Historian Russell Ward’s epic work, “The Australian Legend”, first published in 1958, argued that modern Australia, despite being highly urbanised, drew many of its traits and behaviours from the bush.
His thesis said it was the 19th century pastoral workers, in particular, who provided the roots that nourished our notions of “collectivism”, “mateship” and a “fair go”.
What, I hear you ask, has this to do with the financial services industry? In an interesting way, quite a bit. Without drawing too long a bow, you can take Ward’s thesis about our cultural heritage one step further and give it an economic twist.
For isn’t it a truism that we often portray our own economy as essentially those two industries most closely associated with the bush – farming and mining.
More importantly, isn’t that how the rest of the world primarily sees our economy?
It matters little that Australian Bureau of Statistics (ABS) show the financial services industry generating about 10% of GDP, with mining lagging at 7.2% and agricultural (including aquaculture) a mere 2.4% (those ABS figures are only up to 2011; it can be safely assumed financial services has increased the gap).
Yet Australia is still seen as riding on the sheep’s back or digging holes in the ground.
This notion, of course, was encouraged in the aftermath of the Global Financial Crisis when our economic salvation was directly linked to China’s seemingly insatiable appetite for our mineral wealth – notably iron ore and coal.
The story was always more complex than that – but it was hardly heard. Rather, the China story just became another re-interpretation of another famous Australian tome – “The Lucky Country”.
Does this matter? Well, yes it does. Australia has a sophisticated, diversified economy. Our economy is the 12th largest in the world (in nominal GDP terms).
The end result is that we are missing out on investment, ideas, and technological change simply because we are still viewed as a quarry and farm.
It would be easy to overstate this. But in trips to the US and speaking to business people there that is the overwhelming sentiment I am left with.
There was little appreciation that our financial services sector is underpinned by compulsory superannuation, a highly skilled and multilingual workforce and advanced business infrastructure.
Tell them Australia has the third highest pool of retirement savings at nearly $2 trillion, and that Mercer’s global report on retirement savings systems rated our system the second best in the world in 2014, and they are amazed.
To completely blow them away throw in for good measure the strength of Australia’s banking system with all four of Australia’s major banks rank in the top 20 of the world’s safest banks, each with an AA rating, as well as the fact our regulatory regime played a key role in bringing us through the GFC relatively unscathed.
The fact is our financial services sector, especially by global standards, does have a good story to tell.
Although the Financial System Inquiry rightly pointed to policy initiatives we need to make, its stability, its regulatory regime, and the financial innovation it offers, makes it the envy of most other countries in the developed world.
This is a story we need to tell; mining is and always will be cyclical. And like farming, it is becoming less and less labor intensive.
Even if the Asia century ensures strong demand for mining and agricultural exports, neither will be generate the need for highly skilled labor to the same degree as financial services.
If Russell Ward got it right, and the bush is home to our cultural heritage, then it’s time to redefine the national narrative.
For the reality is Australia has always been an urban-based country, and that’s where our primary economic story lies – first manufacturing and now services.
In particular, it needs to be told overseas, because as an importer of capital the rest of the world needs to know just what our economy has to offer.
George Lucas is managing director of Instreet Investment Limited. He has over 24 years’ experience in the investment banking and funds management industries specialising in developing, managing and structuring financial products.
He was previously a director of two listed investment trusts, chief investment officer at Mariner Financial, and a senior equities derivatives trader with Citibank and First Chicago in London.
