The Federal Government has used the Budget to initiate its response to the so-called Johnson Report resulting from the Australian Financial Centre Forum and has given in-principle support for the key recommendations including the introduction of an ‘investment manager regime’, the establishment of an online regulatory gateway, and the development of an Asia Region Funds Passport.
The Government’s position was made clear by the Minister for Financial Services, Chris Bowen, who said one of the underpinnings of the approach was the Budget announcement of a phase-down in the Interest Withholding Tax (IWT) paid by financial institutions.
He said the main IWT rate would come down from 10 per cent to 5 per cent and that the Government would reduce that to zero “when fiscal circumstances allow”.
“As an integrity measure, the Government will maintain the existing IWT rate on non-resident retail deposits in Australia,” Bowen said.
At the same time he announced the formation of a task force made up of senior financial services executives to be chaired by Mark Johnson and including former Financial Planning Association chief executive, Jo-Anne Bloch, Paul Binstead, Alf Caputo, Jeremy Duffied, Craid Dunn, Shane Finemore and Paul Shroder.
He said the taskforce would facilitate industry input on the key areas of regional engagement and enhancing Australia’s presence in Asia and the design of several of the key outputs flowing from the Johnson report. Bowen said a working party would be established under the taskforce to progress the Asia Region Funds Passport with the working party comprising representatives from the Investment and Financial Services Association, AFMA and the financial sector regulators, including the Australian Securities and Investment Commission.
He said the Government was also moving beyond the report by establishing a Centre for International Finance and Regulation in Australia. The centre would provide education and training for financial regulators from Australia and the region, undertake research into best practice regulation, undertake research into financial sector global developments and enhance regional and financial system stability.
