Australia is on a winning streak. Our tennis players are triumphing, our cricket side global champions, and next year we host the world's most prestigious sporting event, the 2000 Olympics.
But it is not just sport where we are excelling. Australia's robust economy and its performance throughout the Asian financial crisis has proven our credentials as a sound and stable country and has put us in a good position to become the financial center of the Asia Pacific. The government is committed to this goal--a goal that has been described as becoming the Wall Street of Asia.
To achieve this objective, we have undertaken major reforms, not the least of which is the total overhaul of Australia's tax system. While the spearhead of these reforms is a broad-based goods and services tax--which will mean 80% of Australians will pay income tax of no more than 30%--other changes will go a long way to making Australia an even more attractive financial destination.
This tax reform will provide a boost to financial sector activity as we abolish several billion dollars a year of financial services taxes, including financial institutions duty and stamp duty on marketable securities. We will also remove $4.5 billion a year in taxes on exports including exports of financial services, which will be GST-free.
This week we passed laws that widened the exemption from interest withholding tax on corporate bonds, a move that will boost liquidity even further in this developing market. What's more, we have extended the eligibility for institutions wishing to become an Offshore Banking Unit--a major ingredient in all financial centers. Following these changes, funds managers, life insurance companies and providers of custodial services can now set up these units.
This law also relaxes Foreign Investment Fund rules--complex tax laws which aim to prevent tax deferral on accumulated offshore profits--to exempt certain investments located in the United States from this tax, such as regulated investment companies, real estate investment trusts and partnerships. Basically, this provides another incentive for major U.S. financial players to come to Australia.
As reform is always ongoing, we will soon overhaul business taxation. The Review of Business Taxation, led by businessman John Ralph, will form the basis of a new business tax regime, and will make recommendations on the fundamental design of the business income tax system, including changes to the capital gains tax and the corporate tax rate.
Next week the prime minister and I will travel to New York to take part in a major conference where we will speak about the benefits of investing in Australia. This is on top of the scores of meetings and functions where I will meet financial executives in the U.S. and Europe to spread the word. Tax is an important part of the government's financial center plans. But where we offer tax concessions, it is with a view to building sustained investment relationships. We want investors with a long-term commitment to Australia and the Asia region.
As we showcase Australia as a center for global financial services, we can also point to our long-held advantages such as a stable political climate, a skilled and multilingual workforce, liquid financial markets, a strong regulatory regime and an attractive quality of life.
As a result of the coalition government's prudent financial management under Prime Minister Howard, we can add to those credentials a powerhouse economic performance second to none. In fact, over the year to the March quarter, our economy grew by 4.8%. It is growing faster than the G7, faster than the OECD average and even faster than the much-lauded U.S. economy. This performance has been so strong that MIT Professor Paul Krugman referred to Australia as "the miracle economy of the world financial crises."
But this performance has not occurred by accident. It is due in no small part to the economic reforms the government has implemented over the past three years. Since coming to office in March 1996, the government has pursued a credible, transparent and forward-looking framework for macro and microeconomic policy. We returned the budget to surplus, started reforming corporate and securities law and made major changes to the prudential regulation of Australia's smaller financial institutions--representing nearly assets $38 billion and hundreds of thousands of Australian customers.
What is more, through the goverment's privatisation policies around 40.3 per cent of Australians - or 5.5 million adults - own stock, making Australia the 2nd highest share-owning nation in the world. With the privatisation of the next tranche of telecommunications carrier Telstra, which at current prices should raise $A16 billion, Australia should become the number one share-owining nation.
The government has made no secret of its ambition to establish Australia as a center for global financial services. My own ministry was set up specifically to oversee that goal. But we recognize that the best way forward is in partnership with our regional neighbors, not in isolation. As the Singaporean Prime Minister Goh Chok Tong said recently while in Australia: "I think both of us will be better off with both of us succeeding as financial centers." Working in isolation, we could all compete for a bigger slice of the regional financial services pie. But working in partnership, we can grow the pie itself and each take a larger piece of it. If our regional economy is healthy, we can all prosper.
Following the Asia financial meltdown, we are now providing the leadership required to help get the region back on its feet. As a result, Australia is playing a key part in raising regional awareness about the role of improved transparency and accountability in increasing the stability of the international financial system. We have also put our money where our mouth is. We have increased our aid budget for Thailand and Indonesia. Indeed, Australia is one of only two nations to contribute to all three IMF assistance packages for Korea, Thailand and Indonesia.
The Australian government is pressing ahead with its reform agenda. We are keeping a close eye on international trends and will implement policies which allow investors based in Australia to take advantage of them. The economy of the entire region will benefit as Australia becomes the Wall Street of Asia.