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Dear Chair,
Colleagues,
Friends all,
Thank you for inviting me to share a few words at this ASIC Annual Forum on how Australia can navigate a dynamic world, also on the strong foundation of a well-functioning financial system which helps to unlock stronger investment, productivity and growth.
The OECD’s latest Interim Economic Outlook released in September shows that despite high policy uncertainty, the global economy continued to be resilient throughout the first half of this year.
However, recent data points to a softening in the growth momentum across trade, industrial production, labour markets, consumer confidence and retail sales.
We project that global growth to ease to 2.9% next year, while risks to the outlook remain on the downside.
For Australia, we project growth of 1.8% this year and 2.2% next year, which is up from 1.1% last year.
Additional increases in barriers to trade or prolonged policy uncertainty could weigh further on investment, consumption and hence growth.
This is particularly true for an open globally focused, export- oriented economy like Australia.
What happens in the global economy matters to Australia.
That is why continued engagement in constructive dialogue and international co-operation, to help restore an improved level of global policy certainty and stability, should be a very high priority for Australia.
In fact, our strong advice to all governments, in particular market-based democracies, is to work harder, bilaterally and multilaterally, to find the best possible ways to make our international trading arrangements fairer and function better, in a way that preserves the economic benefits of open markets and rules-based global trade.
Open markets deliver real benefits: stronger growth, higher incomes, more and better choices, lower costs and better living standards.
But we must also acknowledge some of the genuine and legitimate concerns that have been raised about aspects of how international trading arrangements are operating in practice.
A fair and stable global rules-based trading system must find better ways to address imbalances and distortions, to deal with unfair practices and tackle supply chain vulnerabilities, while keeping markets open.
More broadly, Australia, and indeed countries across the OECD, need to make progress on reforms to strengthen long-term growth prospects, which have been weak for some time.
This includes reinvigorating productivity growth.
While the level of labour productivity in Australia at about USD 70 per hour last year was slightly above the OECD average of USD 66 per hour, it is well below the levels achieved either by the United States at USD 98 per hour or the EU and the UK at about USD 73 to USD 74 per hour).
And the growth in labour productivity in Australia, at 0.5% a year between 2010 and 2024, has been below the comparatively low OECD average of 0.9%.
Australia can and must do better.
Part of the reason for Australia’s lower growth in productivity relates to the lower growth in both public and private investment in Australia (1.8%) relative to the OECD (2.5%) in that period.
Australia’s share of equity raised via initial public offerings across the OECD dropped to 1.9% between 2020 and 2024 from 4% between 2011 and 2020.
And the OECD’s analysis shows that fundraising by private equity funds focusing on Australia has slowed down markedly in the last two years since the peak in 2022.
We see several opportunities for Australia to foster stronger investment and financial market dynamism in the medium and long term.
Australia needs to assess the international competitiveness of its regulatory and tax policy settings.
First, there is a need to reduce administrative burdens and costs for publicly listed companies.
The number of listed companies in equity markets has been declining in Australia over the past four years.
Between 2021 and 2024, more companies delisted than listed on Australian stock exchanges, leading to a net loss of 30 listings.
ASIC’s initiative, announced in June of this year, to shorten the time between Initial Public Offering lodgement and launch by informally reviewing documents before their submission is a welcome step toward facilitating listings by companies.
These efforts should be complemented by relaxing prospectus requirements for smaller firms, for example replacing them with simplified information documents, as is the case in other OECD countries.
And with a reduction of listing fees for small firms, which are among the highest in Australia compared to peer economies.
For example, for a USD 10 million offering, Australian companies will pay 0.24% in listing fees compared to 0.05% in China and 0.07% in France.
Second, further boosting competition in the financial sector.
Significant barriers to entry are keeping innovative digital challengers in banking and payment markets from achieving the scale needed to compete with Australia’s largest incumbent banks – with the top four largest banks holding over 75% of key retail banking markets.
Strengthened data portability requirements, greater use of regulatory sandboxes and more proportional licensing requirements in the payment sector would facilitate new market entry, lower costs for consumers and enhance the dynamism of the financial sector in Australia more broadly.
Third, further unlocking institutional investor financing for long-term projects, including infrastructure.
With assets equal to 135% of GDP, Australia’s superannuation funds rank among the largest asset-backed pension systems in the OECD.
They are also a key source of financing for infrastructure projects in Australia, with around half of their investments directed toward domestic projects and assets.
There are opportunities for Australia to go further in unlocking new institutional investor financing for infrastructure projects, including:
- Developing more comprehensive, transparent and long-term infrastructure project pipelines with detailed project information, to support investor decision-making,
- Further adapting infrastructure financing vehicles to superannuation funds’ risk and timeline requirements, and
- Ensuring regulatory stability in rapidly evolving sectors such as renewable energy.
Fourth, by encouraging the safe, secure and trustworthy use of AI in finance, while safeguarding consumers and markets.
The OECD’s latest estimates show that expected productivity gains from AI adoption in the finance sector are among the highest of all sectors – amounting to 12% of productivity growth in the sector across G7 economies over the next 10 years.
AI technologies are already unlocking important efficiency gains in asset management and securities, including optimising portfolio management, automating trading, and providing more accurate risk analysis.
At the same time, the use of generative AI raises the risks of financial fraud and scams, as well as cyber-attacks, among other concerns for consumers and businesses.
The use of AI in financial markets can also increase market volatility if a significant number of participants rely on similar AI models, leading to a convergence of trading strategies and feedback loops between models.
The OECD is fostering dialogue and providing analysis to help countries ensure their supervisory frameworks are fit to regulate the use of AI in the financial sector, unlocking innovation while managing its potential risks.
We are also supporting the exchange of good practices in the use of AI-powered supervisory tools to improve the oversight of financial markets.
And finally – in order to boost investment, and hence productivity and growth – Australia should have another look at its business taxation arrangements and how they compare with other more productive economies like the US and the UK.
In closing,
Long-term growth prospects for Australia, like many other OECD Member countries, will depend on boosting productivity and unlocking new investment in business activity and innovation.
The good news is that we have the tools to make this happen – and sound financial market policy has a key role to play.
At the OECD, we provide the comparative evidence base and foster the exchange of experiences and co-operation that policymakers and regulators need to implement these tools.
Australia is an important part of our efforts and we look forward to continuing to our productive engagement with ASIC and other stakeholders.
My very best wishes for a positive, constructive and productive Forum.
Working with over 100 countries, the OECD is a global policy forum that promotes policies to preserve individual liberty and improve the economic and social well-being of people around the world.