Good morning ladies and gentlemen.
In 1928 Australia';s aviation pioneer Sir Charles Kingsford Smith made the first successful crossing of the Pacific Ocean by air. That journey, from the United States to Australia, took just over 83 hours. It was a part of a transport revolution.
Today, 71 years later, Australia finds itself part of an information revolution. Today information crosses that same Pacific Ocean in split seconds.
Traders in New York and Sydney transact at the speed of a keystroke as if they were sitting right next to each other.
Back then Smithy knew well the tyranny of distance.
Like most Australians, he knew our location has been both a blessing and a burden. A burden because distance made us too easy to forget; and a blessing, because isolation forced us to innovate; to be better and to be smarter.
Our history means that we embrace the western world - its language and its legal system and its democracy. Yet our geography puts us firmly in the Asia Pacific. As a neighbour we have forged strong and enduring links in our region.
Once Australia may have been seen as a European nation in Asia. Now, we are an Asian city with a European heritage.
This is the basis for our ambition of securing Australia';s future as centre for global financial services.
We believe Australia is ideally suited as a centre for global capital and that increasingly the financial services sector will see Australia as the logical base for many of its operations in the Asia-Pacific time zone.
Australia has a lot of things going for it right now.
We have deep and liquid markets driven by a strong and growing domestic base;
We have an unrivaled environment for business that is free of fickle government intervention;
We have the largest domestic source of highly educated personnel in the region;
We have world-class infrastructure - from drinking water to data transmission;
Australia is ready for the challenges of the new millennium - be they financial system regulation or computer systems design
International financial institutions need markets that are deep and liquid. They need to be able to trade in and out of positions with confidence - confidence in the systems, confidence in the regulation, confidence in the counterparty and most of all, confidence in speedy and reliable settlement under a predictable and an enforceable rule of law.
Australia has deep and liquid markets across a wide range of products. Whether it be in equities, bonds, synthetics or managed funds we continue to punch above our weight. The Australian Stock Exchange is the second largest equity and options exchange in the region after Tokyo and our corporate bond market continues to grow at record rates.
And let me assure you that I am working day and night to identify ways to make sure that this remains as true tomorrow as it is today.
Even though we might lack the size and breadth of major financial centres like New York and London, we are committed to Australia playing on the same field and playing in the in the same game.
Our commitment to technological change, economic reform and the challenges of globalisation means we have developed an open, a powerful and a strong capacity to play on the international stage.
In our region the Sydney Futures Exchange remains the largest and most innovative exchange in the Asia-Pacific, beating its closest competitors. In fact, last year the exchange traded 30 million contracts worth some 7 trillion dollars.
Globalisation presents golden opportunities for Australian stock and future exchanges to become regional leaders by taking advantage of electronic links between markets around the world.
Our exchanges are already grasping these opportunities. Index-linked products, based on other markets in Asia, will give tremendous leverage to the business done on our exchanges. These type of products will let fund managers use index linked products to hedge their risks in a range of Asian markets and to clear those risks through a single clearing account in Sydney.
And we are assisting this process by providing world';s best practice regulation.
The second area of advantage relates to our working environment.
Australia';s political stability is the envy of the region. Our democracy is robust and stable. And despite our differences all the major political parties share a commitment to business development.
That stability is the foundation on which we have built a resilient economy. In fact, our economy continues to grow, outstripping all but a very few.
All this has taken place while many of the countries in the region have been in recession and commodity prices - the traditional driver of our economy - have been at all-time lows.
And this economic health came about through hard work. We should not be in any doubt that our fiscal consolidation of three years ago shielded Australia from the sharp end of the economic downturn in Asia.
We have become a safe haven for the region despite our significant trade exposure to Japan and Korea in particular.
And this shield has been helped, in no small part, by the security provided through our world-class regulatory arrangements.
Following a major inquiry into our financial system, the Government removed unnecessary barriers to contestability, competition and efficient market operation.
The second part of our regulatory framework relates to our corporate law reform. Both the IMF and the OECD like most successful market participants have recognised the significance of good corporate regulation.
We continue to work on our corporate regulation to provide a cost effective and predictable system that ensures our market integrity.
We should not discuss our domestic advantages without mentioning the Australian taxation system.
The Government recently passed tax reform legislation that was nothing short of revolutionary. While the first phase of our reforms dealt with retail taxes, parts of it dramatically enhanced Australia';s attraction as a financial centre.
For instance, the reforms abolish a range of inefficient financial services taxes including, Financial Institutions Duty and stamp duty on marketable securities, saving traders and investors many billions of dollars in taxes and compliance costs.
What is more, the reforms also overhaul Australia';s treatment of Offshore Banking Units. In the past, Australia';s OBU regime exempted certain offshore parties from Australian tax and allowed them to pay 10 per cent tax on their OBU income.
But only banks and authorised foreign exchange dealers could set up an OBU and get the tax break.
Now, eligibility has been extended to funds managers, life insurance companies and custodians.
We have also relaxed taxation rules for some US mutual fund investors and now allows US mutual funds to compete on a level playing field with Australian superannuation funds.
This should be attractive for many of you given that we have the second-largest defined contribution market in the world after the United States.
And as a shot in the arm to our local corporate bond market, we have also abolished interest withholding tax on Australian sourced interest paid to offshore investors.
These reforms are having an impact.
In fact just this week three international corporates two German industrials and a US property investor issued Australian-denominated corporate bonds worth 1.15 billion dollars, bringing the market to a record A12 billion dollars for the first half of this year.
Ladies and gentlemen, we are looking to build enduring relationships with financial institutions that have a long-term commitment to Australia.
While there are incentives, we are not building a caravan park, where firms come and go, hunting out the latest baubles and trinkets on offer.
Our exceptional quality of life in Australia comes from our long-term commitment to business success. And that quality of life is important to the most valuable asset in your business that is, of course, your staff.
Australia is well renowned for its climate and quality of life. Our people enjoy a lifestyle that is contemporary, cosmopolitan and progressive. And it doesn';t cost the earth.
For instance, residential accommodation in Australia is highly competitive, where average monthly rental for prime CBD apartments range from US$656 to US$2,194 in Sydney. This compares with US$2,425 in Singapore, US$5,294 in Tokyo, and an incredible US$7,525 in Hong Kong.
These factors do influence where foreign nationals want to do business. We do not suffer the same high turnover of executives that some of our regional neighbours suffer. This churn factor costs financial institutions huge sums in missed opportunities and forsaken relationships.
And lets not forget a time zone that is perfect for international communications - Australia's business day spans the close of business in the USA and the opening of business in Europe.
This was highlighted in January with the launch of the Euro, where our time zone advantage over Singapore and Hong Kong enabled Australian forex dealers to be among the first to actively trade the new world currency in a liquid market.
This leads me to one of Australia';s most significant advantages -- its workforce.
Australia is a multi-cultural society that has benefited from more than two centuries of immigration.
In fact, one in every 20 inhabitants is Asian-born with more than 2.4 million Australians speaking a language other than English at home. Now, Asian language speakers number over 800,000.
What this means is that your back office or call centre can now draw on skilled managerial and technical staff who also happen to be fluent in all the regional tongues, as well as having English as a first language.
This resource means Australian cities are fast becoming the location for companies requiring a range of language skills.
That was one of the reasons global custodian giant State Street sought out Sydney as its regional centre and Citigroup chose to locate a major regional call centre in Australia.
What is more, international surveys consistently highlight Australia's advantage in salary costs for management and skilled staff.
In fact, salaries for middle, senior and top management are much lower in Australia, particularly when compared with Hong Kong, USA, Japan, Germany, the UK and Singapore.
Moreover, our workforce is highly educated. The statistics bear out what I am saying. 42 per cent of Australia's workforce has university, trade or diploma qualifications.
This is why, if you go to any major dealing room around the world you';ll come across Australians trading for the world';s leading financial firms.
Along with this glowing human resources advantage Australia has much to offer through its communications infrastructure.
We have a world-class telecommunications and cable rollout, including a leading-edge hybrid fibreoptic/coaxial cable providing a strong domestic market for online content and services.
And as we head to the new Millennium, Australia can boast it is better prepared than most for the challenges of 1 January 2000.
In terms of Y2k compliance Australia is ranked second in the world only to the USA. This is a credible achievement and reinforces the importance of a safe harbour in a volatile region.
Ladies and Gentlemen,
Sir Charles Kingsford Smith had what many thought was an ambitious and unrealistic goal.
Yet, he was able to draw on his natural strengths combined with the best technology of the day to bridge what was seen as the impossible gap between Australia and the Americas.
Like Kingsford-Smith, Australia now stands ready to capitalise on our strengths of deep and liquid markets, our world-class environment for business, the best and brightest people, outstanding infrastructure and a youthful enthusiasm for the future.
With all these attributes Australia is ready to take its place on the world stage and provide the world';s capital with access to the Asia Pacific region without the risks of the region.