Minister for Financial Services, Superannuation and Corporate Law
9 June 2009 - 14 September 2010
Speech at the Launch of Austrade's 2009 Financial Services
Benchmark AFMA's 2009 Reports
Exchange Square, ASX, Sydney
Wednesday, 7 October 2009
I'm delighted to be here to launch these two very significant reports. Can I say as Financial Services Minister, with responsibility for policies that promote Australia as a financial services hub, how much I appreciate the very proactive role that Austrade has been taking in supporting the Government's efforts and supporting all the financial services industry, promoting Australia's financial services role. I know you've increased the priority that is given to financial services which is something that we all appreciate very much. Simon Crean and I regularly discuss these issues surrounding trade and financial services and I know how dedicated he is as well, to promoting Australia as a financial services hub.
I also acknowledge AFMA. AFMA is a very good sounding board for Government. Duncan Fairweather and his team always are ready to provide sound advice, which I appreciate.
These two reports are very valuable. They reinforce what I think is the key message surrounding Australia as a financial services hub. That is, that we have enormous advantages but there is still an enormous amount of work to do. We haven't capitalised on these advantages in the past and we need to make sure that we capitalise on them now and into the future.
When we talk about Australia as a financial services hub, it pays to remind ourselves and remind those whom we are seeking to attract to Australia exactly what our advantages are.
Firstly, our skills. We have built up a great skills base in Australia, largely because of the great pool of funds we have under management as a result of superannuation which has already been referred to. And I think, and I've said this too, this is perhaps Paul Keating's greatest political legacy, the skills that we have built up over the last 20 years as we manage each other's money, and we should be managing many other people's money from around the world.
Our language skills in our community are good but we would like them to be very much better.
Our time change is often forgotten, strategically placed between the close of markets in the United States and Europe and the opening of markets in Asia. The equity markets are again supported by superannuation which has been so important in that capital raising we just heard from Duncan earlier.
in terms of attracting talent we shouldn't of course forget our great quality of life. I was reading on the plane last weekThe Wall Street Journal. Iwas reading about our friends in Shanghai promoting Shanghai as a financial services hub and one of their initiatives, where the Government provided toiletries for financial services executives to encourage them to come and live in Shanghai. With all due respect to our Chinese friends, this is not an initiative I think we need to advance in Sydney in terms of promoting Australia as a great place to live and come and work. So we shouldn't forget the great advantages we have, of being one of the world's most liveable cities, of course together with Melbourne and our other cities.
Prudential regulation of course is also very important and even more so as we emerge from this global financial crisis. I've always had the view that our prudential regulation was a great asset. This has been proven, I think even more so, over the last two years. And of course, our well-run financial institutions; well-run because of very good management and also well run because of that prudential regulation and also because of the four pillars policy. In so many other nations the financial services sector has been a drive to recovery over this crisis but it's certainly not something we would say of ours. We see our financial services sector as a great asset, not a drain.
We need to make sure every challenge is an opportunity. This financial crisis is of course a great opportunity for Australia. For years to come, the world's investors will be looking to see who got through this crisis the best. Which prudential regulation worked? Which financial institutions got through this crisis the best? Which nation survived the global financial crisis? And in Australia, we have a very strong place to argue that it's us, that our real economy, our financial sector has withstood the shocks of the last two years better than any other. And that should be a great selling point for us in the coming years, and we need to make sure we don't let that opportunity pass.
We need to make every post a winner and that includes carbon trading. For all the reasons that we know about the debate on carbon trading at the moment, I think one that hasn't received the attention that it should, is the potential for Australia to be a hub for trading of credits and derivatives. We can do that if we get on top of the game and embrace carbon trading before our competitors do.
These advantages are highlighted in the reports. The Austrade report, on page 32, highlights that Australia ranks better than the United States, the United Kingdom, Japan, Hong Kong and Singapore, in terms of the financial skills of our workforce. Page 52 highlights that we rate second in the world in terms of ease of doing business. We are the largest centre for hedge funds in Asia, which has already been referred to.
We need to build on these blocks. We need to capitalise on these opportunities. There is a river of funds to our north that we haven't capitalised on as a nation. We put a thimble in that river, as we export under 3 per cent of our funds under management. If we turn that thimble into a cup, we will be doing the nation a great service and I don't think that is an unrealistic objective.
So we have been, over the last two years, trying to move Australia as a financial services hub from a slogan into a reality. This relies upon a number of policies. In our first Budget we reduced withholding tax for distributions to offshore investors in managed funds from the highest rate in the world to effectively the lowest. We've made some interim changes to Division 6C of the Tax Act in relation to managed funds in preparation for much broader substantial changes in response to broader tax reform, which we referred to in the Tax Report we instigated when we came into in Government. And on Budget night this year, we announced the abolition of the Foreign Investment Fund and major reforms to the controlled company regime. Reforms which haven't received much attention in the media, but I think we'll be seeing in time to be very substantial reforms in promoting Australia as a financial services hub.
Reform is a never ending finishing line. Our competitors are constantly reforming and so must we. This is one of my KPIs in terms of the Government. We all have KPIs: you have key performance indicators, I have Kevin's performance indicators and he makes it clear to me that this is one of those. So we have a great deal of work ahead of us. Soon I'll be receiving the Johnson Report and the next steps in terms of building on those policy initiatives that we've already taken because don't think for one second that I or the Government think they are anywhere near enough. We have a great deal more to do and this is within our reach.
Yes, we are middle-sized player in the world economy, but we can identify our niche. We can punch above our weight and we can do more. We won't be London or New York and nor should we aim to be. Young Australians will always want, in the financial services sector, London or New York on their CV. But we should get to the place where Sydney or Melbourne are essential on a CV if you want to say you've worked and understand Asian financial services.
Let us have Sydney and Melbourne and Australia being regarded very well. We need to be a financial services hub which not only trades on our strengths, not only trades in Australian dollars, but trades in commodities and products which are not based on Australian dollars. If we do this, we will be doing the nation a great service. Well paid, interesting jobs for the next generation of Australians.
The reports that I'm launching tonight form a very good basis for arguing those advantages and identifying what more needs to be done in the future.
Congratulations to Austrade and AFMA, and thank you and I look forward to working with you in the future on further initiatives to promote Australia as a financial services hub.
Thank you very much.