FROM FINANCE TO FARMING - Murray’s business edge
Article I Rosie O’Keeffe
Photography I Katrina Partridge Photography
As one of Australia’s leading businesspeople, David Murray AO is nationally and internationally renowned for his experience and service to the finance sector in strategic leadership, policy development, education and wealth management. He gives an insight into his passion for the agricultural industry, his views on how developments in technology will shape the future of farming and the highlights of his financial career.
One of the biggest breakthroughs in the Australian ag tech space is the use of sensors, satellites and data systems, according to David Murray AO.
As he leaves his city residence in Sydney on one of his regular visits to his family 4,000 hectare farming property in the Hunter Valley at Merriwa, David reflects on his commitment to ag technology, installing sensors and a base station to monitor his farming operation and the improvements that can be made from investing in these measures.
He believes the availability of water remains the biggest issue in agriculture, together with how well water is used.
David also believes “great schemes” for managing water and providing hydro power are not getting traction.
“Bradfield, who built the Sydney Harbour Bridge and the Storey Bridge worked out how to recycle water from the Murray-Darling Basin a long time ago and engineers know how to harvest water up and down the Great Dividing Range,” he says.
“However, all of this technology around better management of farm water depending on whether it’s in horticulture and irrigated farming such as cotton farming, grapes, all of that can be managed for better yields and better use of water through the use of technology with sensors, satellites and data systems. That’s certainly one of the big breakthroughs, but if we want the greatest productivity improvement in farming we will have to revisit the great water schemes.”
David initially invested in Goanna Ag in the initial stages of its establishment, in support of its business objectives and practical approach to a low-cost telecommunications network and a range of affordable in-field sensors to increase water use efficiency, profitability and sustainability.
“With dryland farming, the data collection is more to do with having real time information and apart from having the best weather forecasts, to be able to check soil moisture, water outages and the condition of tanks and troughs remotely is also a major advance.
“Through being involved in Goanna I have learned about the research being undertaken in the cotton industry here and in the United States. For an average Australian cotton farm the data feed and water control can enable substantial cost savings and yield improvements. I believe there are other sectors that can benefit following on from this.
“I’m really interested in the research and emerging technologies at Goanna Ag and hopefully with the drought not as big a focus, we can move forward more quickly now.”
David hopes the next technological advancement in agriculture will be the tracking of livestock.
“I believe this will open up the opportunity to buy and sell livestock remotely as well with superior information about the farm, the bloodlines, the feed, the quality and being able to identify cattle as they grow, to trade them,” David says.
David believes that despite farmers being some of the most technologically advanced people in the world with the ability to take something new and innovative on to demonstrate the tangible benefits and impact on cash flow, the biggest risk to the agricultural industry – drought – can only be partially covered/managed.
“The biggest risks to the agricultural industry could be managed better. Australia has a large land mass and many different climates behaving differently all the time, yet there is no system of risk sharing across all of those different systems. With government sponsored risk sharing, a multi peril insurance system would take a lot of volatility out of farming. It must be recognised, however, that there cannot be full cover for drought. Unless the farming community gets the support of consumers on this issue it will be difficult to persuade politicians to act.”
The Murray family’s beautiful farm is nestled amongst undulating pastures and dark, rich basalt soils of the Gumman Plains, and is home to the superior quality Dales Angus stud and a dryland cropping operation.
David tells me that despite the purchase of this property five years ago, he has had an understanding and interest in agriculture for many years having spent school holidays at friends’ farms and his mother’s family having grown up on a property on the Macleay River in northern NSW.
David employs a manager to oversee the operations, with the primary objective for the Angus cattle to develop free-range animals with a calm, quiet temperament and high docility level, through pasture-based feeding.
“(In the past four years) we’ve focused on genetics and improving the bloodlines and we are starting to see interest in our young bulls now and developing the stud component of our herd consistently,” David says.
“Initially we started by buying really good cattle from the New England region and we brought some embryos in from what we regarded as the best bloodlines in Canada, so that has given us a good base for our production and to build on the investment.”
There is a focus on achieving a higher yield per head and a better quality Angus beef. Through the breeding program, there is an aim to achieve easier birth weight and rapid weight gain, and a saleable weight at a relatively young age.
Some infrastructure improvements have occurred in recent times and now David says there is an efficient system for looking after the cattle with a couple of sets of yards and races, with silo storages, machinery sheds and good bores also important inclusions.
Crops are grown on up to 1,000ha of the property and with some water rights, there is limited irrigation.
“Typically we grow lucerne, oats, barley, wheat and sorghum depending on conditions. We aim to get good yields because we can self-feed or keep feed for poor times, and we are certainly focused on that now the drought is over,” David says.
“My thought is that if you’re going to run good stud cattle you need to make sure you can hang on to them through the bad, hence the interest in the water and cropping production.
“It’s a business venture that enabled me to invest in prime agricultural land, but the real satisfaction I am finding is coming from engagement with the team and involvement in the complexities of farming.”
It was in 1966 after finishing high school studies at St Aloysius College that David Murray AO first walked into the Commonwealth Bank, not realising that some 39 years later, he would still be with the same organisation – and right at the helm.
At the time he started, the unemployment rate was remarkably low and David admits that like so many other school-leavers he sought a job in a bank because if unsatisfied, it was a simple process to change jobs.
He undertook roles at a branch level for six years and says it wasn’t until he began studying at a tertiary level that he started to enjoy the banking role. He now holds a Bachelor of Business from the NSW Institute of Technology and a Master of Business Administration, commenced at Macquarie University and completed at the International Management Insitute, Geneva. He also holds an honorary PhD from Macquarie University and is a Fellow of the University of Technology, Sydney.
David spent 13 years as Chief Executive Officer (CEO) of the Commonwealth Bank in which it was transformed from a partly privatised government owned bank to an integrated financial services company. In the process it generated total shareholder returns (including gross dividend reinvestment) at a compound annual growth rate of over 24 per cent.
This is still a major highlight for David, who retired from the top job in 2005, and he still regards this development as a blueprint for business transformations of this kind.
“I’d come back from completing my MBA in Europe and did some strategic work for the then CEO and I found that the government as the owner of the bank had not put any capital into it effectively since it was formed in 1912. It was also terribly inefficient under government ownership and I realised at the time that a strategy to confront inefficiency had to be the priority if the bank was to compete.
“The reason why it worked so well for everybody was that we decided our objective was a return to our shareholders… We knew we couldn’t achieve that unless there was a suitable outcome for our customers and our staff at the same time. That’s what happened for a lot of years – our customers did better, we dropped the housing rates by 130 basis points (1.3 per cent) in two steps in the 1990s without any reduction in interest rates by the Reserve Bank.
“Behind the scenes, the most important changes were on staffing policy which we described simply as providing fair, safe, challenging and rewarding work for employees.”
David also reflects on the importance of having had the tenacity and foresight to lead the way with digital banking and the delivery of services in the 1990s.
“We had to lead from the front with technology in banking, even if the analysts in the market didn’t agree with it,” David says.
“Banking became more efficient and effective… It became evident that everything we would do for a customer, they could eventually do themselves, and that brings with it benefits, costs and complications, but it shouldn’t change the objective of getting value to the client.”
David believes a major issue facing businesses today is that the ability to work on bringing a core value for their customers has been seriously challenged by legislation, regulatory complexity and political correctness.
“I believe it is becoming more difficult today and regulation is becoming much more intrusive, and that will add costs eventually.”
Over almost four decades David was at Commonwealth Bank, he did customer facing work in personal banking, worked in commercial banking and specialised finance, and he also spent time in administration, before he was named Chief Executive Officer in 1992.
David also spent two years in Papua New Guinea pre-independence, which he found an interesting experience speaking Pidgin English and working in a bank that was run on hand posted ledgers.
“It was fascinating experience to learn the basics of banking.
“There was then a credit squeeze in the early 1970s which was an important experience for me to see what happened with inflation and interest rates rising substantially… The other big change was the almost complete deregulation of the sector in 1982.
“The credit crunch in the late 1980s and early 1990s was painful when interest rates went to 17 per cent and the banks endured large losses. At that time the Commonwealth Bank was privatised and watching how the industry transitioned after deregulation was fundamental to competitive positioning.”
David also points to the Asian Financial Crisis in the 1990s, the dot-com crash in the early 2000s as major events throughout his time in the industry, before he went on to the Chair the Federal Government’s Future Fund just before the Global Financial Crisis emerged.
It was just after he had retired from the Commonwealth Bank that David recalls the then Treasurer Peter Costello approaching him to take up the post. David spent six years in the role with the objective having to invest budget surpluses to meet the long-term pension liabilities of government employees and take the pressure off the budget from ageing of the population.
“I thought it was a positive initiative and before the legislation was passed I made some contribution into how the Act would operate in practice. We had been going less than a year when the Global Financial Crisis broke. In that year we lost 4 per cent of the portfolio compared to sister organisations in other countries lost as much as 20 per cent, so it was a steady start and has continued to do well.”
David was instrumental in setting up the International Forum of Sovereign Wealth Funds and was named the inaugural Chairman. He led the drafting of the Santiago Principles, a set of principles that sovereign funds use to inform and ensure they operate for good commercial reasons.
“With the Future Fund establishment, we managed to work through accountability to Parliament while achieving public sector efficiency and effectiveness at the same time.
“In Chairing the financial system inquiry in 2014, we made 44 recommendations in which 42 were picked up by Parliament, so that was a major learning experience in learning a lot about the interplay of policy with the operation of the private sector.
“These have all been interesting experiences, but I think the fundamental thing is that an organisation is only as good as its leaders and only as good as its treatment of its people.”
When he’s not checking the Angus herd on his Merriwa farm, for the past seven years, David has also been devoting his attention to charity as Chairman of the Butterfly Foundation.
The Butterfly Foundation provides support services, treatment and resources, delivering prevention and early intervention programs and advocacy for the needs of those with eating disorders and body image issues.
“There are about a million sufferers in Australia. Whilst we’ve made good progress and we are about to open our first residential centre in Queensland, there is still such a stigma attached to it and there is a long way to go. The incidence of people calling our hotline has doubled this year since the COVID-19 pandemic. If these issues aren’t treated they can have a whole of life detriment which is devastating for individuals and costly for communities.
“We’ve had day programs, youth intensive outpatient programs, there’s the helpline, educational programs on schools, so we are really trying to tackle it from every angle.”
David has received recognition on numerous occasions for his career achievements. In 2001 he was awarded the Centenary Medal for service to the Australian Society of Banking and Corporate Governance, and in 2007 he was made an Officer in the Order of Australia for his service to the national and global finance sector.
“It’s certainly a real honour to receive these awards. I’d like to think a whole lot of other people have contributed to my award though and I carry it for them as well.”