The head of National Australia Bank (NAB) has called for an overhaul of Australia's industrial relations and taxation systems as the resources investment boom nears its peak.
NAB Chairman Michael Chaney said investment would reach a high in the next year or two, putting the onus on government to focus on microeconomic reform.
"We've got to make sure that as the terms of trade are lower we focus on productivity in order to get economic growth," Mr Chaney told reporters after NAB's annual general meeting (AGM) in Perth on Thursday.
"If any part of the economy turns down, all banks are affected."
Mr Chaney said the nation would need to increase productivity to achieve acceptable economic growth.
"This will only come about through a renewed focus on microeconomic reform in industrial relations, regulation, infrastructure and taxation, to name a few," he told the meeting.
He also suggested a review of the domestic funding model used by local banks, which raise a significant amount of their funding on international, short-term, and wholesale funding markets.
Australia's economy had been very strong in recent years, leading to strength in the banking sector, he said.
"All of the stress tests carried out by the regulator indicate the banks will continue to be very strong in the event of any sort of a downturn," he said.
The global financial crisis had shown how banks' funding can be threatened, and resolving issues surrounding the current model could help avoid constraints on Australia's economic growth, he said.
Mr Chaney added that using Australia's growing superannuation pool could be one funding solution, along with a more neutral tax treatment of savings.
It follows opposition calls for a review of Australia's financial system.
Mr Chaney said the $1.3 trillion in superannuation funds under management now formed a substantial part of the financial system.
"People who invest in equities don't make bank deposits and that causes the banks to go to the wholesale funding markets offshore and any review of the system needs to take account of that pool of superannuation savings as well as banking assets and deposits," he said.
Other ideas included the development of an active corporate bond market in Australia and increasing domestic deposits.
Keep reading - next article