The federal government was in danger of regulating to death the financial services goose that had laid the golden egg, the head of Australia’s peak services body said yesterday.
Australian Services Roundtable (ASR) president James Bond said: “Given financial services’ GDP (gross domestic product) contribution, the government should be seeing the sector not as something to regulate, but as an export it should assist to grow.”
According to CommSec figures, despite losing almost 4000 jobs in the three months to February, the financial services sector was still the largest contributor to GDP, with a 10.6 per cent share.
CommSec chief economist Craig James said of the 19 industry sectors tracked by CommSec and the Australian Bureau of Statistics, financial and insurance services was 11th in terms of numbers employed (423,100 people or 3.7 per cent of the total employed population) in contrast to healthcare and social assistance in first place (1.35 million people or 11.8 per cent).
“Perhaps we’ve got our booms wrong,” James said.
“When it comes to jobs, the healthcare sector has been the boom sector since 2008.”
However, Bond said that while healthcare employed the most people, its contribution to GDP was 6.2 per cent compared to financial services’ 10.6 per cent.
Even more telling, he said, was the change over the past 20 years. From 1991 to 2011, financial services’ contribution to GDP grew from 6 per cent to 10.6 per cent, an increase of 4.6 percentage points.
In the same period, healthcare’s contribution to GDP grew from 5.5 per cent to 6.2 per cent, an increase of only 0.7 percentage points.
Bond said the various trade and investment departments helped exports, as did agriculture departments. “So why doesn’t Treasury help financial services as an export?” he said.
“The mindset needs to change – it’s not just an industry to be regulated. It’s a sector to be exported.”
Bond drew an analogy between the lack of planning in the growth of the education sector and financial services.
“No-one had a plan with education,” he said.
“The Department of Education and the Department of Immigration didn’t talk to each other. The Department of Immigration didn’t see how important education exports were to Australia. They [the department] went too far and it had a massive negative impact.
“It was the Agent Orange approach to education. You defoliate the trees and you kill the crops as well. It’s like putting DDT all over the vegie patch – you kill the weeds, but you kill the carrots as well.”
