WA's agricultural sector will need the lion's share of $1.5 trillion of investment in the nation's farms over the next 20 years and most of that will have to come from Asia, according to ANZ Bank chief executive Mike Smith.
In a wide-ranging speech at _ The West Australian's _Leadership Matters series yesterday, and subsequent interview with _WestBusiness _, Mr Smith said he wanted to spark a debate about how Australia could overcome the challenges it faced from a once-in-a-generation Asian-led commodity boom.
This included resisting the temptation to bail out industries whose decline was being hastened by the shifts in the economy.
He called on politicians to show leadership and recognise the opportunities that came with greater interaction with Asia and do more to hose down concerns about foreigners buying the family farm, saying "public opinion needs to be shaped, not pandered to".
"How we access necessary capital (for agriculture and resources) is a vital conversation . . . because capital goes where it is welcome," he said.
"Why is there a concern about this investment? It helps everyone and it's not like you can take the land with you."
The Nationals and Opposition Leader Tony Abbott have called for tighter rules around foreign investment in farms.
Mr Smith recently returned from China with a group of the nation's most prominent executives, including Michael Chaney and Andrew Forrest, as part of efforts to build bridges with the Middle Kingdom's senior officials that they say is lacking among Australia's federal leaders.
The ANZ chief said you "could not make up" the Federal Government's bungled handling of live cattle exports to Indonesia, which was symptomatic of shallow thinking in the agricultural sector. This was poised to be the next big beneficiary of the rise of Asia after resources, Mr Smith said.
Chinese investors had a growing appetite for agricultural assets in the State.
Mr Smith said that WA was ahead of other States in its relationship with China, which would be an advantage in coming years, given the huge investment sums needed in the local farm sector and a growing Asian middle class hungry for more protein.
"WA looks to Asia not with suspicion but in terms of opportunity," he said. "It understands there is a customer and talent base there, and there is a manufacturing opportunity, and an opportunity for the supply of services and food."
But he warned more needed to be done to offset the dark side of the boom, namely rising wages and costs, the effects of which were being exacerbated by a high Australian dollar.
Mr Smith said an Australian dollar at $US1.10 was likely in the near term, given "problems in Europe were likely to persist" and the Reserve Bank had limited ammunition to drive it down, barring printing money and buying offshore assets.
The Reserve Bank yesterday noted in its monthly board minutes that safe-haven buying had boosted the currency, despite falls in commodity prices.
A high dollar hurt the tourism and manufacturing sectors, at a time when miners were struggling to offset rising costs and wages, Mr Smith said.
Radical solutions were needed, including examining whether dole payments were too generous to stop people moving from unemployment pockets in the Eastern States to the high-wage West.
He also downplayed speculation that he would leave ANZ next month to take up a role at Barclays Bank in England.
"I can see why from my background (England) I might tick some of those boxes," he said. "But I think the expression we use is 'do they tick mine?' "
Mr Smith said after five years at the helm of ANZ he had unfinished business in his push to generate more than 20 per cent on the bank's income in Asia.
An Australian Prudential Regulation Authority ruling that ANZ would have to set aside more capital than its competitors to reflect the higher risk of its minority stakes in Asian banks reduced the return on those holdings, but was "not too worrying".ANZ would dispose of minority stakes if they cost more and no longer met strategic objectives, but China and Malaysia were two core markets it would not leave.
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