NAB Group Executive Business and Private Banking, Andrew Irvine addressed the final Trans-Tasman Business Circle gathering of 2023 on 7 December in Melbourne:

Firstly, I’d like to acknowledge we’re meeting on the traditional lands of the Wurundjeri people of the Kulin Nation and I pay my respects to Elders past, present and emerging, as well as to any Aboriginal or Torres Strait Islander people here with us today.

Thank you to the Trans-Tasman Business Circle for organising this event and to our hosts Corrs Chambers Westgarth for facilitating today’s discussion.

When you hear the term “Aussie entrepreneur”, what immediately pops into your head?

Perhaps it’s adjectives like: determined, dynamic, driven?

For me, it’s all these and more.

Australian entrepreneurship and innovation are famous the world over. Prior to arriving in this wonderful country just three short years ago, I thought I understood it. But with the benefit of hindsight, I can safely say, I had no idea!

However, it didn’t take me long to grasp the central role entrepreneurs have played in the country’s economic successes, and how vital they remain to our ongoing economic wellbeing.

I’ve come across countless examples of entrepreneurial successes since NAB boss, Ross McEwan, invited me to come to Australia in 2019 to run the biggest business bank in the country.

These are stories of people who spot a gap in the market, do some digging to validate their ideas, and go all in to give it their best go.

Like the story of Andy and Hayley Worley, co-founders of the Melbourne bedding emporium, Sheet Society.

After receiving a department store voucher as a wedding gift, little did they know it would inspire the creation of a $15 million a year business.

Opting to purchase new bed sheets with the voucher, Hayley was so disappointed with the underwhelming customer experience, that she vowed to do it better.

In 2017, utilising her textiles and design experience, the former-fashion designer created the fashion-forward bedding company, Sheet Society.

While she was on maternity leave, husband Andy took the reins and joined the business full time in 2019, but it was the infamous events of 2020 that really helped the Melbourne brand take off.

The huge, COVID-inspired, online shopping boom helped take the business to the next level and by harnessing the endless possibilities of technology, the entrepreneurial pair have continued to push the boundaries of their products, their retail presence, and the online experience for their customers.

An incredible business achievement in just six, short years.

Our relationships with entrepreneurs like Andy and Hayley is one of the things I love about NAB.

It’s also the reason I remain optimistic about the economy in the medium term, while at the same time recognising things are undoubtably getting harder for many Australians right now.

In preparation for today, I took some time to reflect on the year that’s almost gone and think about 2024.

No matter whether we’re business owners or consumers, we’ve all had to face into a difficult past 12 months or so.

The scourge of inflation has hurt Australians more during the past 18 months than it has for three decades.

And while interest rate rises have disproportionally impacted home and business owners, the reality is everyone has been hit hard by inflation.

Many Australians are tightening their belts and making considered changes to their spending habits.

They are prioritising things they love, such as concerts and major events, while being a bit more thoughtful around the brands they select at the supermarket, or by filling up the petrol tank on the cheaper days.

And rare is the business owner who doesn’t want to talk to me about rising energy costs, skyrocketing rents, or supply chain price increases. Things are tough out there and many feel like it’s getting tougher.

And in my own household, the price my 13-year-old son charges for his dog walking duties has risen 20% in the last 12 months.

“Cost of living” he tells me.

Be that as it may, Aussies are a resilient and resourceful bunch.

Despite slower growth, the level of economic activity in Australia is still around pre-pandemic levels.

Thankfully, the majority of Australian businesses entered this cycle well prepared with strong balance sheets and enough cash reserves to insulate them against an economic slowdown.

We’ve been keeping incredibly close to our customers and thankfully, for the most part, they’re saying, “thanks for checking in, we’re doing ok”.

Our recent October Business Survey reinforces this assessment and indicates that the economic resilience we’ve seen this year will continue, despite the many headwinds.

Knowing we’re at the top of the interest rate rising cycle – or very close to it – gives business owners a level of confidence. They’re making things work now, and with a level of certainty around what the year ahead looks like, they’re more likely to take on new workers and look for opportunities to grow if they can.

As a result, I firmly believe the Australian economic glass remains “half full” primarily thanks to:

• Near record low levels of unemployment,
• Increasing immigration and;
• As I said, greater certainty around interest rates and inflation.

In Australia, we’re also quite fortunate to have some structural advantages regarding the sectors which drive our economy forward, and I want to touch on some of these briefly.

Firstly, Agribusiness.

As the biggest Agribusiness bank in the country, we have multi decade relationships with many customers primarily because we stick by them through the good times and the not so good times.

The breaking of the three-year east coast drought in 2020 has been followed by successive years of record-breaking production.

Many agricultural regions transitioned from very poor to very good conditions within the span of a single season, resulting in some exceptional years for sector – in the order of $93 billion in gross value in 2021/22.

However, all good things must come to an end and while we expect growth to reduce significantly due to declines in crop production and reduced prices for livestock, it’s worth noting farm incomes are predicted to remain higher than during the recent drought.

So, all in all, things will get tougher for our farmers, but they’re in a good place to withstand major challenges and we look forward to continuing to support them.

The second key sector is health.

The Australian health system faces similar pressures to others globally, including rising costs driven by increasing incidence of chronic diseases, an aging population, inequitable access to services, and gaps in workforce and infrastructure.

In addition, changing customer expectations are driving a need for more personalised, digital, seamless and integrated care experiences.

Healthcare is a sector where private investment remains pivotal to providing solutions to the sector’s challenges and expanding needs.

Despite the short to medium-term impacts of COVID-19 and broader macroeconomic challenges, strong market fundamentals will continue to drive demand for healthcare services in Australia, underpinning the sector as an attractive area for investment.

And the final key sector I’d like to highlight is professional services.

In a room full of professional services executives, it would be remiss of me to not also point out the strength of – and prospects for – the Australian professional services sector.

Just last month, following a deep dive into accounting and financial planning firms’ attitudes, we learned that 77% of accounting firms and 85% of financial planning firms are predicting good or very good revenue growth in next 12 months.

Off the back of adding 90,000 jobs to the professional, scientific and technical services industry in FY22 – a 7.5% year on year jump – there is little doubt that growing business confidence will further boost its expansion in the years to come.

Encouraging news, I’m sure you’ll agree, particularly for those in the sector joining us here today.

Outside of these sectors, there’s another area of huge potential growth for the Australian economy as we embark on our journey towards net zero emissions by 2050.

Transforming Australia into a low emissions economy is inevitable and complex, but the opportunities through decarbonisation are immense.

To better quantify that, a recent NAB/Deloitte Access Economics report estimated this opportunity could be worth around $435bn to the Australian economy if we manage to transform our industrial base and establish a clean energy platform to drive export growth.

The opportunity is there for the taking with the right mix of policy, innovation and investment to trade competitively.

NAB stands ready to fund the transition and support our customers with the capital they need to invest in new technology and ideas that will future-proof their business and deliver new ways to grow.

We know one in five small and medium sized business owners ‘strongly intend’ to improve the sustainability of their business in the next two years. But it should come as no surprise to you that understanding where to start remains one of the biggest hurdles.

For example, hands up if you know the carbon footprint of your home?

Exactly, so, imagine how few hands would go up if I asked the same question of our agri customers out in regional and rural Australia?

It’s complex, it will require time and investment, but we’re firmly committed to supporting our customers through it.

Last year, we rolled out climate training for more than 1200 colleagues and on the customer side, we’re seeing many businesses drive the switch to electric vehicles (EVs).

In the last 12 months alone, we’ve boosted the number of EVs we’ve financed by a whopping 316% – well above national growth of 179%.

Also – and we haven’t released this to market yet – we’re piloting a new Carbon Insights Tool with 100 business bank customers which will be hugely beneficial to a wide cohort of our customers.

So as you can tell, I am optimistic about 2024 and its possibilities.

Overall, the country is well placed economically, businesses are eager to explore the right growth opportunities and we’re here to help make those expansion plans happen.

As Australia’s largest business bank, we’ve been backing businesses for 160 years to make sure they have the funds they need to grow and thrive.

Australia, with its vast landscapes and diverse communities, has cultivated a unique blend of businesses and entrepreneurs, constantly pushing boundaries in sectors ranging from technology to sustainable initiatives.

What makes Australian businesses truly distinctive is their adaptability.

They don’t merely chase success; they confront challenges head-on, displaying a resilience that defines the Australian spirit. Long may it continue.

Thank you.