GINA Rinehart-backed Bannister Downs Dairy has warned Australia has a problematic new "workforce culture", in which young people did not want to do menial labour or wanted to get paid too much money to do it.
Bannister Downs managing director Sue Daubney said many young people did not want to work in agriculture, which is why the sector needed to recruit foreign workers on 457 or temporary work visas.
"It is not just the cost of [labour] and the cost of managing it, which we all share in WA but the growing issues that we are getting with culture and the work ethic that is coming through and the preparedness to do what needs doing," Ms Daubney told a Committee for the Economic Development of Australia luncheon in Perth on Tuesday.
Bannister Downs employs the equivalent of 45 people and secured the backing of Mrs Rinehart's Hope Downs Dairy last year, which allows the third-generation family dairy to build a $20 million processing plant to increase milk production fourfold.
Mrs Rinehart has warned for years that Australia was becoming too costly and sparked controversy several years ago when she highlighted African workers were willing to work for less than $2 a day, helping lower production costs to produce iron ore that left her worried "for this country's future".
Ms Daubney said the mining boom had inflated wage expectations for unskilled labour.
Speaking on the sidelines of the CEDA event, Ms Daubney said unskilled blue-collar workers had been able to get high wages that agriculture struggled to compete with. She said workers wanted about $30 per hour, compared with a typical base rate of pay of between $20 and $25 per hour.
"We have a low margin. The return on investment at those [$30] hourly rates doesn't work," Ms Daubney said.
She said there was also a "new workforce culture" that posed a problem - a lot of people refused to do the jobs agriculture required, such as bringing cows in for milking at 3am.
"We have normally two temporary backpackers at any one time and they will do whatever has to be done where as it is sometimes hard to get local or permanent Australians to do those jobs, not always but it is an issue," Ms Daubney said. "It's the new workforce culture that is the big problem. They expect to be paid high dollars and expect certain conditions. Agriculture can't afford that."
Ms Daubney said agriculture faced other challenges, including access to funding because the sector generated low margins and low growth, which required patient, long-term capital.
Agriculture is tipped as a key sector to tap rising demand for food from developing Asian economies and buffer Western Australia from the downturn in the mining industry.
Investment banker John Poynton called for greater political and business leadership to better diversify WA's economy, including reversing the flow of government sector superannuation funds to the east coast in a bid to develop a thriving wealth management sector in Perth.
He said that the economy had rode off the sheep's back and then iron ore and everyone was now asking, "what's next"?
"Perhaps if we had thought about that a while ago we wouldn't be now going about what's next," Mr Poynton said.
He said the nation faced challenges that went beyond short-term political cycles, which required a more mature debate and stronger leadership.
Mr Poynton backed foreign investment in agriculture but said Australian asset managers were sending funds offshore that could be deployed locally if the "right settings and right terms" were in place.