That’s it from me for 2023
17 January 2023
That’s it from me for 2023. As I pause to reflect on the year, while it has not been without its trials, it has been a pretty great year. I continue to maintain that I have the best clients. Many who have been with me since the beginning - a remarkable six years ago now. Thank you for staying the journey. Some were first timers, who took a punt on me, generally on the hearsay of others. I think / I hope I have not disappointed. I also have the best of collaborators. A highlight of the year, discussed further below, was working with academics on the next generation of accounting professionals. While cliché, this work would not have been possible without them. I am grateful for their expertise and efforts. And I am similarly grateful for the many stakeholders who gave generously of their time and insights at various points over the year. Finally, it would be remiss of me not to mention my family. We epitomise free, frank and fearless advice and feedback on steroids - “What’s that bleep you have just posted on LinkedIn?!” Prioritising family has meant that this review, which I started penning late last year, has taken me until now to post.
The picture that graces this review is from the Friends of DXP Consulting End of Year Celebration – a small gathering, celebration and thank you to the clients, collaborators, stakeholders, family and other friends who travelled with me in 2023.
The trials include the now familiar feast or famine of work. Thankfully it has been more of the former and less of the latter. But that does not stop me questioning whether I should get a ‘real job’ each time I hit the leaner periods. Putting time, effort, heart and soul into proposals, often with brilliant others, which do not always land, is another trial and can be a bit soul destroying. Perversely, as the market reacts to the scandalous behaviours of a few big players by adding extra hoops to jump through, it is the little guys who are suffering the most.
A personal trial for me is adapting to the ‘new normal’. On the one hand, I fear I have become too comfortable in my own company and resentful of disruptions in my day and time loss in transit. On the other, each time I do venture out, I am reminded of how much I enjoy, learn from and am invigorated by face-to-face conversations. I suspect that I am just a bit crazy. But please do not let that stop you from inviting me along to seminars, meetings, coffees and the like.
A personal highlight of the year was sorting out at the meta level, what drives me and the areas of focus for my work. I have to work a bit more on articulating this epiphany, but in the language of my fellow economists, it goes along the lines of: I aim to add value to the policy and other settings and conditions that best support the supply-side of the economy. Like I said, it needs some work. I know that sounds dry and boring. When it is anything but. It matters. It impacts the livelihoods and wellbeing of people and the sustained prosperity of nations.
Two key factors gave rise to this epiphany. One is reflecting on what may come across to many as disparate areas of focus for my work, which traverses gender equity through to skilled migration, and everything else in between. The thread that binds most areas together is that they support the supply-side of the economy (which I attempt to explain better below).
The other underlying factor was my mounting rage at policies focused predominately on the demand-side of the economy. A self-indulgent look at my LinkedIn posts over the past year reveals that I made at least 15 posts on the subject of inflation or, more precisely, what is being done to bring it under control. The tone shifted over time from polite questioning to angry assertions. My anger stems from the fact that the primary policy lever pulled has been interest rates. The Reserve Bank of Australia (RBA) has cranked up the cash rate 14 times since December 2021. High interest rates encourage saving, discourage borrowing and, thereby, quell our ability to spend. Economics 101 is that this reduces the situation where there are too many dollars chasing too few goods, which drives prices up. However, rising interest rates is impotent against supply-side problems. That is, when the bigger problem is not the money doing the chasing but the reality that there are two few goods. In recent history there was close to two years of no migration, supply chain disruptions as COVID swept through and impacted manufacturing and transport capabilities, climate damaged produce, the war between Russia and the Ukraine causing wheat, coal, gas, oil and metal prices to climb to new heights, and, more recently, the escalation of tensions in the Middle East. While the RBA may be cautiously claiming victory as inflation comes down, a big reason is because many of these supply-side pressures have eased. I could go on. And I do in my recent cathartic rant shared under the Insights tab of my website. But here I will suffice by leaving you with my main point, borrowed from the well regarded Australian economist, Chris Richardson: “Rising supply is a much happier solution to inflation than demand destruction”.
This begs the question of: how to bring about rising supply? There are at least five ways:
• incentivising productivity-enhancing investments;
• supporting the participation of women, Indigenous Australians and other under-represented cohorts;
• putting migrants’ skills to best use;
• attracting global talent; and
• developing the talents of today’s and tomorrow’s workforces.
All I will say on the first is that what not to do is to keep ratcheting up interest rates. The rest provide convenient headers to capture where I have focussed my energies over the year.
Supporting the participation of under-represented cohorts
Three cohorts that should feature more prominently are women, Indigenous Australians and migrants. The first two are discussed in turn under this header; the last under the next.
In 2022 I had much to say about the labour force participation of women: controversially, that in order for more women to get into the labour force, men had to be better supported in getting out. Specifically that entitlements for paid parental leave should not differ depending on whether it is mums or dads seeking to access them (see linked article). Last year, I welcomed the opportunity to support others in advocating parental leave reform in their representations to Government, including on the Employment White Paper. The Government listened: in July more gender neutral, generous and fairer arrangements were introduced.
With the settlement of native land claims and other developments, unprecedented opportunities are opening up for Indigenous Australians. The risk is that best advantage is not taken unless Indigenous Australians play a more prominent role in determining their own success. Supporting the upskilling of Indigenous Australians is not just about equity it is about empowerment. This is an important message that I got to help clients evidence and convey in their submissions to Government on the White Paper and the Universities Accord.
Putting migrants’ skills to best use
Primary applicants for permanent skilled migration typically do well in the Australian labour market: their rates of labour force participation are high and unemployment low, and they are likely to be working in roles that make best use of their skills. Secondary applicants, other permanent migrants and recent graduates have much poorer outcomes, despite the skills many possess. I was privileged to work with a number of clients on initiatives designed to redress this situation.
One reason why primary skilled migrants do well is that their skills are assessed and verified as a precondition for migration. For some trades the form of verification is an Australian qualification. For some professions, primary applicants assessed may walk away with a digital badge issued jointly by skills assessor, VETASSESS, with the relevant professional body. These are powerful assets that support skilled migrants’ employability. Until recently other migrants did not have the same opportunity to have their skills assessed. The Government through its skills assessment pilots redressed this for selected in-demand occupations. This is a good initiative that could be great. To make it great would be to provide other (than primary skilled) migrants a positive form of verification, such as a digital badge. The opportunity for augmentation is when the pilots draw to an end next month. I had the privilege of assisting a client argue this case for augmentation.
In 2023 we learnt about the thousands of international graduates in limbo struggling to find meaningful employment extending their stays through temporary visa hopping. The counsel of some commentators was to not to give graduates false hope. I agree. However, rather than curtail work rights, better would be to give international graduates real hope. Particularly given the persistence of skills shortages and the fact that international graduates, who have lived and studied in Australia, make great migrants. Yet they may struggle due to a lack of relevant work experience and/or the reluctance of some employers to take them on. The accounting, IT and engineering professions provide graduates real hope through their professional year programs, which are focused on international graduates’ work readiness and include an internship component. These programs develop graduates’ employability skills, provide them with work experience and open the eyes of employers to the benefits of international graduate talent. Programs such as these need to be supported and extended. This was the key point argued by the professional bodies who administer these programs in a joint submission to ministers. I could not have been happier to help.
Attracting global talent
When borders swung open after being closed for near on two years, ministers were happy to extoll the benefits of migration, and the business community and public were happy to listen. A review of migration was launched and welcomed by many. Lending a hand to clients on their submissions kept me frantically busy as 2022 drew to a close.
As 2023 wound up, a migration strategy was delivered into an altered political climate. While business remained keen to ease their skill shortages, and the public remained generally welcoming of migrants, some commentators were pointing their fingers at migrants as the cause of all sorts of evils, like housing shortages and inflation. I will spare you a lecture on the faults of their arguments, and suffice by saying here that a better focus of policymakers attentions is the quality and not the quantity of migrants. I was welcoming of the chance to assert this point in the submissions of clients on the migration program.
As Australia pondered its migration strategy, and elements of that strategy are further investigated in this new year, comparisons continue to be made to the Canadian approach. The sentiment of some is that Australia would be wise to follow Canada’s lead. In truth there are many points in favour of Canada’s approach, such as a three year planning cycle and ranges for their planned intake rather than boundless targets. However, a dispassionate comparison, which I undertook and presented on over the year, reminds us that Australia’s approach is superior on many fronts. Attracting skilled migrants in areas of shortage, for instance, means that they are more likely to be in roles that make good use of their skills. Don’t get me wrong, there is lots of room for Australia to improve on this front, but following Canada’s lead is not one of them. My key finding is that there is much that the two countries could learn from each other.
Developing the talents of today’s and tomorrow’s workforces
An argument too often reeled out in opposition to skilled migration is that Australia should invest in and develop local talent. Of course it should. But that does not make skilled migration a bad idea. A (not original) mantra of mine is to avoid the tyranny of the OR and embrace the genius and the power of the AND. Particularly when it comes to supporting supply.
Over 2023 I was fortunate to work on matters concerning global AND local talent, including the Universities Accord which impacts the development of both. Like many I wait in eager anticipation of viewing the final report and learning how the Government intends to respond.
As foreshadowed earlier, my highlight for 2023 was working on a project on attracting the next generation of accounting professionals. A paradox exists: the future of work for accounting professionals is bright – demand is strong and the opportunities to engage in meaningful and transformational work are great – yet the local talent pipeline is dwindling. Skilled migration is part of the solution. A more complete and sustainable solution is to uncover and tackle the reasons why more school students are not choosing to study accounting in their senior secondary years. In the absence of this, shortages are destined to go from bad to worse. This project provided an opportunity to work alongside academic accounting experts and work with players across the whole ecosystem of influences on students’ choices to co-design solutions, plural. There is no single silver bullet. But with everyone working together and pushing in the same direction meaningful change is possible.
The most I will say under this header is now that I better understand myself about where I am heading and why, I plan to continue on my journey with a better sense of direction and purpose, and with others with complementary interests and skills.
“Purpose is the reason you journey.
Passion is the fire that lights the way.” (unknown)
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