15 Oct 2013

The superannuation and banking industries will form part of the ‘super-growth’ sectors that will be key to driving Australia’s future prosperity as the mining boom fades, according to Deloitte Access Economics.

The firm’s Positioning for Prosperity? Catching the next wave report, released yesterday, claimed that five super-growth sectors — agribusiness, gas, tourism, international education and wealth management — could inject an extra $250 billion to gross domestic product over the next two decades if their full potential is harnessed.

“The reality is that we need new growth drivers. We need another wave — or several — to create more diversified growth,” said Chris Richardson, partner and economist at Deloitte Access Economics.

“And the first place to look is markets that can be expected to grow significantly faster than the global economy as a whole over the next 10 or 20 years, or by more than about 3.4 per cent per year.”

Focussing on wealth management, where banks and super funds are the key players, Richardson said the treasure-trove of opportunity was in servicing the needs of the three billion people who will join Asia’s middle class by 2030.

Today, only $75 billion of the $2.1 trillion of funds under management looked after by the finance sector is managed on behalf of foreign investors, and more needs to be done to make Australia a significant global financial centre in order to attract higher levels of capital.

Sharia-compliant investments, advice

“One area of potential strength is attracting more funds from Islamic groups in Asia and the Middle East for investment in Australian assets,” the report said.

“Our investment offerings are capable of being Sharia-compliant because they are underpinned by physical assets such as farms, mines and real estate.”

Deloitte Access Economics said the Asian region’s ageing population will present opportunities to export intellectual capital to governments including advice on moving to defined contribution systems, associated regulatory controls and retirement product know-how.

“Another export-ready product is the technology platforms we have developed for managing wealth in Australia,” the report said.

“These wrap platforms and other systems allow large retail superannuation businesses to offer up to 600 investment options to consumers.”

Bonds, banking

With Australia’s proven ability to create financial instruments for global sale, there is an opportunity to expand the government and private bond markets and make them larger export earners.

“If we can break down the restrictions on inward and outward capital flows this has the potential to further open up Asia’s rich pools of savings,” Deloitte Access Economics said.

At the corporate and institutional level, there is scope for Australia’s banks to “ride on the coat-tails of our own strong export sectors along with wider Asia-Pacific growth.”

“Our banks have competitive expertise in infrastructure financing, agribusiness and complex construction projects,” the report said.

“They are also becoming increasingly adept at managing systemic risk through insurance and financial markets, and at facilitating portfolio investments for Asian businesses in Asia.”

Author: Vish Teckchandani

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