithium, copper, cobalt, nickel and rate hearts. 

MODERN MANUFACTURING STRATEGY

The opportunity to build our processing capacity onshore in critical minerals is timely. Where once we ranked 55th in 1995 on the Index of Economic Complexity created by Harvard University, in 2018 Australia has slipped to 87th. This coincided with the increase in our exports of raw materials to our biggest customer increasing to 40% and being primarily made up of resources. 

 

At a time when Australia⁩ added only ⁨3⁩ new products between 2004 and 2018(A product is considered ‘new’ if it was absent 15 years ago and present today). The three products? Activated carbon, Hydrochloric acid and Lead foil. These products contributed $⁨2⁩ in income per capita in 2019 while:

  • Canada⁩ added ⁨8⁩ new products between ⁨2004-2018⁩ and these products contributed $⁨48⁩ in income per capita in ⁨2019⁩
     

  • Ireland⁩ added ⁨5⁩ new products between ⁨2004-2018⁩ and these products contributed $⁨768⁩ in income per capita in ⁨2019⁩
     

  • Singapore⁩ added ⁨17⁩ new products between ⁨2004-2018⁩ and these products contributed $⁨1,746⁩ in income per capita in ⁨2019⁩
     

I led the development of a Modern Manufacturing Strategy for the Prime Minister, which has now been implemented by the Government. It is designed to have value being added to the raw materials extracted in Australia by creating an advanced manufacturing capacity. In this way, we are able to create better-paying jobs, the companies that create these jobs and we are able to train the workers to have the skills to do these jobs. 

The focus of the Modern Manufacturing Strategy is not more spending. The focus is on putting a deliberate emphasis on delivering better outcomes with the funds currently invested by the government in innovation. Taxpayers already spend between $6-8billion each year to fund programs to spur innovation. While developing the Modern Manufacturing Strategy, we recognised that choices need to be made. Yes, that means picking winners. Which involves identifying sectors, not companies. 

The Modern Manufacturing Task Force Report identified a number of high potential sectors that play to Australia’s strengths. They are: 

  1. Space
     

  2. Medical products
     

  3. Resources technology and critical minerals processing
     

  4. Food and beverage
     

  5. Defence
     

  6. Recycling and clean energy

This strategy is designed to deliver sectoral strength that will endure. We need more deliberate investment, the building of ecosystems around specific sectors. 

 

The world’s leading nations are sitting at around Industry 4.0 and I’m thinking of Germany when I make that statement. Australian industry is regarded by many around the world as hovering around the Industry 2.0 level, some might argue we are at Industry 3.0. Our opportunity is to leapfrog to Industry 5.0.

Why advanced manufacturing? Because when we own production, we own research and development and if we own research and development, we own the products. This then becomes our competitive advantage and comparative advantage. Manufacturing then becomes a capability and modern manufacturing becomes an ecosystem. 

I have already mentioned our advantage in the critical minerals space. 

We have existing advantages in each of the sectors chosen and we are able to unlock the opportunities with deliberate and targeted investments. 

THE CIRCULAR ECONOMY

We believe there are significant opportunities in recycling. 

The World Business Council for Sustainable Development calculates that this is a $4.5 trillion commercial opportunity.

In a circular economy, products last as long as possible, and when they need to be scrapped they are recycled and the materials are reused. As such, the measurements look at every stage of consumption and post-consumption. 

A factor that reduces the circularity of Western and Northern European countries is their tendency to produce a lot of garbage. These include how much garbage and food waste is produced, how much of that waste is recycled, and how much of that recycled material is actually reused. 

 

They also include the volume of recyclable materials traded, how many patents are filed having to do with the circular economy, and how many jobs are created in "circular economy sectors" (most of which are in repair and maintenance).

In general, countries with the highest circular economy scores — Germany, the U.K. and France — have robust recycling systems and high levels of innovation in circular economy sectors, a high number of patents and investments and jobs in circular economy sectors.

For Australia, where the value of its natural resources lies only in the raw, unprocessed state, a circular economy is critical in ensuring future prosperity and economic security. It is an issue that needs to be as prominent as ESG is in Australian boardrooms.

REGIONAL ALLIANCES

Australia is a member of APEC and ASEAN and a number of Free Trade Agreements have been negotiated with countries in our region, including the recently concluded Regional Comprehensive Economic Partnership (RCEP) and the  Comprehensive and Progressive Agreements for Trans-Pacific Partnership.

We have Free Trade Agreements with Singapore, Thailand, Malaysia, Korea, Japan, China, Indonesia and those we are working to conclude with the EU, the Gulf Cooperation Council, India, the UK and the Pacific Alliance. 

Increasingly, opportunities for cooperation are unfolding between the US and Australia through the established Free Trade Agreement, and more recently with the UK through the establishment of AUKUS Alliance and with Japan and India via the Quad.

This level of engagement opens opportunities for companies to supply chains in each of these economies, which is increasingly attractive as Australia reshapes its export market basket. 

SUPPLY CHAINS

Healthy regional relationships are important for the security of supply chains. 

The pandemic challenged supply chains and led to acute shortages including in critical minerals and semiconductor chips.

It is estimated that the shortage of chips will cost the global automotive industry alone $210 billion in revenue in 2021. 

The disruption to supply chains has seen consumer prices soar. In the United States, these are now up 6.2% from a year earlier – higher than most economists’ estimates and the fastest increase in more than thirty years. The question now is whether the costs are transitory or permanent? 

LABOUR SHORTAGE

Another challenge exacerbated by the pandemic, although not necessarily caused by it,  is a labour shortage. 

In the United States sectors particularly affected by workers quitting their jobs were accommodation and food services, wholesale trade and state and local government education.

This matters because coupled with supply chain disruptions, key industries are struggling to regain momentum.

Which in turn is having a material impact on economic growth and causing product and service shortages for consumers. In the United States, there are more than ten million job vacancies spread across all sectors with a record proportion of companies raising pay to try to attract staff. 

Australian employers are also facing labour shortages and responding by calling for more inbound workers, increasing salaries and incentives to attract and retain staff.

All this while Australia’s:

  • Unemployment rate rose 5.2%.

  • The Underemployment rate increased to 9.5%

  • And the Underutilisation rate rose to 14.7%

 

Tim Harcourt, the chief economist at the University of Technology Sydney, believes that education, not a reliance on foreign workers, is the key to solving Australia's labour market problems. It is a challenge that will need to be overcome. As economies transform, the demand for labour rises which in turn hampers growth. 

CLOSE

The task is enormous and the stakes are high.

The time for debate and waiting for governments to take the lead has ended. 

It is time for business to lead. 

We can see this as the greatest opportunity that has presented itself in our lifetime. 

We can recognise the opportunity and embark upon transformational change.

We can step up to the opportunity and enter that supply chain to assist the US in achieving its infrastructure ambitions.

 

We can unlock opportunities by entering regional supply chains to create new markets for our goods and services.

We can take the opportunity to invest in modern manufacturing and introduce new products to our export basket to more markets. 

We can seize the opportunity and create a market mechanism that puts a price on carbon to encourage businesses to make the investments needed to halve emissions by 2030 and achieve net zero as soon as possible and before 2050 

 

We can embrace the opportunity to upskill our existing workforce and give them access to better-paying jobs, reskill those who are unemployed and welcome more immigrants to support a  growing economy. 

This is an opportunity for businesses to plan and execute this transformation in a methodical, sensible, pragmatic and just way.

It is an opportunity for business leaders to take the risks we want, to deliver the outcomes we need. 

And as Dr Bourla observed at a time when failure was not an option - If not us, then who?

We can do transformational change if we think boldly and act courageously.

Thank you.