21 March 2016
Speech - #2016011, 2016

Address at the launch of the Government’s FinTech statement, Stone & Chalk, Sydney

Check against delivery

Today I am here to talk about FinTech but as you know the Prime Minister has made an announcement earlier today about the calling back of Parliament to deal with the issue of the ABCC. That is another sector, another sector that is absolutely critical to the successful transitioning of our economy. Over a million Australians work in that construction sector. So, almost 9 per cent of employment, almost 8 per cent of our Gross Domestic Product and the ABCC, which played a critical role in reducing the number of days lost to disputes and improving the productivity of the construction sector, is critical to the transition story of our economy. It's removing the sort of impediments that get in the way of this successful transition that the Turnbull Government is all about.

We know we are at a very important time in our economic transition and you've got to make the right calls. You have got to think carefully about those calls. You have to ensure that the decisions that you make are going to back Australians in as they successfully move through this transition. That's why dealing with the ABCC is so important. It's about the transition story in our economy and why the Turnbull Government can be best trusted to manage that transition.

As it is true in construction, it is also true in this critical area of Fintech. We have seen firsthand how FinTech can stimulate technological innovation from crowd funding and mobile payments to digital currencies and robo advisers. Australia has already developed a deep culture, as we know over a long period of time, of entrepreneurship and innovation, which is the lifeblood here of Stone & Chalk. It is this culture of innovation that this Government wants to support and foster. We want to make sure that the government gets out of the way to allow these businesses to grow.

So, today with our FinTech statement the Turnbull Government is saying loudly and clearly to the industry that we back you, and we are going to back you in to this transition. The government wants to help create an environment for Australia's FinTech sector to be internationally competitive, to become a locus of creative thinking and business activity and we want to see the broader local economy energised by attracting and keeping talented entrepreneurs. We want to see FinTech succeed because we recognise the important role the sector plays for economic growth, to drive productivity in this country.

Financial services is the largest single contributor to Australian GDP. It is therefore critical that we do all we can to have a financial sector that is modern and strong. A strong financial sector contributes to a strong economy. Every sector in the Australian economy relies on a strong financial sector for access to capital and access to banking services. A financial sector that is dynamic, transparent, fast, provides the economic backbone and economic infrastructure that Australian businesses and individuals rely upon.

It is important that Australia's economic growth is supported by such an infrastructure. We know that if we don't have the frameworks in place, whether it be in finance or tax, businesses in the 21st century are more mobile than they've ever been and they can pick themselves up and it's important that those arrangements support that type of thinking. It is important we get behind an industry sector such as this because the Australian economy is transitioning and this supports that transition.

Today, we move on, and continue to roll out the national innovation and science agenda that I was here with the Prime Minister on the day in the days that it was announced and it was received with great enthusiasm by all of you here, I remember, together with Wyatt Roy and other ministers. Through that agenda, we are committed to backing entrepreneurs to respond to the opportunities presented by new technologies. Now, many of these existing measures will support Australia’s growing FinTech industry. These include changing the insolvency framework to encourage innovation and entrepreneurship, creating a new entrepreneur visa to attract foreign innovators, embedding technology neutrality into financial legislation and regulation and increasing the availability of data.

Our FinTech statement builds on this commitment, forming part of our agenda for creating a modern, agile economy of the future and today we announce further actions to support the FinTech sector. We will ensure access to concessional tax treatment for venture capital investments in the start-up FinTech firms. We will take action to address the double GST treatment of digital currencies. We won’t be taxing digital currency. We will commission the Productivity Commission to inquire into options to increase data availability to facilitate new products and better consumer outcomes. We are continuing to consult further with industry on Crowd Sourced Industry Framework which has been introduced into the Parliament and we are actively considering increasing the eligibility thresholds and reducing the cooling off period for investors which has been a key topic that Craig and his colleagues have raised with me through the FinTech advisory group. We will be looking to lift those.

We will review the uptake of the FinTech services by Commonwealth agencies. In addition to this the Government’s FinTech advisory group continues to work through all of these details. Some of the other issues the group is continuing to work on is increased facilitation of digital advice models, the uptake of Blockchain technologies, the evolution of Australia’s crowd funding system, which I have already mentioned, the data transparency and comprehensive credit reporting arrangements and the emerging insurance models that sit around these arrangements. This group will complement the Innovation Collaboration Committee which was announced as part of our financial system inquiry.

All of you are very excited about FinTech. It goes to the centre of what you are doing each and every day. Within the Financial Services sector as well it is an exciting topic but you know the reason I am excited about FinTech and what it can deliver is it has the power to transform our economy more broadly. It has the power to completely bring in a new environment of competition. For small businesses that are out there who find it difficult to attract capital, for large government agencies that are struggling with convoluted and difficult payment systems and the interface of those payment systems with the other arms of what we do, to medium sized businesses which are trying to bring their products up to date to be able to connect with their consumers in the way they haven’t before. The power of FinTech is not just to ensure that the ideas that are being born here in Stone & Chalk can find their way as a vendor, I suppose, to a bigger purchaser which will be a good pay day for you, but what is more important is that innovation actually finds its way into the economy.

That’s what the government is looking for out of this. We’re looking to see these new FinTech tools being able to lubricate our economy, and drive the transition in our economy that previously wasn’t possible. How big is it? How successful will it be? Well, time will tell, but we’re not going to die wondering about this as a government, and we do think it has been enormously important to engage with the FinTech sector to imagine what is possible and then to follow that up with the changes in regulation, the changes in regulatory practice, which we are already seeing.

I mean particularly in the area of the regulatory sandbox, which is a key topic which has been raised with the advisory group. That is something we will be proceeding with, but we already know that ASIC, and there are representatives of ASIC here today, have already got tools available to them to create what you’d call a virtual sandbox at the very least.

Recently I met with all of our key regulators and I was very pleased with the forward leaning and the enthusiastic approach that they wish to take to this sector. There will be genuine collaboration under the policy settings that we are announcing today. To drive what is called reg-tech to support FinTech. That is enormously important. It is important that we align these objectives. The government understands what can be delivered through this area, there is a lot of promise and that has to be followed through on but we need the right environments for that to take place.

So whether it’s on comprehensive data reporting, credit reporting, whether it is on issues of sandboxes, whether it is on issues of not applying GST to bitcoin and things of that nature, these are the sort of changes that support the transformation, and the transition of your economy. Australia grew at 3 per cent real last year. We are the envy of the developed world, when it comes to economic growth and jobs growth. But we cannot take that for granted, it won’t continue to happen on its own, and there are big risks to it. Those risks come in the form of failing to appreciate the opportunities of innovation. It comes in failing to understand that if you tax companies out of existence, then they won’t be there to create the opportunities and the enterprise, and the jobs that will be the product of their enterprise. These are the things the government is focused on. Ensuring that we back investment, particularly into sectors like this that help transition, and transform our economy for the benefit of growth and jobs.

So Craig, congratulations again, we thank you very much for the wonderful working relationship we’ve been able to form with you and your entire team, and the broader FinTech community and indeed, diaspora, when we’ve connected up with them in various places around the world. It’s a very, very exciting time as the Prime Minister is always saying. No more so than in the FinTech sector. You know you have a government that understands the opportunity, understands what you’re trying to do, and understands just how much you can support other Australians if you’re able to get it right, and we want to back you to do that.

Thank you.