Summit News

The Business Council of Australia (BCA) wants government debt paid down before the gains from a mining boom are invested in a prosperity fund.

There was much wisdom in using the commodities boom to increase nationals savings, council president Graham Bradley said.

Mr Bradley was responding to a suggestion from Reserve Bank governor Glenn Stevens that raising savings would be a "prudent approach" to the current period of exceptionally favourable international prices.

The council believes the first priority should be to pay off net public debt.

"By the end of 2012 we will have nearly $100 billion in net debt," Mr Bradley told ABC Radio.

"We would be better to get that paid down so that we bulwark ourselves against another global downturn first.

"If there is still surplus left over, let's look closely at the wisdom of what Glenn Stevens is saying."

Wages blowout tipped

The Business Council is also tipping a wages blowout as employers face a desperate shortage of skilled workers.

The shortage has spread from the mining sector to other technical sectors, especially communications, Mr Bradley warned.

Business fears a 30 per cent wages surge in the Western Australian mining sector could lead to a broader wages blowout.

"We believe it is," Mr Bradley said.

"The skills shortage that we had two years ago before the global financial crisis is back with us."

Many of the council's members were reporting an inability to hire "literally thousands" of skilled workers.

"It's now in the communications sector with the national broadband network causing a lot of wage pressure on engineers," Mr Bradley said, adding the shortage also was carrying over into the health and education sectors.

The council believed Australia had under-invested in skills and training which had to be a part of future population policy.

"In the meantime we would be denying ourselves some great growth opportunities driven by the vibrancy of the regional economy here if we didn't import the skills we need," Mr Bradley said.