Macquarie Conference: CEOs call on Albanese Government to use win to address productivity crisis

Australia’s top companies are calling for a renewed focus on reform, with Labor now holding an expanded mandate and likely facing a third term.

Top of mind is restoring Australia’s productivity, which fell by 1.2 per cent last year and is at fifty-year lows.

Opening the Macquarie Australia Conference, the Bank’s chief executive Shemara Wikramanayake said the country had shown enormous resilience throughout recent and longer-term turmoil, thanks to its strong institutions, rule of law, and liquid and transparent capital markets. But the price of such luck, she warned, was “complacency” rather than a driver for change.

Ms Wikramanayake said that with a clear majority, government and business needed to start thinking about the “big structural shifts” caused by the unwinding of the global world order.

Wesfarmers chief executive Rob Scott echoed Ms Wikramanayake’s concerns and said Australia “will not be a prosperous nation and the economy will not continue to grow unless business grows.”

“Business provides six out of seven jobs in Australia. High levels of government spending, stimulus and handouts will only keep us going for so long. (There’s) never been a more important time for reform.”

The call to action comes as Macquarie’s chief economist Ric Deverell warned that despite relative calm in equity markets following Donald Trump’s sweeping tariff program, the world faced a “seismic” shift in global trade.

“What we’re seeing now is actually an historic shock,” he said.

“This is just an enormous trading relationship. These are the two biggest economies in the world. They are mutually complementary. If this level of tariff persists for any period of time, trade between these two countries will grind to a halt.”

Tariffs were top of mind for CEOs at the conference, many of whom are navigating fracturing supply chains.

Heath Sharp, chief executive of ASX-listed plumbing supply company Reliance Worldwide, which exported $120 million worth of product from Chinese factories to the US last year, said the firm was looking to completely remove Chinese manufacturers from its supply chain.

Entire teams had been repurposed to manage the imposition of tariffs across thousands of products.

“We’ve shifted essentially all of our resources to dealing with this across all regions, not just in the Americas. This is a global issue for us, and it’s all hands on deck,” he said.

Mr Sharp said the company was already feeling the impact on sales from the uncertainty caused by Mr Trump’s policies.

“There are definitely decisions being made or not being made right now. Build out, you know, add another bathroom, build out the basement, buy a new home, sell your home. So that’s been deferred in some cases,” he said.

On the other side of the trade war, China was expected to hold out more effectively, according to SGH chief executive Ryan Stokes.

SGH, which supplies equipment to the infrastructure and resources sectors through its Coates and Westrac businesses, was focused on maintaining cost controls in response to client activity. But Mr Stokes remained bullish on China’s resources demand.

“We’re confident in the outlook for China’s economy. They have a pretty substantial domestic economy with the ability to stimulate growth, so they can navigate through trade-related issues,” he said.

“We think that’s going to be strong for iron ore, strong for coal, strong for gas, strong for those primary resources, critical minerals, and gold.”

Mr Stokes said he was also confident that a commitment to increased defence spending, homebuilding, and ‘nation-building’ infrastructure projects would be positive for SGH, but warned the government needed to focus on productivity “so we can afford to have this wage inflation.”

“We’ve got to look at how we get more productive, how we adopt the right technologies that ultimately can drive better growth through the economy, which the private sector is going to have to do,” he said.

While most CEOs were focused on long-term reform, Ingham’s chief executive Andrew Reeves provided a stark reminder of the cost-of-living issue that dominated the election.

One of the largest poultry suppliers in the country, Ingham’s had seen customers downgrade from free-range chicken to cheaper alternatives, turning away from higher-margin products like pre-sliced or marinated cuts.

The company, which recently negotiated a three-year wage deal with four per cent annual increases, said it was investing in automation to reduce labour intensity. Mr Reeves agreed that boosting worker productivity should be a priority of the next Labor term.

“One of the things that would be really helpful is around productivity, labour laws, labour mobility, labour flexibility, those sorts of issues,” Mr Reeves said.

Craig Scroggie, CEO of data centre operator NextDC, with a market capitalisation of $8.7 billion, said the productivity conversation would rapidly evolve in the age of artificial intelligence.

The long-time evangelist for the technology was riding high after shares surged 8 per cent on Tuesday, following a series of major new deals that grew customer numbers by 30 per cent in the first quarter.

Mr Scroggie said AI was the most significant development in his 30 years working in technology, and that Australia had a front-row seat to become a leading adopter and provider, especially given the breakdown in relations between the US and China.

That would be possible, he said, if Australia settled on a comprehensive energy policy that considered all options, including nuclear.

“Now that the election is over, I hope we’ll be able to focus on a solid long-term energy strategy that will allow us to get multiple Net-Zero baseload technologies in place over the course of the next decade or two, rather than one political cycle. I think you’ve got to take a science-based approach, rather than an ideology-based approach,” he said.

Get the AI settings right, and the productivity question could take care of itself.

“Our thinking on how we measure productivity has to continue to evolve,” Mr Scroggie said.

“Using artificial intelligence to improve productivity is probably one of the greatest opportunities that we’ve had in our lifetime, to be able to do more, to have more knowledge, to produce more. The real opportunity is to enhance the workforce we have today, make them more productive and be capable of solving problems we’ve never solved historically.”