Welfare payments could be cut to encourage workers to move to labour-starved, booming mining States like WA as part of a radical rethink of how Australia overcomes its increasingly high-cost economy, ANZ chief executive Mike Smith said yesterday.
Mr Smith, who this week said he and his senior executives would take a pay freeze, believes that the pressure on the economy will only grow, given he expected the Australian dollar to head to at least $US1.10 for the foreseeable future.
He said the strong currency was hurting tourism and import-competing manufacturing industries while miners were paying big wages to attract labour, undermining their global position.
"One of the issues you are going to have with the high dollar is global competitiveness," he said after speaking at _The West Australian's _Leadership Matters series. "How do you reduce that cost base? Surely one of the ways to do that is you put labour where it is needed, rather than fly-in, fly-out, or compromise as we do at the moment."
Mr Smith said talks with resource industry leaders had convinced him that welfare reform could deal with the two-speed nature of the economy.
"I think that is something we should consider," he said. "Instinctively, mobility in Australia feels low compared with, say, the US. In the US if you don't move, your house goes and you don't eat. So that is the difference. The welfare net (in Australia) is such that it doesn't provide an incentive for people to move."
But some analysts argue that issues such as cheaper housing in the US make it easier for people to move between American States.
However the idea of cutting, or at least capping, dole payments has recently gained political traction.
Former WA treasurer Christian Porter flagged the idea in June as a way to boost jobs in depressed east coast cities such as Wollongong.A spokesman for Employment Minister Bill Shorten said a Federal Government submission to the Senate inquiry on increasing unemployment benefits argued lifting the dole would have the "distinct disadvantage of reducing employment incentives".
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