A newly released report from the senator-convened committee, Australia as a Financial & Technology Centre Advisory Group (AFTCAG), has made 15 recommendations for how Australia can lure the Asia-Pacific region’s money managers.
AFTAG, which is chaired by Australian British Chamber of Commerce chairman Andrew Low, was formed in August and contains a cross-section of executives and board directors from the financial services sector. Among others, the members include Frank Kwok, head of Asia Pacific for Macquarie Infrastructure and Real Assets; Di Challenor, general manager, GTS Westpac Institutional Banking and First Sentier Australia and New Zealand managing director Elizabeth Hastilow.
The group has called for a number of changes to make Australia a more appealing destination for the region’s companies, aiming to scrap barriers for business growth, attract relocating operations and talent, simplify regulation and changing the nation’s image for the rest of the world.
The expected departure of APAC businesses from Hong Kong, the diminishing appeal of offshore centres as global tax rules are tightened, tighter visa regulations in Singapore and post-COVID re-evaluations by businesses on where they can operate and where people wish to live are all anticipated to add to Australia’s appeal.
“[The] timing is currently especially propitious for Australia to be offering a more attractive environment for AsiaPac headquarters,” the new AFTAG report noted.
According to Mr Bragg, attracting merely 5 per cent of Hong Kong’s finance activity would equate to 13,000 new jobs in Australia. The senator has previously championed the idea of Australia rising to become a financial services centre in the APAC region, first speaking on the matter as China began to impose draconian national security laws on Hong Kong.
But Australia’s advantages as a base, including its quality of life and reliable legal system, are offset by its tax inefficiencies, regulatory complexity and the inconvenience of relocating, AFTAG ruled.
“We can end the narrative that Australia is too expensive and complex by making Australia a real choice for regional head offices as well as new investment opportunities,” Mr Bragg said.
“The competition is real. Our competitors have set up equivalents to our Global Talent and Investment Taskforce so we must move quickly.”
AFTAG’s recommended policy solutions include removing barriers for business growth, such as amending the Investment Manager Regime rules to scrap obstacles for Australian managers to handle foreign money for foreign assets.
Other calls include binning the withholding tax for funds issued under the Asia Region Funds Passport program and eliminating interest withholding tax on interest paid by financial institutions lending into Australia.
Mr Bragg noted that the local tech and finance sectors are “sophisticated but very domestic, with a few exceptions”.
“Insurance and financial services make up only 1 per cent of our exports,” the senator said.
“Less than 6 per cent of managed funds are held on behalf of foreign investors, compared to 40 per cent in the UK and 75 per cent in Singapore.”
AFTAG has also urged for a “better balance” of regulation, with ideas including a subcommittee on the Council of Financial Regulators of Financial Regulator Assessment Authority that promotes investment and competition, and reports to Parliament.
A bias towards competition as an overriding principle for ASIC, APRA and other regulators when overlooking the fintech sector has also been listed, to prevent deterring upstarts from entering the Australian market.
ASIC could also fast-track an AFS licence for any business that already has a licence with Hong Kong’s Securities and Futures Commission (SFC), the UK’s Financial Conduct Authority (FCA) or the Monetary Authority of Singapore (MAS) for the same activities.
“The committee believes that businesses that are already licensed for substantively the same activity by a reputable regulator in a common-law market very similar to Australia (starting with the UK, Singapore and Hong Kong) should, if they have had the license for at least three years with no sanction or investigation, be automatically licensed for wholesale activities (not retail) in Australia within two months unless ASIC determines a specific reason that they should not be licensed here,” the report stated.
Australia is also urged to take hold of its international image quickly – through the creation of a “Financial Services Taskforce within Austrade”, which would include revolving industry representatives to conduct virtual and in-person roadshows to promote the country as a finance hub.
The first such roadshow has been recommended to take place in early 2021.
Prime Minister Scott Morrison recently signalled Australia would welcome the migration of skilled workers to further develop its fintech industry, pitching an invite at the Singapore FinTech Festival.
In his address to festival attendees, the Prime Minister commented the digital sector would be key to Australia’s recovery from the COVID crisis.
“Fintech is integral to the economy we are rebuilding,” he said.
