by Chris Becker
London just took the gong for most expensive capital in the world, according to a recent study (here at the Guardian), but that hasn’t stopped it being one of the most sought after financial hubs in the world.
So the expensive real estate that is the hallmark of Sydney should not be an impediment to it becoming the southern hemisphere equivalent of “The City”, and it seems other factors are at work.
The Global Financial Centres Index just published a fascinating report this week, putting Sydney a paltry 23rd on the list (Melbourne is at 24th), falling fast:
Sydney’s drop from the top 20 attractive financial centres has been relentless. In 2007, it was 9th on the list, 11th in 2009, it placed No. 16 in 2012, and then in 2013 and 2014 it landed at 23rd spot.
According to the Z/Yen Group index, Sydney ranks behind Hong Kong, Singapore, Tokyo, Seoul and Shanghai in the region.
The survey ranked financial centres on the business environment (levels of regulation), the availability of human capital, tax settings, infrastructure, reputation and financial sector development.
New York and London are the top two financial centres in the globe, followed by Hong Kong and Singapore.
There are a few initiatives in the pipeline to help arrest this decline, namely the Asia Region Funds Passport (AFRP), a free trade agreement in funds management services between Australia, New Zealand, South Korea, Singapore, Philippines and Thailand.
But the main problem is the distinct lack of foreign investment in the Australian fund management industry – fascinating when you consider their extremely simple and profitable operation domestically, with a compulsory superannuation scheme providing huge and guaranteed profits.
The most common reason why is Australia’s tax regime and lack of incentives but really it is one of poor innovation within the industry.
Why cultivate international investment when you have a gold mine in front of you and a political complex dedicated to your every whim?