How Aussie ag may sail through global economic chaos: Peter Costello at Beefex 22

That was the verdict from former federal treasurer Peter Costello, who spoke at today's BeefEx22 conference in Brisbane, hosted by the Australian Lot Feeders' Association.

Against a backdrop of global instability, and the financial volatility that accompanies it, Australia is enjoying the strongest terms of trade ever experienced, he said.

"If you had to name one country well placed in these times of instability you would have to say it is Australia," Mr Costello told the 600-strong audience.

"I would have killed for trading conditions like this when I was treasurer.

"For the beef industry, that's opportunity. Rural commodity prices are doing the best they have in a long time.

"What will squeeze you is inputs, so now is the time to take risk off the table and batten the hatches.

"We always knew the adjustment was coming but, properly managed, this could in fact be another boom for Australian agriculture."

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Mr Costello, the country's longest serving federal treasurer, said the enormous economic stimulus during COVID was unprecedented.

"From jobkeeper to jobseeker, the government paid $100 billion in stimulus," he said.

"At the same time, we have never had a lower interest rate - the cash rate was just 0.1pc.

"And thirdly, our reserve bank created money to the tune of $400b. Globally, $10 trillion was created in order to deal with the pandemic.

"We have just lived through the greatest investment conditions we will ever see in our lifetime.

"But they were not normal."

What those tailwinds have now delivered is something Australians have not had to deal with in three decades -inflation.

And it caught authorities by surprise, Mr Costello said.

Inflation is on track to peak at the end of this year at 7pc.

"The inflation genie has escaped and is moving through the economy and so interest rates are going up," Mr Costello said.

"We're now at 2.6pc and this ain't finished yet folks."

While he acknowledged the case for a government moving into deficit during a global pandemic, he said the issue was that in Australia that followed 12 preceding financial year deficits.

"The COVID deficits were number 13 and 14," Mr Costello said.

"The debt servicing on rising interest rates makes for big headwinds."

Amid that turbulence is an international scene where two powerful countries - China and Russia - have very different ideas to the rest of the world.

The president of China's agenda was to maintain the power of the Chinese Communist Party and that involves militarisation of the South China Sea, Mr Costello said.

"You've seen what happened to international markets when Russia invaded Ukraine. Imagine what will happen to our markets if there is a war in the Taiwan Straits," he said.

"Agents of change are disrupting international order and the more that instability continues, the more volatility hits financial markets."

The former politician and lawyer, who today is a corporate advisor and chairs the Australian Future Fund which holds around $130 billion in assets, suggested a return on investment of zero or negative 1pc might look like a very good result in FY23.

"Remember this - we don't have to import energy and we don't have to import food. When energy and food prices go up, Australia is a net winner," Mr Costello said.

"This period has been the best for terms of trade ever seen. In 2000 we were getting $13/t for iron ore. Last year it was $130/t.

"All of the products Australia exports have been rising in price and our imports have been fixed, or in some cases falling. These have been, and remain, the greatest Australian trading conditions we've seen."