Little has been done to advance Australia as a global financial services centre in the Asia-Pacific region with current managed fund structures putting the local market at a competitive disadvantage.
At the same time, despite a number of Government inquiries, independent research and cross-party politicians calling for way to allow the Australian funds management sector to exploit its status as a mature and growing investment market, insufficient political will has been applied to reach this outcome.
This lack of decisive action has resulted in more than five years of inaction according to One Investment Group, executive director, Justin Epstein, who said that despite strong recommendations to promote Australian expertise into Asia “no single vision or timeframe required to achieve this goal have yet been presented”.
Epstein said that while Australia had signed on to the Asian and ASEAN passport schemes and mutual recognition schemes these were initiatives established in the region and that clear direction from the Australian Government was still not forthcoming.
Epstein, whose group offers responsible entity, trustee and custodian services and registry and accounting services for managed funds, said a blue print for change has been proposed in the Johnson Report released in 2009 and that six years later its implementation was still not complete.
“Australia needs political will from both sides of Parliament to implement Johnson’s many unfinished recommendations and boost its regional competitiveness as a matter of priority,” Epstein said.
He said Australia’s unit trust structure was archaic and often not well understood by offshore investors with the Johnson Report finding parts of Australia’s tax and regulatorly frameworks placing the funds management sector at an international competitive disadvantage.
“Five years on, Treasury is having preliminary consultations and still talking about various options for collective investment vehicles. It appears that collective investment vehicles are as problematic as unit trusts with no implementation date in the horizon,” Epstein said
“Regardless of the structure, we need flexible vehicles that resonate with international investors. We need these vehicles now, otherwise our ability to capitalise on free trade agreements with China, Japan and South Korea will be hampered.”
“Australia has one of the largest and growing funds management sectors in the world, but this growth has been underpinned by compulsory superannuation. Less than 4 per cent of total funds under management in Australia are managed on behalf of non-resident investors. It is time for the funds management sector to leverage its infrastructure and export our funds management expertise.”
