Transcript of Question & Answer Session Panel Participation at the AFR Business Summit

I thank everyone for being here and a particular welcome to Sarah; it’s her first public appearance as the new RBA Assistant Governor and Chief Economist. I might take the opportunity just to get a very quick read on the economy from you, Sarah, because we had the national accounts out last week. Growth fairly slow – just 0.2 per cent in the December quarter, in per capita terms going backwards. Also, I think people would be interested to know about how you’re seeing the inflation pulse. I think there’s a perception out there – whether it’s accurate or not – that maybe the economy is slowing faster and inflation is coming down quicker than the RBA anticipated. But how are you seeing those two things?

Thanks, John. It’s a pleasure to be here. As you’ve said, it’s my first public engagement, so I’m really happy to be doing it here today. In terms of the national accounts, broadly speaking, the numbers actually came in line with what we were expecting if you have a look at the February forecasts. There are obviously always some lumps and bumps in the underneath components, but the GDP was absolutely in line on a year-ended basis. We know and have known for some time that households are clearly struggling at the moment against those big headwinds coming through from inflation, primarily. We know, obviously, for some households, interest rate hikes are also challenging and difficult, but inflation is the single biggest drag and that was really confirmed, and that weak position for household composition was not unexpected. But I think there are some other interesting things going through the data as well. Perhaps particularly relevant to this panel discussion was what we’re seeing in business investment. Still, certainly on a year-ended basis, very, very strong. So we have seen a turnaround there, in terms of the pace of growth but also its share of GDP. I’m sure we’ll pick up on what that means with the other panel discussions in a moment. Then, just finally on inflation, we have obviously the January monthly data; that was the sort of major release we’ve had since the February forecasts were released. Again, there’s always lumps and bumps in that data. I’ll remind everyone that you have to be a bit careful with the monthly indicator at the moment; it’s still experimental and it’s not a complete picture of CPI, particularly in the first month of the quarter. So, with all of that taken into account and looking at the data, actually, again it’s broadly in line with what we were anticipating. That’s not to say that we’re not monitoring and looking, and we’ll obviously be reviewing and updating our forecasts and publishing those in May, so we’ll have much more to say in a couple of months time. But, broadly speaking, the latest numbers have come out as we anticipated.

We are going to talk about productivity on this panel. Danielle Wood, you’re the chairwoman or chairperson of the Productivity Commission. Just maybe for the non-economists in the audience, which would be the majority, what is productivity, why does it matter to people beyond this room, to everyday Australians, and, just briefly, why has it been weaker not only in recent years but over the past decade as well?

Just a little question to open with, John. Look, for non-economists, productivity is essentially the rate at which we transform our inputs – our people and our machines – into outputs, economic activity. Why does it matter? That is the single, most important determinant for our living standards over time. So, as we get better technology, as we get better know-how and as we get better at pulling together those inputs to deliver stuff, we all get richer. We can take those riches, in terms of buying more goods and services, in terms of delivering more things that we care about – whether that’s health or education – and sometimes in terms of shorter working hours. So productivity matters for all of us. Why has it been depressed? Here we really need to distinguish between the sort of cyclical short-term story and then the longer term story. The statistics have been on a pretty wild ride through the COVID period. It actually shot up in the early days of COVID kind of counter-intuitively, but we shut down large swathes of the economy that tended to be the lower productivity services sectors; as we reopened, we saw the data crash. We have also had an incredibly strong labour market: unemployment with a ‘3’ in front; very high levels of migration, as we’ve reopened borders; and people who were already here working longer hours. With that huge expansion in labour supply – a record expansion in labour supply – investment in capital hasn’t kept up and so, when we look at labour productivity, that has pushed it down. We are now seeing that turn around. As the labour market softens and as business investment is stronger, we’re seeing a turnaround of that, but that is kind of just the broad cyclical story. I am much more interested in the structural question, which was talked about yesterday: why, in the decade pre-COVID, that decade sandwiched between the GFC and COVID, did we see such low productivity growth by historical standards? That wasn’t just an Australian phenomenon; we actually saw a slowing of growth around the industrialised world. There are a number of structural factors in play there: technology has been making less of a contribution than it once did and the shift in our economy towards services, which have tended to be historically lower productivity. They have all played a role. But, as we talked about yesterday and as we heard the Treasurer say, we should be ambitious and we should be doing what we can in the next decade and beyond to try and shift the dial on that, and things that business do and things that government do can make a difference to that number.

Peter, just picking up on that, Danielle mentioned there technology and what businesses can do. A previous Productivity Commission report – Danielle spoke about this at the recent Financial Review Workforce Summit – suggested that actually, yes, there’s a whole lot of policy issues that we need to get right, but businesses also in Australia, according to research, are not so great at adapting new technologies, getting them into their workplaces and distributing amongst their workers to make them more productive. You’re at the coalface, I suppose, of advising businesses on being more productive and more efficient, bringing in technology. Do you agree with some of those criticisms, or actually are we quite good at it?

I think one of the challenges with technology and the investment in technology has been somewhat consumed into adapting to regulatory reform compliance, so that investment dollar is effectively keeping the lights on. What we’re trying to do is to make sure that you get that shift in investment into the new capabilities, into new ways to compete and into new ways to bring about products and services into the market. I think one of the reasons that GenAI has sort of figured so heavily in a lot of the dialogue and even in what you heard Jamie Dimon talk about is that it’s a little bit of a trifecta. It’s a technology that’s moving out of the technology specialists’ realm and into the hands of the management of the business. What does that mean? It’s a trifecta in the sense of it can drive incremental value and it can lift productivity but, more importantly, it can create more meaningful workplaces where we’re actually providing a boost to human ingenuity. We talk about the acceleration of creativity provided by some of these technologies. So, yes, it is about automating and doing away with repetitive tasks. But a big part of the prospect that we see in GenAI is actually that augmentation; that ability to boost the human factor to drive creativity to build new products and services. I think that’s why we’re probably as bullish about this technology and its impact on productivity. It’s probably analogous to the early’80s, when the PC arrived on our desktops and we saw that real connection between technology and productivity. I’ll just say one other point. I think it’s also interesting because, unlike some of the technologies in that period between the first computer on the desk and where we are now, this is probably the realm of big business. Why do I say it’s the realm of big business? It’s because you need the investment in the digital core, you need the investment in the data and you need the investment in the governments’ responsible use of that data. I think, therefore, it’s very much in the realm of the audience that’s in this room to bring about that investment and to really drive productivity.

Bran, the Business Council is a big advocate obviously for policy reform to help drive productivity. I think some of the things that you want to see revived are so-called similar things to national competition payments that we saw in the 1990s from Paul Keating, basically paying the states to do good competition reforms that boosted productivity, essentially an incentive. Is that the sort of thing that you’d like to see the government sort of pick up and carry forward? And for what sorts of things specifically would you like to see the states potentially rewarded for?

Look, thanks, it’s a great question. From our perspective, we think there is so much merit in taking the approaches that have been taken in the past that work and we know that, with respect to the competition reforms of the 1990s, they really did work. So looking at about a $5 billion investment that was made by the fFederal Government over the course of a number of years that’s translated since then into about $60 billion a year as a benefit to our annual GDP. We’d like to see something similar with respect to what we describe as ‘national reform payments’ to states. We know from the 2017 Productivity Commission report, that a lot of the reform levers that we can take in order to try and improve productivity right across the country really do fall to the states. So, from our perspective, we’d like to see reform with respect to payroll tax. There are eight different definitions of what a wage is across the country. We also have different rates and we have different approaches to how you go about managing compliance. To say that’s a problem for business and to say that it’s a regulatory challenge is, I think, a significant understatement. Look at stamp duty; this is a fraught issue. I know that because I’ve been part of the debate during my time when I was working in government. But it is important that we start moving incrementally from stamp duty towards a broad-based land tax. Then, of course, there’s the regulatory morass that we have across states. All sorts of different policies and procedures that make doing business a challenge. If I were to walk out of this room right now and go downstairs and decide that I wanted to open a coffee shop, I’d need 20 different licences. That’s just extraordinary. Then, on top of that, there’s the planning systems. In NSW, you’re looking at about 400 days for a medium-density development to be considered and potentially approved. In WA, it’s about 200 days. Why the difference? So, for us, we think, let’s incentivise states to look at (a) how they can go about it within their own jurisdiction, making changes that enhance productivity within that jurisdiction but (b), and perhaps more importantly, where are the synergies that they can find working with other states? Where can they, for example, harmonise a definition of wages, and where can they look at a common approach to payroll tax so that businesses only have to comply once? Ideally, you’d do away with payroll tax altogether but, as a first step, at least try and make it simple for states to comply. Those are the types of changes that we think are really important.

Sarah, just at the RBA, the former Governor and the current Governor have been keen to point out that the RBA really has no control over productivity – it’s essentially up to structural policies from governments and also businesses investing and doing things like that as well. but the RBA still has a strong interest in it. Why is it important, in terms of the inflation and interest rate outlook? Bearing in mind that I know Governor Bullock said we want to look beyond the short term to the medium term, but it does very much have an impact on inflation and interest rates.

Yes, absolutely. I guess that I was actually reflecting on the way that it’s slightly strange to be a central banker on this panel. But you’re absolutely right. Our policy instruments and our mandate are not focused on productivity at all, and our particular instrument doesn’t really have an impact on it. We set interest rates, and our job is really to do the best that we can to manage the economic cycle. So, to Danielle’s earlier points, the cyclical is our role in this; we don’t really deal with the structural. But we do care very much what’s happening with productivity because it’s fundamental to understanding the economy, the economic position in the cycle and what it looks like going forward. For example, if we’re thinking about what sustainable wages growth looks like in the medium term, that’s fundamentally contingent on productivity. If we’re thinking about the supply-side capacity of the economy more broadly, how it’s likely to evolve over time in the context of our forecasts and then, for me, my team and others in the bank, how we advise the board around that interest-rate-setting decision, then productivity and what they think is happening to productivity is really, really crucial. So it’s not something that we necessarily have much of an impact over, but it is something that we care very much about and spend a long time talking about and looking at. Particularly at the moment, given the cycle that Dani just outlined, it’s been very violent, for want of a better word, it’s been really pronounced, so understanding that has been really important. Now, obviously, we’re coming back through the cyclical recovery that Dani mentioned. That’s also what we’ve been expecting to see and we are seeing it, but how it plays forward from here is crucial to the outlook. It’s not something that we can do much about, but we certainly pay a lot of attention to it.

Danielle, you’ve sort of been at pains to point out as the relatively new chair of the PC that, while issues like tax and industrial relations are important—things that, in our editorial, we write about a lot at the Fin Review and the former PC Chairman Gary Banks talks a lot about as well. You’re trying to broaden the conversation and say, ‘Yes, but there’s also a range of a whole lot of other policy areas that we need to be making inroads on.’ What would you identify, if you had a shopping list, very briefly, as a few key ones that you’d really sort of put at the top of that agenda that should be really front and centre for federal and state governments?

You’re exactly right, John. We often talk about productivity as if there’s just one or two levers that government pull and then ‘problem solved’. Really, it’s a game of inches; it’s going to be movement across a whole range of areas. But I kind of think of it in terms of two broad buckets. One is the enablers, which are things like an education and skills system, which is delivering people with the skills that we need into the future. School education is one area that I think is critically important. It’s quite frightening – Sarah and I were talking about this yesterday – when you look at some of the data, we are falling behind not just compared to other countries that we might want to compare ourselves to but compared to our own performance over time. Your average year 9 student, according to the PISA assessments, is now about one year behind in maths and more than a year behind in reading, compared to an Australian year 9 student 20 years ago. That is frightening, given the amount of money that we’ve pumped into the education system. There are things that we know could make a difference there. So getting those kinds of enabling factors right – it’s education, it’s health and it’s infrastructure, including digital infrastructure – are critically important levers that governments have. Then the second category goes to the business and investment environment; that picks up on things like tax, IR, the migration system and your energy system. We’ve really highlighted that the way we do the green transition will have critical implications for productivity. We can either do it in a really expensive way, or we can do it in a much more rational way. So education, green transition and housing policy: I would add them to tax and IR, when we’re thinking about what are the things that governments can do to make a difference.

Bran, you’ve worked in state government. Obviously, the states have a fair degree of responsibility for the education system, and training and skills more generally sort of feed into that narrative. From a big business perspective, have you done much thinking around that sort of intersection of what’s going on with education? Actually, our rankings are plummeting internationally, and is that an issue that business is concerned about?

Yeah, deeply concerned about it. ‘Deeply concerned’ is really the only way to describe it. As Danielle noted, we have seen a very steep and concerning decline in our international rankings, with respect to how our students perform, and we’ve really got to start turning that around. There are lots of different ways that we can start looking at how to do that. But, again, if you take the approach that I was talking about previously with respect to payments for states, let’s look at the jurisdictions that make education systems successful. We know that overseas there are so many different examples that you can point to. We know from overseas experience that it makes sense to invest in making sure that kids have access to affordable, accessible and, obviously, high-quality early childhood care, particularly in the year leading up to school, so we need to invest in that regard. We know that we’ve got to do more to get back to basics in terms of reading, writing and arithmetic, and making time for kids to focus in on those three things particularly, especially in those formative years in primary school. Then, of course, heading into high school, we’ve got to focus on quality career counselling. I think about my own career counselling experience when I was at school, and it was walking into a room for about an hour with some guy who told me at the end of it that I should be a physiotherapist, and I didn’t even know what physiotherapy was. I imagine there are lots of people in this room that probably would have had a similar experience. I think about my kids now and they’re getting a better approach. But my kids go to a private school and they’re fortunate in that regard. We need to make sure that that type of quality, accessible careers advice is available to kids right across the board so that they can start thinking about what their opportunities are, what their skillsets are and so forth. Then – and this is absolutely critical – we’ve got to embed this synergy between high school, vocational education and training and then into higher education and give people the opportunity for lifelong education beyond that. That is costly, of course, but we’ve got to have those conversations and we are, which is very pleasing. So, coming out of the accord discussion that Mary O’Kane has been running, we are seeing proposals for change. We are seeing the opportunity for us to talk about how we can have better connectivity between business and better connectivity between higher education, particularly in terms of the acquisition of skillsets. And I’m very pleased to say that the Business Council is going to lean into that, and we think we can put our action where our words are and try and contribute to that discussion.

A quick editorial comment from me before I turn to Peter. Danielle just said that, despite our pumping a whole lot of money into the education system with the Gonski reforms over the last decade or so, it hasn’t equated to an improvement in performance. I think it’s a good example of where simply just putting more money into something is not always the answer. You’ve actually got to get the structures of the system right and then maybe there’s a case to invest additional funds in it as well or, for example, paying incentive payments to the states that are going about those broader reforms rather than just putting a big whack of money in there. Peter, can I just turn to you? Just on linking the education skills and training thing back to the technology and how people are adopting it and using it in their businesses, what sectors or businesses in Australia are actually doing it well? Are there any examples, can we learn lessons from them and what’s Accenture doing as well?

Sure. Maybe just a quick build on Bran’s point. I think the notion of lifelong learning continues well into the workforce. If we look at some of the studies that we’ve done in the US with some of this newer technology, our estimate is that around 44 per cent of the workforce will actually be impacted in some way positively around new technology. At the same point in time, when you survey executives, two-thirds would say that the workplace will be more meaningful and 95 per cent of executives say that we’ll be adding net new workforce capacity. So this idea that lifelong learning has to extend into the workplace is a big part of what businesses are leaning into. To your question on Accenture, yeah, we’ve just announced a $1 billion investment into learning platforms in Accenture. We’ve acquired a company called Udacity, which is enabling some of that digital learning to be rolled out. I think this idea that we are now in this continual learning environment, continual re-skilling environment, is something that we need to work on. I think the other comment that I would make is about how we find the right talent and attract them into the technology sector. I think the Tech Council of Australia put out a very clear report around how wide the gap is, in terms of the number of technology-enabled skills that we need in this country to serve our ambition. Ans we have to find those skills much more broadly than just out of the normal feedstocks of education; we have to encourage folks back to work. We saw the publishing of some of the gender pay gaps. The technology sector is behind and we need to find the mechanisms to get the best talent and attract gender equality back into the sector, and that means actually, I think, finding return-to-work opportunities and re-skilling opportunities. Again, I think that’s where we, as business, can really step up and drive into that arena.

Sarah, one of the themes that sort of emerged yesterday from various panellists, from Wei Li from BlackRock, Peter Costello touched on it and Hugh Mackay also touched on it to varying degrees – I’ll summarise like this, although maybe not reflecting all their views universally: inflation and potentially interest rates are coming down maybe a bit faster than we anticipate in the short-term cyclical sense, but in the medium term, there are all these structural supply side pressures that could be inflationary. So you have higher inflation and rates than you otherwise may have, like things from like the energy transition, the ageing population, labour shortages and geopolitical fragmentation. Do you sort of share the view that there are these upward medium-term pressures structurally on inflation?

I think the factors that you’ve just highlighted are absolutely the ones that I’m thinking a lot about and my team are doing a lot of work on, and I think it’s reasonable to say that, clearly, some things have shifted from the pre-COVID years. The energy transition is a great example; that’s obviously a step change that we’re experiencing here, perhaps there’s slightly different timing overseas. As for the ageing of the population and what that means, that’s not a new thing. We’ve known that was going to happen for a while, but we’re perhaps entering a phase where it starts to look a bit different because we’ve got the baby boomers very definitely retiring and moving through that later phase of life and so what does the workforce look like going forward from here. In terms of those factors and being very cognisant of them, absolutely. I think it will be interesting to see how they all play out. I think, as an economist, you always have to be a bit humble about what you do and what you don’t know. We can see that, potentially, there are some inflationary channels. For example, if we got a strong kick to aggregate demand from the energy transition, it’s possible. But if it then enables cheaper, lower costs of energy, as a positive supply-side shock, that can create some downward pressure; at the very least, it can increase our productive capacity. So, from our perspective, that bigger productivity capacity manifests as high levels of consumption of demand that are consistent with the inflation target, and that’s really what we’re looking at. So, from our perspective, it’s a job of cyclical management. But all of these trends and how they play through and manifest in the supply-side of the economy are absolutely vital and critical. So I see our role as it’s got a quite defined mandate; it’s a very clear mandate. But understanding all of these trends and being able to work with people like Dani and connecting with business so that we are plugged into what’s happening and thinking about what they mean is really, really important for us, because we don’t know all of it – certainly not – and we’re going to find out a lot over the next five, 10, 20 years.

Danielle, speaking of the energy transition, you mentioned it earlier, it’s going to be absolutely critical that we get the best policies and the most efficient way to do this, because the amount of money that’s going to need to be put into develop a new capital stock, essentially, to replace a somewhat existing productive capital stock. The potential for bad policy here is very high. We saw the Productivity Commission come out with a report pointing out that, for example, the electric vehicle fringe benefits tax costs about $20,000 per tonne for emissions abatement. The Prime Minister is talking about making batteries in Australia as well, some sort of green industrial policy. There’s no economy­wide carbon price. Are we going about this in an as productive and efficient way as we could be, or have you got concerns about the potential for bad policy from federal and state governments of both sides of politics?

First of all, you’re right. This is an incredible transformation that we are trying to conduct very, very quickly. My ex-colleague at Grattan, Tony Wood, used to call it ‘an industrial revolution on a deadline’. That is the scale of what we’re doing here. Government obviously needs to be involved in that. At the moment, we have a plethora of policies across different sectors. We would, not surprisingly to anyone in this room, like to see us harness the power of markets; that’s going to tend to be the most efficient way to get there. I think, realistically, an economy-wide carbon price is off the table, at least in the short term. So what we can do is think about sort of sector-specific prices. That’s already happening to some degree with things like the safeguard mechanism, which are introducing a sort of implicit price when we look at industrial emissions. But whether we need to go down the same path when it comes to electricity and transport. At the moment, there’s a range of expensive policies that you’ve pointed to, such as those FBT concessions, and the state stamp duty concessions for EVs are very, very expensive ways to reduce emissions. So replacing those with more efficient signals would make a big difference. Then the green industrial policy point is a really challenging one. On the one hand, we do have this huge task. We need technology to evolve and the idea that government might need to play a role in that, given the timeframes, given that we will need to see us push down the cost curve on a lot of these technologies and given that there’ll be potential to learn about local circumstances, you can build a case that there is a role for government subsidies in certain circumstances. But, of course, once you open up industrial policy, you also run the risk that you throw a lot of money at sectors or parts of the economy that are not going to be areas where we have a long-term comparative advantage. So a really principles-based approach, focusing on those areas where it looks like we’re going to have an advantage in the long term: that’s going to tend to be a kind of very energy-intensive transformation. We have amazing stocks of wind and solar energy that we can tap into. As for things like batteries, it’s much harder to see the case for that. And, with every country around world throwing money at trying to build a domestic battery industry, are we really going to have a long-term advantage in that space, without ongoing government supports? I find that hard to believe.

Bran, just on the whole climate energy transition, the new President of the BCA, Geoff Culbert, who’s in the audience this morning, spoke at a BCA dinner last night of chief executives that some of us were at. He came up with the suggestion in this space for trying to take some of the policy out of the hands of the politicians, the short-termism, and suggested that a body such as the existing Climate Change Authority could independently set up or propose 10 to 15-year targets and transition plans to try and take some of the short-term politics out of it. As part of that, do you think the BCA would like to see the government, for example, come up with a 2035 target, or will you be proposing your own? I just also wonder – just to play devil’s advocate here – how realistic it is that we take sort of power and decision-making away from democratically elected lawmakers and give it to an unelected bureaucratic body.

Look, it’s a great question. What we’re calling for is a fundamental shift in the way that we think about climate. The challenge that we’ve got, and I think we would have seen this over the course of the last 24 hours, week, month, year, is that we continue to have a divergence of views, in terms of what the appropriate policies are or the policy mix is to deliver us to net zero by 2050. The big problem with that is that it doesn’t give business certainty and, as Danielle noted, we do need to see business take the lead in terms of delivering that net zero outcome that we’re all looking to achieve. So how do we give business that certainty? Well, we say that you’ve got to have a plan, so you’ve got to have a detailed plan. In order to have a plan, of course, you’ve got to have a target. So, first things first, we think it’s critically important to lean in, and that’s what the Business Council of Australia is looking to do, lean into the setting of a 2035 target. So we’re doing the work ourselves to come up with a view in terms of what we think that target should be. From there, we think it’s absolutely critical that there is a plan that goes to how that 2035 target should be delivered and, beyond that, how we get to 2040, how we get to 2045 and onwards to 2050? What we’re talking about, in terms of a different approach to managing the setting of these types of plans, is making sure that we have a collection of experts that people can get behind in the room, working towards what this type of planning should be, and then we seek the buy-in of politicians across both sides of the aisle. Now, do we understand that that’s going to be a difficult thing to do? Absolutely. But what we have seen is that the challenge right now is that there is so much competition and contestability associated with climate policy that it’s holding back our capacity to deliver on the goals that we need to achieve. So something needs to change, and we’re putting forward a big idea in terms of what we think that is.

Peter, how are you seeing the whole energy transition from your perspective? Just a thought that we discussed at a previous conference was that one of the reasons that we don’t do a lot of manufacturing here – maybe it’s hard for ‘green sort of industrial sort of policy sort of stuff’ – is that we have pretty high labour costs here relative to the rest of the world, but AI, potentially, is going to replace humans in some tasks. So is there a possibility that, as you substitute some of that technology in, the prohibitive labour costs for making things here is not so restrictive and we could do more of that?

I think, to Danielle’s point, let’s find those hinge industries where we do have a point of natural advantage. I look to some of the work that’s going on in South Australia at the moment around digital shipyards and bringing about automation and the use of technology around highly specialised applications. Again, I think it takes a little bit of the labour quotient out but actually lifts the quality of the product and the output. I think the standards that are being delivered, simple things like the quality of the weld and the strength of the weld done through the use of robotics and automation, are achieving very, very high-quality standards. I think that gets back to the point of: how do we use technology not only to replace repetitive work but also to expand on our creativity and our ability to then, to use the language of last night, to get Australia punching above our weight?

Danielle, perhaps I could just turn to the gender pay gap and female labour force participation. I was just chatting with a colleague prior to this event, and they just pointed out to me that part of the reason, not the sole reason, obviously, that we have a gender pay gap in the country is because of more part-time work amongst females. A previous PC report said that higher childcare subsidies are not necessarily a magic bullet for higher female participation, because of interruptions with the tax and transfer system. I think you’ve previously suggested in a previous capacity that maybe we need to think about getting rid of Family Tax Benefit B because some of the high marginal tax rates that that involves, if you’re getting that payment and then you’re considering going back to work, it may not really be worth it financially. Is that something that you still stick by, or is that a bridge too far now?

What I would stick by is that we need to think about the incentive effects of the interaction of all the different payments. It is the interaction of the childcare subsidy which, because it’s means tested, starts to wind back as you earn more, FTB, as you say, and various other government supports wind out. That meant, actually, until the recent changes to the childcare subsidy, that women who wanted to work more than three days a week, if they had children in care, could have been losing 70, 80, 90 or even 100 cents in the dollar for those additional days of work. So we had a system that was set up that was not creating the incentives for people who wanted to, to work more. There are various levers within that that you can pull to improve those incentives. There have been improvements with the changes in the childcare subsidy. We have an inquiry underway at the moment into the early learning and care system more broadly that is looking at issues like quality that Bran was touching on, and it’s looking at issues around affordability and accessibility. But what is clear to me is that we want to make sure we enable the people who would like to use their skills in the workforce to do so. There’s one paper I love looking at the US, which puts, I think, between 20 and 40 per cent of the productivity growth between 1960 and 2010 down to what they call better allocation of talent and, as women came into the labour force in a big way and as minorities moved into all sorts of parts of a profession, we were able to use the skills and capacities that those people had in a way that we weren’t able to before. So making sure that we continue on that journey I think is an important part of our economic productivity challenge.

A quick couple of questions from the audience; they’re up on my screen. Peter, I might direct this one to you. What role does culture and mindset play in solving productivity challenges? Have we become focused too much on policy regulation versus actual creativity and innovation? I’ll just note that, last night at this CEO dinner, we had the AirTrunk founder there, Robin Khuda, who emerged as a Bangladeshi immigrant at 18. He had to go through university and get educated. It was a great story. He nearly went broke building these big data centres or digital infrastructure highways, as he called them, and now he’s built this $14 billion empire. He did say that he thinks there’s too much risk aversion amongst publicly listed companies; it’s one of the reasons he’s staying as a private company at the moment. What do you think about that whole debate?

Yeah. Look, as I said, I think there’s been an era where we went through e-commerce and those sorts of technologies, where entrepreneurialism thrived and you had a lot of disruption. Again, I think we’re now in an era where big business has a role to play, but it does mean that we are fundamentally shifting our workforces and we’re changing the skills. When we talk about putting technology in the hands of everybody – some call it the ‘democratisation of technology’ – then you need to create the systems to let that thrive. I think that means that we have to change our management models; we have to change the way that we govern and the way that we have leaders driving learning into systems so that you can actually liberate the value that’s coming out of those areas. But if you look at some of the big applications today around the marketing funnel, that boosting of creativity around content, around real personalisation and around product and service innovation, that’s happening at the coalface, and I think that’s the domain of really creating and empowering the workforce in a different way.

I’m going to squeeze in one final audience question here on the screen; it is from my colleague Jacob Greber of the Financial Review. Danielle, just picking up on your remarks, are there good and bad ways of conducting a clean energy transition? Are we on the right path? We had Peter Dutton here talking about nuclear. Does nuclear add up for Australia?

I think we’ve kind of engaged in the first part of that question already and I know that Peter was talking about nuclear this morning. Look, my view is that we should always be technology neutral, so we should be open to different solutions; so I don’t think we should put our hand up and say not nuclear. I have not looked into this issue in any detail. A number of people that I know and respect have suggested that the time frames and the costs are such that it won’t stack up. But I think we’ve got the opposition leader who’s opened the debate; we will have to see all of those factors before we make a call about whether it makes sense for the country. But I think timeframes and costs matter a lot, so that’s what I’m looking for to be convinced that that would be the way forward.