The goal to turn Australia into a global financial services centre appears to be gaining traction, with a recent speech by the federal treasurer and a report from the Financial Services Council putting the spotlight on the industry’s exportability.
Renowned globally for its enviable honeypot of natural resources – just the kind required to keep China’s growth engine running smoothly – Australia is not often referred to for its financial services prowess.
While Australia’s executives and economic policymakers did gain kudos for managing to avoid recession during the global financial crisis, the country lags behind regional powerhouses Hong Kong and Singapore in terms of the reputation of its financial services industry – let alone London, Frankfurt or New York.
With the tiger economies of south-east Asia nipping at its heels, a change in ministerial portfolio responsibilities in the Rudd Labor government has seemingly seen the priority of financial services up several notches.
In a speech to the National Press Club a few weeks ago Treasurer Chris Bowen – who now has responsibility for financial services as former minister Bill Shorten moves to the education portfolio – spoke of reigniting the goal to turn Australia into a global hub for financial services.
At the opening day of the FSC annual conference in Brisbane yesterday, Mr Bowen reiterated the call.
“The mining investment boom [is] coming to an end, and [there is a] need for more growth to be driven by the non resource sector,” he said.
“Although the local industry is strong, our financial services exports and imports are low by international standards.
“In 2009, it was pretty unfashionable for Governments around the world to announce that they wanted to promote financial services.
“But we decided the financial services sector was a good, indeed essential, area for us to invest in as a policy priority.”
The Australian Financial Centre Forum's report on Australia as a Financial Centre (Johnson report) offered a number of recommendations, but only since Mr Bowen’s appointment as minister-in-charge of financial services have the objectives been signalled publicly as a political priority for some time.
The treasurer pointed, in his speech yesterday, to the proposed legislation to amend the Income Tax Assessment Act 1997 to expand the existing exemption for qualifying investment income of certain foreign widely-held managed funds if they meet a number of criteria such as compliance with reporting obligations.
Treasury is seeking submissions from industry on the final tranche of investment manager regime legislation, with an exposure draft and explanatory memorandum released yesterday.
A report put out by the FSC and technology provider DST last week – which surveyed chief executives in the wealth management industry – also played up the global potential of the Aussie financial services sector.
“The ‘export’ component of financial services is the local expertise and skills – not Australian assets (eg. equities and bonds),” the report states.
“For example, an Australian-based fund manager - either a stand-alone business or one that is part of a global network - that manages funds for Asian clients is exporting financial services to Asia.
“This is the case even if those funds predominantly comprise global equities and fixed interest products, rather than Australian assets.
“It is the funds management expertise that is the export, irrespective of the asset mix involved in the transaction.”
