John Brogden

The draft terms of reference for the financial system inquiry announced by the Prime Minister and Treasurer last night, provide a framework for the evolution of Australia’s financial services industry into a major services exporter in the 21^st Century according to the Financial Services Council.

“Australia’s financial services industry is looking to this inquiry to establish the architecture for growth into Asia,”FSC CEO John Brogden said.

The FSC welcomed the appointment of David Murray AO as chair of the review saying he is the “right person at the right time” for the role.

“David Murray has a deep knowledge of the financial services sector,” Mr Brogden said.

“He has spent his entire career in the financial services industry and has extensive experience in financial markets. We are pleased that he will be supported by a council of international experts to advise on international competitiveness and offshore regulatory frameworks.”

He also said: “The financial system inquiry will play a critical role in underpinning Australia’s future economic growth.”

“We are starting from a position of strength with a sophisticated, well-functioning financial services system which has withstood the biggest stress test on our economy since 1929.”

“The financial system inquiry is timely as we are at the beginning of the next phase in the evolution of Australia’s financial services industry. “

“As one of Australia’s major growth industries, financial services must be able to deliver more for all Australians and be more globally competitive.”

Mr Brogden said he expected one area of emphasis in the inquiry would be the need for greater competition and trade in financial services.  In particular, the export of financial services to Asia and what the industry can do to link with the economies of Asia.

“Australia already has some runs on the board. The Asia Region Funds Passport is under development and the Investment Manager Regime and Significant Investor Visa regimes have been established.”

Mr Brogden said he was pleased that superannuation was a central part of the inquiry.

“The key difference between now and when the Wallis inquiry was conducted 16 years ago is that superannuation is now a $1.6 trillion industry – bigger than mining and the ASX. By 2035, superannuation will be around $7 trillion.”

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“It is difficult to overstate the significance of these changes. The introduction of an Investment Manager Regime represents a major step towards Australia becoming a more significant international financial centre,” Mr Codina said.

“By removing a major export barrier for Australian-based fund managers, Australia will attract more foreign investment, especially from the Asia Pacific Region.”

A recent Financial Services Council and Plan For Life study into cross border investment flows found investors in the Asia Pacific region were increasingly recognising the capability of Australian-based fund managers – with up to 73 per cent of off-shore funds flowing into Australia coming from the region.

“The strong bipartisan support for an Investment Manager Regime will ensure Australia capitalises on its position as a leading financial centre in the region,” Mr Codina said.

“We also wish to acknowledge the support from the Johnson and Henry reviews, with both recommending the introduction of an Investment Manager Regime.”

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“The Investment Manager Regime was a recommendation of the Financial Services Council to the Financial Centre Taskforce (Johnson Review) and we strongly support the Government’s initiative today,” Mr Brogden said.

“The announced changes will provide tax certainty for foreign investors investing in Australian managed funds. It will take away the uncertainty that currently exists which can result in foreign investors being unfairly taxed.

“The importance of this change cannot be underestimated – it removes a major barrier to Australian based fund managers attracting foreign investment.

“This will give Australian based fund managers the certainty they need when competing internationally and is a major step towards Australia becoming a real global financial centre.

“The Financial Services Council also praises the Financial Centre Taskforce for its strong support of and commitment to the introduction of an Investment Manager Regime.”

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