Use royal commission to improve sector

15-Dec-2017

By Sarah Kendell

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The financial services sector should use the forthcoming royal commission as a chance to identify further areas for improvement despite a multitude of recent inquiries having already focused on the industry, according to former federal treasurer Joe Hockey.

Addressing a breakfast hosted by the Financial Services Council and BT Financial Group in Sydney yesterday, Hockey said the inquiry presented an opportunity for “self-analysis” from the sector, and could ultimately have positive outcomes given that a respected former High Court judge was at the helm.

“My advice is to have a good look at yourselves, ask if there is anything you can do better and then put it in the submission to help the royal commission so that they can form a judgment about doing something better,” he said.

“I have dealt with the financial services industry around the world and I can say to you that Australia has the best financial system … it doesn’t mean there aren’t problems that can’t be addressed, so my advice to the industry is not to see it as a threat, see it as an opportunity to make positive recommendations that at the end of the day will benefit the Australian people.”

Having served as Australia’s ambassador to the US for two years, Hockey encouraged financial services professionals to take negative international media coverage of Donald Trump’s presidency with a grain of salt, as his recently agreed tax reform package was likely to boost the US economy and have a flow-on effect to Australia.

“[The package] is genuine significant reform and there are two components to watch – one is the corporate rate because it will be a magnet for money around the world but it will also be a catalyst for the repatriation of over $1.5 trillion sitting in the bank accounts of American companies offshore, a massive flight of capital back to the US potentially,” he said.

“The second one is previously the biggest states in America have the highest taxes and you were able to deduct your state taxes from your federal taxes. They are now limiting that to $10,000 and I am expecting to see a movement particularly in the IT sector from places like Silicon Valley and New York to cities that are already taking off like Denver in Colorado and Austin in Texas.”

Hockey said the tax plan was also likely to boost the US dollar, and that given Australia’s corporate tax rate was still at 30 per cent, “it could have a significant impact on smaller open economies like Australia if we aren’t competitive”.

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