As part of this effort it said it is changing its name to the Financial Services Council, effective next month.
In announcing the organisation’s new, broader mandate at an IFSA/Deloitte event today in Sydney, IFSA chief executive John Brogden addressed such topics as the recently-proposed and controversial resources super profits tax (RSPT), as well as global efforts “by international bodies such as the G20, and by governments in the US, UK and EU” to install new financial services industry regulations.
About the latter, he noted that Australia’s already-existing regulations had shielded it from the worst of the fallout that affected banks and other institutions in these countries, and added: “we have to be vigilant in resisting regulation which has been designed to solve problems that do not exist in our market.
“Clearly, Australia is in the near unique position to resist much of the new regulation being proposed…
“Taxing transactions on financial services – proposed by the UK, Germany and France is a prime example.
“It will not make the system safer, and may instead perversely encourage greater risk taking by financial institutions to claw back any foregone revenue.
"A tax on financial transactions will also inevitably increase the cost of capital and reduce the efficiency of capital flows at a time when they are critical to global recovery.”
Brogden was also critical of a proposed US regulation, the so-called “Volcker rule”, which would prohibit banks from managing private equity, operating hedge funds and engaging in proprietary trading. “[This] would have an immensely detrimental impact on Australia’s prospects as a leading financial centre,” he noted.
Brogden said he had not been planning to mention the proposed resources tax in his address but that the election of a new prime minister (Wales-born Julia Gillard, who assumed office today following an early morning leadership challenge) “provides the Government and the mining sector with the opportunity to abandon their entrenched positions and seek swift resolution to the impasse”.
The proposed 40% tax on resource companies’ profits is being fiercely fought by Australia’s mining giants, who say it would hit their global competitiveness and cost jobs.
Brogden added: “The investment community in Australia and internationally want a solution to the uncertainty. We acknowledge the need for a resources tax based on profits and the abandonment of inefficient state-based royalties, but some elements of the current proposal – in particular retrospectivity – go too far.”
Brogden’s comments came as media reports were quoting the new prime minister as saying her government would be open to negotiations on the proposed tax. The resources tax was among the reasons for the downfall of her predecessor, Kevin Rudd.
Financial services sector Oz’s ‘largest’
In his address, Brogden noted that Australia’s financial services sector is now the economy’s largest, and that its pool of managed funds is expected to more than treble to A$5trn by 2030.
Referring to the IFSA’s new expanded mandate, Brogden added: “as the largest sector in the Australian economy – responsible for managing the savings of all working Australians and facilitating investment throughout all industries – we have an obligation to speak on broader economic policy issues.”
As the Financial Services Council, Brogden said his organisation would be “custodians of the investments and retirement savings of Australians” and as such “will exert a stronger influence on the economic environment in which we invest on their behalf”.
“The Financial Services Council will contribute to policy development on a broader range of issues than IFSA has done in the past, and we will continue to advocate on behalf of our members on core issues,” he added.