NAB Group CEO and ABA Chair Andrew Irvine joined ABA CEO Anna Bligh in a panel discussion at the Trans-Tasman Business Circle’s Annual Economic Forecast event.

Rate reductions will have an outsized impact on confidence

Mr Irvine said he was happy to see the RBA’s decision on Tuesday to reduce the cash rate by 25 basis points.

“I think it’s going to have an outsized effect on confidence,” he said.

“Signaling that rates have peaked and now we are moving to a downward cycle is pretty huge.

“For the average homeowner, it’s probably an extra $100 a month, so that will help households, but I think it will have an outsized impact on business confidence as well.

“I think the back half of last year was the toughest part in the economic cycle and we’re on the way up, so we’re optimistic about what 2025 will bring.”

Anecdotally Andrew also shared a conversation he had with a NAB business bank customer. “I was speaking to a principal of a private school – this actually shocked me – who’s a client of our bank and they said that 40 per cent of the school fees paid in that school are paid by grandparents. 40%. That blew me away.”

Productivity the key to Australia’s economic growth

Mr Irvine said productivity in housing and resource extraction were the two areas needed to ensure future growth of Australia’s economy.

“The only way we can increase the long-term economic growth potential of our country is with productivity. Otherwise, when you grow, you get inflation,” he said.

“We don’t have enough of our economy skewed to the new economy, technology and innovation type sectors and these are all real challenges.”

“We’re just not creating enough dwellings. The dwellings that we are creating take far too long from gestation to people moving in, and we know what the issues are: it’s hard to do planning.

“I don’t think we’ve got enough new ways of working in the construction industry and leveraging new digital technologies and these are all problems that we’ve got to address if we’re going to have enough homes for people to live in.

Mr Irvine said cutting resources approval times could also help productivity.

“Mining has paid and created the prosperity of Australia.” he said.

“Unfortunately, right now it’s taking so long for mining approvals to happen that I’m hearing from some of our resource customers that they see sovereign risk in Australia.  They are choosing to deploy their capital in other areas, particularly South America, Canada, places like that, and that’s a problem for our country that we’ve got to really lean into.

Price of cash

Mr Irvine said in Australia, cash is viewed as free and digital payments are viewed as having a surcharge.

“This is actually the wrong pricing signal because the cost of a digital payment versus a physical payment is much, much lower,” he said.

“Think about it, you have two people in an armoured car driving around a country that is thousands of kilometers in size, moving cash.

“The facts are the number of runs that these trucks are making is smaller every month and the use of cash is declining.

“That’s a problem we’re going to have to solve, but we’re intent on solving it and we know that it matters to Australians.”

Australia needs more skilled migration

Mr Irvine spoke about the need for more skilled migration to attract the skills and workforce talent needed in Australia.

“We struggle in very specific areas to find the talent that we need in Australia – computer engineering, data science, cyber security – those types of modalities are really hard to find the right talent sets here.

“I think it starts from secondary and tertiary education. You need STEM courses to become really attractive to young kids so that they want to pursue careers in those areas. Then, we just need more graduates coming through our system. That’s been a challenge for Australia for quite a while.

“We live in a country that many people want to come and live in. It’s one of the most amazing countries in the world, Australia, we’re very attractive to global talent and I think we need to look at the people that we’re encouraging to come here and wherever possible skewing to the areas where we have skill shortages.

“Things like engineering, computer science, data science, those are all areas where I’d love to see more immigration so that we can build out our capability.”