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Financial Hub
Axiss Australia
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| New hub: financial services are
the Australian economy’s third largest sector |
The ‘F’ word will be heard a lot in Australia
during Rugby World Cup 2003. And not just ‘F’ for football
– also ‘F’ for financial services.
Australia is already acknowledged as a centre for sporting
excellence. Now its position as the Asia Pacific’s most dynamic
and sophisticated hub for global financial services is in the ascendancy.
Australia’s economy has undergone considerable change
in the past few decades, from one that rode on the sheep’s back
to one more likely to be aboard the greenback or the yen, from primary
industry to services – with financial services at its heart.
Ten years ago, Australia’s stock market capitalisation
was dominated by resources and manufacturing companies, with a market
share of 35% and 33% respectively. The finance and insurance sector amounted
to 17%. By 2002 the proportions were reversed (see chart below), with
resources at 15%, manufacturing 18% and finance and insurance a hefty
40% – two-fifths of the entire market.
Today, financial services is the third largest sector of
the Australian economy – and one of the fastest growing –
generating about A$46bn (7.3% of GDP) and employing 350,000 people.
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| Australia’s changing stock
market capitalisation |
Supported by skills
Australia’s attractions as a financial centre derive not from the
size of its capital markets – it will never have the scale to rival
New York or London – but from the quality and availability of its
services. Foremost among these is the skill level and multilingual capabilities
of the workforce.
| Australia’s skills as a
financial services centre
o Australia has a global reputation for high quality management
ability, with locals holding senior international positions at firms
such as Goldman Sachs, Merrill Lynch and Deutsche Bank.
o Almost half of all those employed in financial services within
Australia – around 148,000 people – have post-school
qualifications.
o More people are employed in financial services in Australia (350,000)
than in Hong Kong and Singapore combined (215,000).
o Australia’s workforce is the most linguistically diverse
in the region, with more than 850,000 people fluent in a major Asian
language (Chinese languages the most spoken) and 1.3m fluent in
a major European tongue other than English.
o Sydney’s Macquarie University has the world’s largest
postgraduate degree program in finance, with more than 900 enrolled
students; the Melbourne Business School has been rated the best
business school in the Asia Pacific (MBA Career Guide 2003).
o Workforce costs in Australia are among the lowest in the developed
region, with salaries for finance-related roles up to 100% more
expensive in Singapore and 240% more in Hong Kong.
o Australia’s desirable lifestyle negates the need to pay
the expensive location premiums for expatriates commonly applicable
in other regional centres where average location premiums can amount
to 15% of salary. |
According to a survey of senior global executives conducted
by PwC Consulting, the most important requirement in choosing a future
business location is the availability of a skilled workforce. When it
comes to workforce quality, supply and costs, Australia cannot be matched
by any other centre in the Asia Pacific.
Global firms such as JPMorgan, Citigroup and ABN AMRO have
all cited Australia’s skilled workforce as crucial in their decisions
to select Australia as a base for regional activities, from back office
treasury processing to foreign exchange trading.
In fact, our workforce has been the primary lure for more
than 100 financial services firms that have either established new operations
or expanded existing ones within Australia in the last three-and-a-half
years.
Economic resilience
The quality of Australia’s workforce is complemented
by other factors making Australia a compelling regional base from which
to offer financial services:
- the strength of its economy, one of the best performing in the world
with a growth rate above 3.5%;
- the low-cost of business infrastructure in areas such as prime office
rentals;
- the advanced environment for information and communications technology;
- the stability and security of the political system; and
- the strategic advantage offered by a time zone straddling the closing
of the US market and the opening of the European trading day.
Funds centre
Adding to this mix is the size and sophistication of Australia’s
pool of managed superannuation funds – the fifth largest in the
world, currently valued at US$339bn (see chart below).
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| Global significance of Australia’s
managed funds pool |
Global consulting group Cerulli Associates says that Australia
is the most attractive destination into which funds managers should expand
– and firms such as State Street, Vanguard and Mellon have heeded
the advice.
Driven by a decade’s worth of government-mandated retirement savings
contributions, Australia has experienced the strongest cumulative asset
growth of any major funds market place in the world – 15% since
1999. The growth shows no sign of abating, with the pool tipped to exceed
US$1.32 trillion by 2015.
International firms are anchoring in Australia not only to tap into the
lucrative opportunities domestically, but also, given our funds management
experience and expertise, as the ideal gateway into the emerging funds
management markets of Asia – markets predicted to be 15.1% of the
world’s total by 2004. As an entrée into Asia, Australia
offers considerable bite.
World champions in Rugby (and cricket and netball and Rugby
League and...), Australia is also shaping up as a world-class player in
financial services.
Axiss Australia is a federal government initiative established
to promote Australia as a global financial services centre in the Asian
time zone.
Telephone: +61 2 8257 0555
Website: www.axiss.com.au
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