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Mike Smith at The West s Leadership Matters breakfast. Picture: Michael Wilson/The West Australian.t
Mike Smith at The West's Leadership Matters breakfast. Picture: Michael Wilson/The West Australian.

ANZ chief executive Mike Smith has relit the tense debate about foreign ownership of Australian farms, saying that political leaders needed to argue against rather than pander to xenophobic slogans on the issue.

Speaking at The West Australian's Leadership Matters series this morning, Mr Smith said Australia's agricultural sector needed a staggering $1.5 trillion of new investment over the next 20 years, and much of that money would inevitably have to flow from countries like China, whose middle class wants more protein.

The Nationals and Opposition Leader Tony Abbott have recently called for a tightening of the rules around foreign investment in farms.

But Mr Smith said fears of selling off the farm were overblown and political leaders should do more to hose down concerns.

"How we access necessary capital 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."

He said the Farmers Federation supported more investment.

Mr Smith said knee-jerk political reactions as in the live cattle ban to Indonesia showed that more thoughtful leadership was required.

He also said more should be done to help manage the strains of the mining boom, including by helping people move to resource-rich but labour constrained areas such as the Pilbara.