GDP

Financial Services Council (FSC) chief executive John Brogden has blamed “out-dated” regulation and taxation for Australia’s failure to effectively export its financial services business.

In the FSC’s Budget submission, Brogden pointed out that at 8.7% of GDP, financial services is the largest sector in the economy.

“Our financial services industry is diverse, innovative, scalable and well-regulated. We have world-leading capabilities in funds and private pension management.

“However, regulation has held the industry back from developing into an export industry. The industry has been unable to deliver for Australia beyond our shores. A combination of out-dated regulation and taxation settings has prevented Australia from exporting these skills for managing foreign capital,” he said.

The former Liberal Party politician said that in Hong Kong, 60% of the assets managed belong to foreign investors. Whereas in Australia, only 5% of the $2.2 trillion pool of assets is foreign sourced.

“Countries such as Luxembourg, Ireland, Singapore and Hong Kong promote and attract financial services through targeted regulatory and taxation settings,” Brogden continued

Failing to manage large amounts of foreign money means that Australia also fails to receive the flow-on benefits from higher economic activity, employment and tax collection, Brogden said.

“Instead, we are losing this business to Hong Kong, Singapore and others in our time zone. We urge the government to reform our regulatory and taxation settings to enhance our competitiveness and export opportunities.”

At $2.2 trillion, Australia has the third largest pool of assets under management in the world.