ANZ chief executive Mike Smith has called for less “emotion, paranoia and sentimentality” in national discussions about foreign investment, arguing Australia needs the money for infrastructure and productivity.
Speaking at the Japan-Australia Joint Business Conference in Tokyo today, Smith said Australia would not have the means to fund welfare, health, education and housing without foreign capital.
Smith explained that Australia’s mining and agricultural sectors – major contributors to the economy – were particularly capital-intensive, so foreign investment helped boost productivity.
Foreign capital also helped fund infrastructure to support Australia’s growing population, while increasing competition and bringing innovations to the local market, he argued.
Here’s what he said:
In recent months, Australia’s national discussion about foreign investment has again become infused with emotion, paranoia and sentimentality.
Perhaps this isn’t surprising given foreign investment in agriculture – and sometimes even in mining and manufacturing – seems to be at odds with how we think about ourselves as a nation.
It’s almost as though we’re abandoning our agricultural heritage or giving up long-loved brands which play so closely upon our memories.
However foreign capital is critical to economies such as Australia.
The truth is, if our national savings had to cover our capital needs, we would not have the capacity for essential investments in areas such as welfare, health, education and housing.
In my view, capital goes where it is welcome and when Australia turns away foreign capital, we turn away opportunities
To me, the Japan-Australia relationship demonstrates that foreign investment doesn’t have to come at the expense of control of our national assets, our institutions or our identity … The trick is to deal sensibly with the control questions and to be innovative with funding structures we develop.
Let me say however that despite the noise from some parts of the political spectrum in Australia, I’m more optimistic that our leaders understand the importance of Asian capital to Australia’s future than at any time in the recent past.
Smith noted that Japan injected some $125 billion of capital into Australia in 2012 – twice the amount it invested in 2007.
He welcomed the Abbott Government’s approach to Asian trade relationships, highlighting “positive progress with Indonesia” and efforts to completing free-trade agreements with China, Japan and South Korea.
Earlier this month, Prime Minister Tony Abbott took a delegation of business leaders to Indonesia, including Mike Smith and CBA boss Ian Narev. He plans to lead a similar trade mission to China next year.
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