The former head of a powerful business lobby has backed the Albanese government’s description of high inflation as a global and supply chain problem, despite Reserve Bank governor Michele Bullock saying it’s now largely a homegrown issue.
Former Business Council of Australia boss Jennifer Westacott has lauded the federal government’s “thoughtful remarks” last week, and said there needed to be a whole-of-government approach to driving inflation down.
“The government has made some very important and thoughtful remarks on [inflation],” Westacott said. “[Interest rate hikes] has never been seen as the only tool for solving inflation, and inflation has been driven by many things – some of them external to the country, some of them about the complexity of supply chain; some of that is about global conflict.”
The Australian sharemarket is bracing for higher interest rates for far longer after Bullock’s comments at the annual Australian Securities and Investments Commission on Tuesday, followed by her speech at the Australian Business Economics event on Wednesday, and strong retail sales during Black Friday.
Bullock said that while Australia’s rising inflation had initially been supply-driven, including price hikes due to pandemic-related disruptions and Russia’s invasion of Ukraine, the persistent problem was now mainly centred on domestic factors.
“An important implication of this homegrown and demand-driven component to inflation is that getting inflation back to target will take time,” Bullock said.
When asked about Bullock’s comments on Thursday, Prime Minister Anthony Albanese said inflation was driven by supply chain issues and international factors.
Westacott, who stepped down as chief executive of the Business Council of Australia earlier this year, on Monday joined philanthropic investment company Future Generation, established by prominent fund manager Geoff Wilson.
She has been appointed as chair of the global arm of Future Generation, which donates 1 per cent of its assets to charities preventing mental illness in young people. Since 2015, Future Generation Global has donated $38 million to charity. Future Generation Australia, chaired by former NSW premier Mike Baird, has donated a similar amount to vulnerable youth.
Wilson expects to exceed his initial target of donating $100 million by 2030.
Westacott said the investment company was a way for ethical and wealthy investors to get a return on theiinvestment while donating to good causes.
“The non-government can be caught up in very complex reporting and compliance arrangements that are quite difficult for them,” she said.
“What we do is we fund on this untied basis, and we have a very, very clear funding purpose: we fund emerging organisations $1 million to $ 15 million, we fund organisations that are having that preventative impact for young people; we put some money towards research.”
She said the Future Generation’s model, which could donate a portion of its assets because fund managers are not charging management fees, should be examined by the Albanese government, which has committed to doubling philanthropic giving by 2030.
Westacott, also chair of the Mental Health Council of Australia, said one of the most important ways to bring fulfilment to the lives of young people struggling with mental health was via employment.
“I’m really, really pleased to see more companies thinking about, ‘How do you create mentally healthy workplaces? How do you deal with the known stress factors? How do you deal with inclusion? How do you deal with supporting people who are struggling?’,” she said.
Wilson said Westacott would bring a wealth of knowledge, experience and contacts to the investment company.
“She’s fair, and she is very accomplished in the business community and also dealing with the politicians,” he said.
On inflation, Wilson said the Reserve Bank and the federal government needed to work together better and rein in public spending.
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