Westpac Group today released its submission to the Financial System Inquiry.
The Group said it welcomed the opportunity to help ensure Australia’s financial system remains robust and effective in driving Australia’s long term growth and prosperity.
In its submission, the Westpac Group says that the Australian financial system is diverse, strong and highly effective in meeting the needs of customers and the economy. However, as there have been significant changes to the system since its last review, it is timely to see how best to maintain and enhance the strength of the system.
Deputy Chief Executive Officer, Mr Phil Coffey, said: “This Inquiry is about our country’s future. What we need is a broad and comprehensive review that reaffirms the significant strengths of the current system, and makes considered recommendations for improvement to best support Australia’s growth.”
Westpac believes six specific areas are worthy of the Inquiry’s focus, and the Group has made a series of recommendations that relate to:
The quantity and quality of funding available to the financial system is central to its ability to fund the economic activities of customers. Enhancing the banking system’s access to high quality funding sources, such as an increase in deposits, is the best way to ensure ongoing economic growth can be funded. Equalising the tax treatment of deposits with other savings options is an important measure for increasing high quality funding sources to the banking system.
Post GFC there continues to be intense focus on regulation and regulatory change. Often this appears heavily weighted towards stability - in some cases at the expense of efficiency and growth. A stocktake of regulatory reform to evaluate the combined impact of existing and proposed regulation is worthwhile.
The system’s support of small and medium enterprises (SMEs)
The SME sector is critical in driving Australia’s productive capacity and supporting future economic growth. It is important SMEs are supported by the financial sector to grow and invest. Westpac believes there should be a Government and industry taskforce to examine opportunities for enhancing the SME financing mix.
Building and protecting the wealth of Australians
The single largest change to the financial system since the Wallis Inquiry has been the rapid growth in the size of Australia’s superannuation industry. It is important for the Inquiry to reinforce the objective of the superannuation system to aim to deliver up to 65-70% of income replacement in retirement for all Australians.
The application of technology in financial services
Developments in technology are profoundly changing the nature of how financial services are delivered and the way customers interact with their financial institutions. In meeting these changed circumstances we need to ensure that regulation of financial services does not unnecessarily inhibit innovation, while managing the potential risks of new technology.
Serving customer needs through competition
Westpac believes Australia's financial system is dynamic, diverse and competitive, with a range of participants and offerings. The banking system in Australia reflects a high degree of competition. In retail banking there are 70 banks and 94 credit-unions and building societies offering products including deposit accounts, housing lending, credit cards and business lending.
Westpac said it looked forward to working with the Inquiry to achieve positive outcomes for Australians.