QUESTION: How would you describe global Australia as a increasingly important global financial centre?
MINISTER: Well, to build a modern financial centre, you need three key components: you need an excellent and competitive and simple regulatory system, including a globally competitive taxation system so that you can compete as a safe and secure place to clear and settle transactions. Secondly, you need human capital and the basis upon which you build human capital is an excellent education system and Australia is a very significant exporter of education, particularly in New Asia. And the third factor you need is information technology and communications. You need to have the IT specialists and the affordable communications links, the band width to be able to build a financial centre. And its upon those three key criteria that you can build a global financial centre.
QUESTION: Has Australia got the necessary requirements in order to fill the criteria that you just mentioned or are there further steps needed?
MINISTER: Well, as each day passes, the biggest barrier that Australia faces is being bogged down - and that's distance - and what brings down distance is new technology. It means that you can clear and settle transactions in the Asian time zone from anywhere in Asia. Australia has the people - I think that is clearly shown during the Olympics. Australia certainly has the IT capacity. In fact, the OECD recently put out a report saying we're one of only six New Economies in the world based on the mainstreaming of new technology, and certainly we've got the best regulatory environment in our view, and in the view of others, almost anywhere in the world.
QUESTION: You were mentioning the internet, and, clearly, communication, it doesn't matter any more - you can build a financial environment. You are probably aware that in New York, Stock Exchanges are moving towards [equilution] of the pan-European bourse. What's the Australian response to that? Are there plans for building similar international link-ups, maybe in the Asia Pacific region, or elsewhere?
MINISTER: Well, the Australian Stock Exchange was one of the first exchanges in the world to demutualise and, in fact, list on itself. The Government has recently announced that it intends to lift ownership restrictions on the Australian Stock Exchange, so that it can, in fact, forge alliances globally. In fact, the ASX is really an electronic exchange itself. It has been seeking partnerships, it's got an opportunity to trade Singaporean shares and Singapore can trade Australian shares from the 1st July next year. It is in constant discussions. The biggest threat, of course, to Asia is that the world's becoming increasingly Americancentric and, to a lesser degree, Eurocentric. Where does that leave Asia? Well, Asia has to come together - it has to bring all its component parts together to try and aggregate the capital markets to create depth from liquidity, and that includes, importantly, forging obvious links with Japan.
QUESTION: You were mentioning also the Australian Olympics which I think have been quite successful in enhancing the image of Australia, that's for sure. But do you think that, I mean they're going to have a long-lasting impact on the economy?
MINISTER: Well, the Olympics illustrated that Australia is more than a large mineshaft with some kangaroos and sheep grazing near the entrance. What the Olympics did was showcase not just to Australia, which is a very beautiful nation, but it showcased Australians. It showcased the people of our nation. It said that, in fact, we are modern and sophisticated and that we are a pot pourri of the world, and I think what became quite clear is that people understood from the Olympics that, in fact, the traditional areas that Australia is famous for - agriculture, mining, which represent only 7 per cent of the Australian economy - are today perhaps less significant domestically than, for example, financial services, which is 8 per cent of the Australian economy, or services generally which is around 80 per cent of the Australian economy.
QUESTION: So you cannot continue to the sort of old image of Australia being an old economy because unfortunately this is something of a label for the country.
MINISTER: That's right. And what we are doing is saying "please replace your perception of Australia with an understanding of the reality of Australia, that in fact it is a service dominated economy and even though 60 per cent of our exports come from just 7 per cent of our economy, the internet provides Australia with an opportunity to sell 80 per cent of its economy, particularly to the three billion people that live on our doorstep in Asia.
QUESTION: This is certainly quite a rosy scenario. However, not everything is so positive at the moment. I am thinking in particular about the Australian dollar which, as we speak, is trading around record lows against the US dollar. What is, in your view, what are, the main reasons behind its persistent weakness?
MINISTER: Well, Australian Ministers quite rightly regard commentary on the level of the Australian dollar as inappropriate. What we do recognise is that the globe is fascinated with all things American at the moment. There certainly is a massive shift of capital from Europe and various other parts of the world to the United States. The fundamentals of the Australian economy are extremely good. We have a very high growth rate, we have lower than expected inflation, unemployment is coming down, the current account deficit is reducing. This is a wonderful time for Australian exporters, it is a wonderful time for investment in Australia and what we say about the dollar is "the market is the market is the market", and whilst we focus on the fundamentals of Australia and the Australian economy, they are going to be the important factors for the long term value of the currency.
QUESTION: The currency itself can be a sort of a drag for fundamentals because it could create inflationary pressures. I am just wondering whether this, coupled with buoyant oil prices and rising wages, as we've heard this morning, is going maybe to put pressure on the Reserve Bank of Australia, or create a bit of havoc.
MINISTER: Well, its not for me to speculate on monetary policy in Australia. We have an independent Reserve Bank that does an excellent job in making our monetary policy assessments. What we come back to is, let's have a look at the reality. The CPI inflation indicator which came out in the last 24 hours indicates that inflation is lower than anyone was predicting, and that's even with the lower Australian dollar and increasing oil prices. So let's keep a focus on the reality and the truth about the Australian economy and the Government is very determined to keep focusing on how we can improve the fundamentals of the Australian economy even though, at this stage, they continue to perform very, very well.
QUESTION: Thank you. Just one question about the political situation in Australia. The General Election is expected to take place next year, and recent polls are showing that the governing coalition is coming round neck and neck - so I am just wondering what is the Government planning to achieve between now and the expected date of the Election to win back voters?
MINISTER: Well, the Government is going to keep focused on the core policy issues that it was elected on. We are focusing on making the economy strong, on continuing the fundamental reform within the economy even though we've just undertaken very significant taxation reform and significant industrial relations reform. The Government has flagged that it will be focusing on Defence expenditure over the next few months. We have a White Paper coming out that will indicate where we will be heading with significant defence acquisitions over the next few months. Transport and the infrastructure continues to be a significant focus for the Government and a number of large infrastructure projects in partnership with the private sector will be rolled out over the next few months And, of course, we also have a growing and very significant biotech industry in Australia with huge export potential and huge development potential, and in the interim we will continue with rolling out the spectrum options in telecommunications and significant opportunities to continue to build our wonderful opportunity to access the market of 3 billion people on our doorstep through new technology.
QUESTION: Just one more thing. I mean, anything in particular in terms of financial regulations?
MINISTER: Well, we, yeah, we are about to undertake the most significant reform of the regulation of financial services anywhere in the world. We are putting in place a new regulatory system that provides for one licensing regime and one licence for a deliverer of financial services whether they be insurance products, investment products, risk products - so one licence, one conduct and disclosure regime - and the same rule applies whether products are sold to consumers through face to face, over the branch counter, by telephone, through the internet, or any other mechanism that might be developed, including M-commerce. We see a huge opportunity to export financial services that are trustworthy, that are globally competitive, from Australia into the Asian region of 3 billion people.
QUESTION: Thanks a lot, Mr. Hockey.
MINISTER: Thank you very much.