A recent CEO Voice lunch hosted by AIM WA and The West Australian saw 13 senior leaders across a range of industries discuss the state’s business landscape and the range of challenges and opportunities that will shape Western Australia (WA) into the future.
The war for talent
Despite unemployment sitting at just 3.5 per cent and wages growing across Australia at a historic rate, a pay packet increase of around 3.3 per cent does little to offset the crippling rise in the cost of living, forcing many people to focus on wages when making job decisions.
As many WA businesses battle to attract and retain staff, the resources sector, with its higher wages, is a tough competitor to beat.
The Agency Executive Director Paul Niardone expressed concern over retaining employees.
“It’s a big issue,” he said. “We’re starting to lose talent to the resource sector, which you can’t match if you’re not in that industry.”
To address this challenge, his company has increased flexibility around work arrangements, including four-day workweeks and working from home.
Similarly, HBF CEO Dr Lachlan Henderson voiced his concern around a workforce deficit across health that is affecting both public and private hospitals. A focus for HBF is looking at workforce flexibility, including how to manage the challenge of an increasing number of people working from home versus the office.
WesTrac Chief Financial Officer Richard O'Loughlin noted strong optimism about the future, with the mining industry and infrastructure still driving a lot of their business. However, wage increases that are tracking way above average in some industries, are causing concerns about unsustainable overheads.
Mr O'Loughlin stated that they are competing with lots of other mining services organisations and employees jump from one company to the next for a bigger pay packet.
To keep valuable employees, WesTrac is placing an increased focus on their leadership development. “It's bit of a slippery slope when you start chasing, so for us, it's about being disciplined. It's about trying to offer something else,” he said.
In addition to leadership development, strategies around diversity and increased flexibility help organisations keep their best employees and remain competitive.
AIM WA CEO Professor Gary Martin said businesses can learn from the past and focus on retaining people through offering greater workplace flexibility, more inclusive and transparent workplaces and understanding the expectations of employees.
“The views and expectations of employees today are so much broader than just regularly increasing salary,” he said. “Yes, pay is important, but it’s not the only deciding factor.”
According to Good Sammy CEO Kane Blackman, there’s a talent solution “hiding in plain sight” – diversity; with people with disabilities making up to 20 per cent of the unemployed labour force in Australia.
“There is an opportunity in this country to get one million Australians with disability of working age into work.”
Highlighting the economic and social benefits of employing people with disabilities, Mr Blackman’s advice to businesses seeking to leverage this untapped resource is to partner with organisations that know this talent pool well.
When it comes to the impact of culture and purpose, Warrikal CEO Amanda Healy has had great success leveraging these to recruit staff. Warrikal is not a typical engineering business and emphasises diversity and inclusion within the organisation, along with providing more autonomy for people in how they work.
Regulation and red tape
Bureaucracy is another area that presents challenges for WA businesses, with regulatory hurdles acting as a barrier to growth and approval processes and red tape hindering the pace of development.
According to Committee for Perth CEO Paula Rogers, there are incredible opportunities in the state, but regulation and approval processes are slowing everything down for their members.
In Ms Rogers’ view, failure to act quickly and cut red tape could mean that Western Australia misses out on opportunities.
“Other countries in the world are putting in place incredibly streamlined processes. We have been sitting here thinking the world’s going to come to us. Well, the world could potentially pass us by.”
Cost of living, housing and infrastructure
The impact of high inflation on the cost of living in Western Australia is being felt by businesses and residents alike, particularly in the areas of housing and infrastructure.
Though client confidence is high according to PwC Partner Scott James, he highlighted the sense of uncertainty and fear among the broader population, with many concerned about rising interest rates and the impact of inflation on their everyday lives.
“I think what we’re all looking for is when will interest rates stop going up, for example. So, people just need to know what the rules are, so they can adapt their lifestyles.”
Lack of affordable housing for purchasers and renters was a major concern for leaders attending the lunch, as well as infrastructure not keeping pace with urban sprawl.
Telethon Speech and Hearing CEO Mark Fitzpatrick said in his view, the state continues to lack forward thinking when it comes to planning and infrastructure investment for when the resource boom ends.
With concerns about the health sector, he noted how children are experiencing two-year delays to see paediatricians.
“We’re not creating capacity in those social infrastructures that actually support our community,” he said.
Mr Niardone suggested a rebalance in WA's government spending, to boost areas like health, education and other essential infrastructure, rather than aiming for a record surplus.
Housing availability and affordability are both key factors in the challenge to attract workers to WA. REIWA CEO Cath Hart acknowledged the pressure on the housing market, with rental vacancy rates “perilously low” and mortgage holders facing rising interest rates.
Recognising the need to look at housing reform to address the challenges of maintaining a supply of housing stock and the pressure of rising costs on homeowners, Ms Hart anticipated spare bedrooms being put on the rental market to help pay mortgages and provide accommodation.
Ms Hart acknowledged that kitchen table budgets are feeling the pain, but remains positive about the state's future and the resilience of the WA economy.
“ …we do have the highest average wages and amongst the lowest average mortgages and our economy’s really strong, and our prospects are really good,” she said.
Blackburne Founder and MD Paul Blackburne said lower interest rates and growing demand from down-sizing baby boomers wanting to release equity, alongside limited supplies of housing in WA, would boost demand in reasonably priced quality apartments, which he said were still in under-supply.
Protecting our agriculture and arts industries
The arts industry in WA faces a difficult time due to limited funding and a lack of recognition for the value of the arts. However, a thriving arts industry attracts tourists, creates job opportunities and improves the overall quality of life for residents.
Ms Healy, who runs a business in the arts, highlighted the difficulties in securing funding from the government. The application process is lengthy and the amounts awarded are too small to make a notable difference. In contrast, with the state so heavily focused on mining, there seems to be little interest in supporting the arts.
Facing a slightly different issue, the agriculture industry is a major contributor to the state's economy, but with increasingly changing weather patterns and fierce competition from imports, there is a need to increase support for local, sustainable farming practices.
Getting supplies into WA during the pandemic and more recent floods highlighted the importance of self-sufficiency in food production for the state.
According to Ms Sarich-Dayton, this realisation should be a wake-up call for WA as we continue to import a significant amount of food from other states and countries, while by the day, our own state's food and drink businesses are going bust.
The opportunities ahead
Though WA has largely been spared the worst of the pandemic, the state is not immune to its effects. And while it has certainly placed some stress on business, the pandemic has also created new opportunities for businesses that are able to adapt to the new reality.
For example, the rise of e-commerce and small business has accelerated dramatically in response to the pandemic, creating new opportunities for entrepreneurs and those able to sell their products and services online.
Reminding lunch guests of the unique experiences to be found in her city of work, Fremantle Chamber of Commerce CEO Chrissie Maus said, “We’ve had a huge increase in new businesses opening up and this is people who have been on the couch during COVID thinking up ideas.”
WA businesses that embrace new opportunities are likely to be well-positioned for success in the years ahead according to Ms Maus, particularly if they embrace their uniqueness.
Though critical for the state’s success, for perhaps too long, WA has been overly reliant on the mining sector as its major driver of economic growth. This heavy dependence on mining has made the state vulnerable to swings in commodity prices and market fluctuations.
Alongside a wealth of natural resources, WA has a highly innovative and entrepreneurial culture. These and many other untapped advantages within the state can be leveraged to attract more talent and support growth industries such as renewable energy and technology.
For many businesses and individuals, the path that lies immediately ahead may get harder to navigate. But, with necessary housing reform and infrastructure development, streamlined regulatory processes and support for key industries, Western Australians can hopefully enjoy a more resilient and diversified economy that is better equipped to weather future challenges.