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Monday, 25 June 2018
Page: 6184


Mr FALINSKI (Mackellar) (15:57): I rise today to offer my support to the Corporations Amendment (Asia Region Funds Passport) Bill 2018, centred upon improving the Australian economy and our ties with Asia. We live in a global world, which requires us to have a global outlook. Gone are the days of insular economic policy and protectionism. Gone are the days of narrow-minded policy and the focus on purely domestic matters. We as Australians must look to sustain our future by encouraging economic growth through sensible policy. The bill will allow for eligible managed funds to be marketed across the economies of nations participating in the Asia region funds passport with limited additional regulatory requirements. Australian fund managers will be able to offer interest in qualifying funds to investors, while Asian fund managers will be able to market their qualifying funds to Australian investors without cumbersome red tape and regulatory requirements. Japan, Korea, New Zealand and Thailand have all signed up alongside Australia to implement the passport, and more are due to follow.

The bill also implements the Turnbull government's commitment to the Asia region passport memorandum of cooperation and will improve economic cooperation and relations between our nations. History has shown us that better connections between financial markets in the Asian region and global trading economies will benefit us all.

Let us turn our minds to the Asian growth miracles of the 20th century. Following the Korean War, South Korea was one of the world's poorest nations, with a per capita income of only $64. The country had been ravaged by war, and its people were in dire straits. It was following this that the miracle on the Han River took place—a remarkable period of growth and economic prosperity on the back of economic reform, with a hardworking population and ever-increasingly open markets and investments opportunities. Economists will rightly point to the impact of foreign loans and investment from America and Japan as helping to prop up this miracle. However, it was the freeing up of markets and engagement in the global economy that proved to be the engine room behind Korea's remarkable economic turnaround.

It is simply a fact that more people have been lifted out of back-breaking poverty in the history of humanity by free trade—not by UN sanctioned government programs, not by foreign aid, but by free trade and the open market. One just needs to look at the difference in living standards and wages between North Korea and South Korea to see the difference that free markets and encouraging investment can make to the fortunes of a nation.

Similarly, China had seen decades of poverty, starvation and low living standards under a closed market economic system. It was Deng Xiaoping in 1978 who initiated a period of reform and opening up with the famous phrase: 'White cat or black cat—it doesn't matter, as long as it hunts for mice.' That has underpinned China's remarkable rise to the second-largest economy in the world. Adam Smith wrote, in The Wealth of Nations, that throughout history China had been one of the most prosperous, powerful and richest nations in the world but that economic growth had subsequently stalled and gone backwards due to the emergence of a closed economy in the 16th century. It was the decision to open up the country to foreign investment and to engage with global markets that brought about an era of growth and success. The removal of restrictions and the establishment of a more simplified investment scheme heralded an era where investors and businesses flocked to China. Finally, the world's largest nation by population was not only opening up for business and trade but empowering its own people and dragging them out of poverty. Since then, it has been something of a fairytale, economically speaking. Hundreds of millions of Chinese have been pulled out of poverty, with the creation of the world's largest manufacturing base.

The benefits of free markets and the prosperity that they bring are there for all to see. It is incontestable. As the Minister for Revenue and Financial Services stated:

The Funds Passport is an important step to further Australia’s economic integration with the Asia region. It will provide Australian fund managers with access to Asia's expanding middle class and high net worth individuals, by allowing them to offer their products into the region without having to go through duplicative approval processes in each economy.

We in government must seek to make the lives of individuals and businesses easier by facilitating the conditions in which they can operate. Government must enable and support investment, not restrict it. It is the unwavering belief of the Liberal Party that working towards a lean government that minimises interference in our daily lives will, in turn, maximise individual and private sector initiative and benefit all Australians.

Australia, too, has grown to be a prosperous and stable nation through increased global engagement and liberal investment schemes. Our record of continuous years of economic growth has been built on a commitment to free market principles and a willingness to open our markets to competition and investment. It is often said that our nation is built on trade and foreign investment, and I am sure that this will continue to be the case. The Turnbull government has a tremendous record of supporting and encouraging investment, with our commitment to reducing red tape, completing free trade agreements and supporting business part of the national plan to create a prosperous and wealthy Australia. This is a noble goal that we should all get behind, regardless of political persuasion.

The bill will play an important role in minimising regulatory requirements and making processes more straightforward for investors. Allowing eligible funds to be offered across multiple participating economies under a common set of rules will drive investor security and confidence while encouraging investment through ease of access. Historically, Australia has not been a strong exporter of funds management services, given that there are a plethora of ways in which foreign funds are taxed as well as regulatory barriers restricting trade and financial services. Thus reductions in compliance costs for investors and fund managers will result in regulatory savings and a stronger funds management industry. We will see an increase in jobs, the government revenue base and aggregate gross domestic product, not to mention improvements for customers and consumers alike. Increased competition through regional engagement will also result in improved services and access to foreign funds, meaning a better deal for the many Australians who use funds management services.

However, our counterparts in the Labor Party will stop at nothing in their quest to impose their big government agenda on all Australians and to disrupt our growth and prosperity. At the behest of their union bosses, they seek to close off our economy and increase red tape. Labor's track record of being antibusiness and anti-investment threatens to undermine the pillars that have made Australia prosperous and allowed its people to enjoy living standards that are amongst the highest in the world. The decline from the more economically rational times of Labor under Hawke and Keating to the high-taxing and protectionist agenda of the Leader of the Opposition, Bill Shorten, makes a stark contrast. For all our sakes, we simply cannot allow this to happen.

This is why it is so important that the Turnbull government continues to support free trade and economic engagement through the likes of this bill. We in the Liberal Party are committed to growing our economy and to providing opportunities for all. This can only be done through fully supporting free market economics and serious engagement with our region. The history of our Asian neighbours in particular showcases the benefits that free trade can bring to all. Asia comprises more than 4½ billion people, making up 60 per cent of the world's population. The regional economic outlook for Asia and the Pacific estimates growth to remain strong at 5.4 per cent in 2018 as the region continues to be the leader of global growth. Australia is extraordinarily well placed, both geographically and economically, to continue to engage in the region and to benefit. The majority of our top export markets are in the Asian region. Engagement represents an incredible opportunity to grow our economy and industries, including funds management. Looking at the countries that have signed up to implement the passport that this bill facilitates, the likes of Japan, Korea and Thailand have performed well economically in recent years and are well placed to continue growing. Australia must ensure that it is well placed and prepared to move forward in what some call the Asian century.

History has shown us many times that those who stop and pause ultimately get left behind. We have always been a forward-looking nation and we must continue to be so. Some may question the merits of free market investment and seek to exploit any discontent for political gain. For those of you who choose to pursue such a path, I warn you to remember your history and the fate of those who have spouted similar protectionist arguments in the past. Ludwig von Mises, the esteemed Austrian-American economist, once wrote that:

The philosophy of protectionism is a philosophy of war.

This serves as an important reminder of the dangers of abandoning free trade and pursuing the dark path of protectionism.

Since the end of World War II in 1945 and the widespread emergence of free trade and the global economy, the level of trade interdependence between nations has seen a significant decrease in the number of armed conflicts and war related debts, making the current day one of the most peaceful eras in history. The so-called capitalist peace theory has contributed not only to peace but also to lifting hundreds of millions of people out of poverty and to improving living standards around the world. I'm proud to be a member of a government and a political party that understands such principles and history and is committed to facilitating such benefits in Australia.

It is clear that this bill will go a long way towards improving trade relations and the economic wellbeing of all nations involved and, in particular, the people living in those nations. Australia's funds management sector has the potential to improve. We have a powerful mix of high-performing domestic and international funds management firms that will help to drive revenue and create jobs. I'm confident that this bill will help to encourage even more funds management firms to view Australia as both a viable destination for investment and a nation where they can set up operations and contribute to our economy. Australia's economic future and prosperity are essential to our continued wellbeing and quality of life. So I urge all here today to take a stand for our industries, our jobs and our future and to support this bill.