Ladies and gentlemen, I'm delighted to have the opportunity to speak here tonight at the Harvard Business School of New York.
It's an honour to be talking to graduates of America's oldest university, whose origins date back to 1636.
Harvard holds a special place in the hearts of many Australians. In fact, more than 1,400 Australians have studied here. They include a number of well know people from all walks of life, including the internationally renowned architect Harry Seidler, the former chairman of one of Australia's biggest mining companies, Sir Roderick Carnegie, and of course, World Bank president, James Wolfensohn, who completed an MBA here.
Mr Wolfensohn, in fact, was instrumental in setting up the $60,000 Robert Gordon Menzies Scholarship named after our country's longest serving Prime Ministers - which enables an Australian graduate to study at Harvard each year.
These people exemplify the close relationship that exists today between Australia and the United States.
Those ties, particularly in a business sense, are becoming stronger. And, I think it is technology which is breaking down the geographical barriers that separate us.
And, as Australia stakes its claim as a global financial centre, American firms are increasingly setting up or expanding operations in our country.
For instance, America's largest stockbroker Merrill Lynch has chosen Australia as the first place outside the US to launch its online stockbroking business.
It does so in the belief that our regulatory environment is conducive to good business.
SSB Citigroup Asset Management is basing its global research group in Australia. It's confident the Australian market will become one of the top 5 or 6 globally in terms of total available assets under management.
Charles Schwab, the market leader in online trading in the US, has announced it will start operating in Australia.
And The Royal Bank of Canada announced last month it would transfer its major currency-trading centre in the Asia-Pacific from Singapore to Sydney.
What's more, Goldman Sachs, Morgan Stanley and Deutsche Bank are also lifting their presence in Australia, persuaded by our expertise in managed funds and the depth and liquidity of our markets.
There can be no greater endorsement of a country's investment credentials than when major international names like these vote with their feet -- and, of course, their funds.
They seek the stable financial waters Australia offers in a region known for its volatility.
These financial institutions seek our many advantages:
- They seek a sound political and economic environment.
- They seek a well-established and dynamic financial sector that's an important contributor to GDP.
- They seek a skilled and multi-lingual workforce, where 2.4 million Australians speak a language other than English at home, and.
- they seek Australia's world-class regulatory systems.
Perhaps most importantly, our Government has an eye to the need for ongoing reform to make sure Australia's financial systems are at the cutting edge, equipped to face new challenges and turn them into opportunities.
Challenges like the revolution in information technology.
I am glad to say Australia has embraced it and turned it to our advantage -- and for a very important reason.
Because it is technology that has wiped out the major obstacle to our becoming a global financial player. And that obstacle is distance.
When the Harvard Alumni Association was formed in 1965, Australia was, in relation to the US, a long way away.
Back then -- and we're only talking 35 years ago -- it would have taken me, at best, 2 days to reach New York from Australia.
The quickest, most accessible mode of overseas communication available to me then would have been the telegram.
Our geographical isolation was a natural impediment to business people, like yourselves, committing to Australia.
The information technology revolution has changed all that.
Now, I can leave Sydney for New York this afternoon, and, with a little help from the dateline, get here before I left home!
On the plane I can stay in touch with my office via email, phone or fax.
In fact, I don't even have to leave home to transact large volumes of business on these shores. I can do it all in a matter of minutes with the click of a mouse.
Within a generation, Australia has broken the shackles of isolation. With the help of technology, we are no longer a prisoner of distance.
But, more than merely grabbing the technology lifeline, we've used it to harness world-class expertise in this major growth area. Australians enthusiastically embrace new technology.
We've developed, for example, one of the world's best telecommunications infrastructures.
Our communications sector, the most deregulated in the Asia-Pacific, was recently recognised as the most competitive in the region. The University of Singapore's Centre for Telemedia Strategy placed us ahead of Japan, Hong Kong and Singapore.
This competition has helped drive down the cost of making a phone call to the United States by more than 80 per cent since June 1997.
We have the second-largest information technology market in the Asia-Pacific, after Japan. Its growth has been helped by the high penetration of computers. In fact, we've got more computers per capita than any other country in our region. The only country in the world we don't outpace is your own.
A nation of surfers, we've taken to the Internet with relish. Nearly 23 per cent of all households have home Internet access, again the highest per capita rate in the Asia-Pacific.
Financial transactions are now the leading use for IT networks for Australian businesses.
And as Internet use continues to grow, we expect more people will turn to it for financial and banking services. In anticipation, many players in Australia's financial sector are offering comprehensive on-line banking services.
As you can see, Australian industry provides a positive role model for the Asia-Pacific in terms of competition, in terms of innovation and in terms of adopting new technology.
But we have to put this in context. We're only in a position to look to new frontiers because our Government has spent the past 4 years putting our economic and financial house in order.
Our robust economy and strong financial systems have been built on those reforms.
And these reforms have had outstanding affect.
For instance, the Australian economy has been growing at 4 per cent a year or more for 10 consecutive quarters.
At the same time, 7 of our top 10 trading partners have been in recession or depression. We are, in fact, enjoying one of the longest periods of sustained economic growth since the 1960s.
In addition, inflation has risen less than 2 per cent per annum for the past 4 years and unemployment has dropped below 7 per cent the lowest level since 1990.
As Massachusetts Institute of Technology economist Paul Krugman recently told a group of New York investors: "There aren't enough Australian economies in the world."
The International Monetary Fund is in no doubt as to where the credit lies for our economic fortunes. It has directly attributed that performance to the reform agenda we've pursued in government, which has added stability to our financial systems and generated investor confidence.
Our financial reforms have been across the board.
We have reformed our budget and reversed a crippling budget deficit, which has been returned to surplus. This has helped address long-standing concerns about Australia's current account deficit and ensured we continue to repay our public debt.
We have reformed our industrial relations. This was a big thorn in the side of our international reputation. Our reforms have resulted in a sharp drop in time lost to industrial strikes. In 1998, Australia lost fewer working days per thousand employees to industrial disputes than at any time since 1913!
Now, we're in the midst of our biggest reform yet, overhauling Australia's tax system.
I hasten to say Australia's overall tax burden is already very low compared to other OECD countries and is roughly comparable with the US. Our tax reforms will further enhance that position.
On July 1, a 10 per cent goods and services tax will replace an outdated wholesale sales tax regime.
As a result, personal income tax will be cut significantly, with 80 per cent of the population paying no more than 30 cents in the dollar.
Business costs will be reduced by up to $8 billion a year and costs to exporters will be cut by more than $3.5 billion. Those figures, by the way, are in Australian dollars.
We also plan major business tax reform, including a reduction in the company tax rate from 36 per cent to 30 per cent over the next 2 years.
We're introducing an internationally competitive capital gains tax regime, so individuals will pay no more than 24-and-a-quarter cents in the dollar.
In addition, the Government is introducing rollover relief for scrip-for-scrip takeovers. And, to promote investment in innovative Australian firms, superannuation entities and similar funds will receive tax exemptions on capital gains received on venture capital investments.
Another major area of reform has been in our regulatory framework.
Our reforms here have led the world. They've been praised by Alan Greenspan, who told the IMF and World Bank conference in Washington late last year that Australia's economy had been unaffected by the recent Asian financial turmoil "arguably because (we) already had well-developed capital markets as well as a sturdy banking system."
In 1997, after a major review of the Australian financial services industry, we created two regulators of all financial institutions and markets -- a Twin Peaks policy.
The prudential regulator is the Australian Prudential Regulation Authority. The corporate regulator, the Australian Securities and Investments Commission, supervises the financial markets, including consumer protection.
The blueprint for our reform was known as the Wallis Report and it's been used as a reform model for the financial services industry in a number of other countries, including the UK.
We're pursuing reform of the regulatory process for businesses, including simplified prospectus and fundraising provisions, more certain directors' duties and a range of other initiatives that will ensure Australia's financial services industry remains highly competitive.
These reforms have the dual effect of bringing more flexibility to the regulatory regime, while at the same time enhancing investor protection. At the end of the day, there is more certainty and stability in the financial services sector.
The sector has responded positively to reform, with turnover rising by 11 per cent in the year to July 1999.
In the past decade, total exports of financial services have increased five-fold. I would expect the increase in the next decade to far exceed this.
In the process the Sydney Futures Exchange has become the largest financial futures exchange in Asia, while the Australian Stock Exchange is the second largest in the region behind Japan.
As I said earlier, this environment has already attracted a wide range of North America's forward-thinking and market-leading companies to Australia.
Our Government, in partnership with the private sector, is determined to build on this and develop Australia as a global centre for financial services.
To achieve this, we've established the Australian Centre for Global Finance. It's headed by the internationally respected Les Hosking, the former CEO of the Sydney Futures Exchange. Les is recognised for making the Sydney Futures Exchange one of the world's leading financial exchanges.
The Australian Centre for Global Finance is playing a key role in increasing awareness and understanding of Australia's sophisticated financial sector and promoting the effectiveness of our world-class regulatory framework.
The Centre gives the Government policy advice on issues that enhance Australia's attractiveness to global capital and is working closely with my office to deliver on these outcomes.
It is developing into a one-stop-shop, able to help companies within the financial services industry take advantage of the environment I've outlined to you tonight.
Ladies and gentlemen, Australia is in a unique position. It's a country of European heritage, influenced by American culture, based in Asia.
We lead the way in our region in terms of economic performance, the strength of our financial systems and regulatory reform.
We have broken free from the shackles of isolation, removing the final obstacle that kept us out of the main global financial game.
And we're not afraid of change. In fact, we embrace it, as our ability to adopt new technology shows.
We are ready, willing and, above all, able to do business on 21st century terms.
Our financial sector is already playing an increasingly important role on the world stage. We are working to ensure this role continues to grow.
We are determined to cement Australia's position as a global financial centre. And in the process, develop further the myriad links between our two countries.
I urge you to take a closer look at what Australia has to offer.