The importance of a vigorous financial sector in rebuilding after the pandemic
By World Healthcare Journal-
The World Economic Series in conjunction with Diplomat magazine hosted Senator the Hon Jane Hume, Australian Minister for Financial Technology, Superannuation and Financial Services and HE the Hon George Brandis QC, the Australian High Commissioner to London, in a webinar to discuss the importance of a free trade agreement between the two countries.
The High Commissioner began his remarks with an update on the free trade agreement negotiations that are currently taking place. “Both sides have high ambition for a very comprehensive free trade agreement and we hope to get this wrapped up in a matter of months,” he told the audience of diplomats, politicians and industry experts. He went on to stress that this has been a negotiation at ‘warp speed’ – “Between two countries which understand each other and which have similar legal systems, which have similar business practices, accounting standards, cultural norms and a similar way of life and whose economies are very complementary we can move a lot more swiftly,” he said.
The importance of financial services
Financial services are a critical part of both economies and as such are intrinsic to any free trade deal. Financial services is Australia's third-largest services export to the UK and the UK itself is Australia's fifth-largest trading partner. The Fintech Bridge between the two countries was established in March 2018 and following successful introductions and meeting, there are now 38 companies doing business in this space. The Australian government has allocated $9.6m to export financial services and attract inward investment to facilitate the movement of investment and also the movement of data.
The High Commissioner concluded by highlighting the links between Australia and the UK, including the fact there are more British people living in Australia than living in the European Union. In his view, despite the shared history, there is a missing link in the form of a free trade agreement and now that Britain is in the throes of Brexit there is an opportunity to rectify this omission in a successful agreement.
Senator Jane Hume continued this theme from Sydney where she was in quarantine before heading to Canberra in her politically nomadic exile from her home city of Melbourne which had been in lockdown for more than 120 days. As Australia’s first Fintech minister she wears her badge with pride, saying her goal is to give those entering the Australian fintech market the support they need.
The overarching aim is to consolidate Australia’s position as a global fintech leader and collaborator. “The fintech industry is building on those very strong foundations of financial services in Australia, delivering quality products, innovative services, and also backed by a world-class infrastructure and a very supportive policy platform,” she said. “It's been such a difficult year to grow businesses anywhere right across the global economy. But despite those challenges, Australia's fintech ecosystem has continued to grow. ”
Australia has committed to the largest economic lifeline in its history, equating to around 25 per cent of GDP, over half of which is direct economic support or 13 per cent of GDP, including wage subsidies, loans to businesses, assistance to trainees and apprentices and allowing Australians to access some of their pension savings.
“The great strength of the Australian economy has been the resilience of our financial system which was well-capitalised and well regulated,” she said. Our financial regulators have been working very closely with institutions throughout this very difficult time and have focused on coordinating a response, providing a regular and very clear dialogue to help sectors navigate the crisis. ”
Expanding export opportunities
In Senator Hume’s view, the Covid crisis has emphasised the need to expand exports and build resilience in supply chains to withstand future shocks. Trade between the UK and Australia was valued at $30 billion two years ago and the total amount invested between the two economies stands at one trillion Australian dollars. She cited Prime Minister Scott Morrison’s response to the UK’s open banking system – “I’ve got to get me one of those” – to the appreciation of the audience.
She stressed the need for the free flow of goods and services to grow Australia’s position as a leading player in the region as well as globally. By entering the UK market Australian companies have access to a much wider region, and this works in reverse as UK companies can expand into the Asia Pacific region.
She spoke about the exciting opportunities that consumer data presents - “a really exciting platform through which we can consider opportunities for digital trade in these times, not just to banking, but also right across the economy, including more general cross-border data sharing and particularly in consent standards. There is a really amazing opportunity here with the KDA and the free trade agreements coinciding to create a sort of an exemplar, if you like, in global standards-setting when it comes to consumer data. ”
She also stressed that in Australia the consumer is always at the centre of any considerations to help them become more engaged in their own financial affairs and to make better choices. In this spirit, she has launched an enhanced regulatory sandbox that allows businesses to test their products for a full 24 months without licences. Coupled with the government’s boost in research and development funding which allows for a 62 cents in the dollar tax rebate, the fintech ecosystem is supported at all stages.
Senator Hume went on to respond to a particular question around the specifics of the trade agreement in the wider region, making a distinction between bilateral and multilateral agreements. “Bilateral relationships are where we get deep and enduring trade and relationships, whereas multilateral relationships are more about establishing a set of rules and dispute resolution opportunities,” she considered. She felt there was an opportunity to set rules around data standards, privacy and consent protections as well as dispute resolutions around data, again with the consumer at the centre rather than at the periphery.
The mutual recognition of regulatory and professional standards can be addressed through free trade agreements, and there can be a process of regulatory cooperation to address issues that may arise. Senator Hume made the point that mutual recognition does not have to be about mirroring legislation, and there are different ways to acknowledge and trust other systems.
The TPP or TransPacific Partnership was also discussed, with the view that perhaps it would be reconsidered now by President-elect Biden. It was considered a progressive partnership of 11 countries in the region with the hope it would be supported on a wider basis.
The discussion concluded with the balance between competition and protection against international competitiveness. “Free trade produces prosperity,” said Senator Hume. “Australia has become now one of the wealthiest countries in the world per capita. And it is in part, in large part because we have embraced an ambitious free trade, global free trade agenda for decades. ”
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