Makes recommendations on how the financial system can most effectively help the Australian economy be productive, grow and meet the financial needs of Australians.
Objectives and principles
This Inquiry’s objective is to assess, and make recommendations on, how the financial system can most effectively help the Australian economy be productive, grow and
meet the financial needs of Australians. To meet this objective, the Inquiry considers that the financial system must satisfy three principles: efficiently allocate resources and risks, be stable and reliable, and be fair and accessible. These three principles underpin the following analysis.
The Inquiry’s initial assessment
Based on the input of submissions, regulators and international perspectives, the Inquiry’s initial assessment is that, to date, the Australian financial system has performed reasonably well in meeting the financial needs of Australians and facilitating productivity and economic growth.
Indeed, many areas of the financial system are operating effectively and do not require substantial change. Those areas are not the focus of this Interim report.
However, there is no room for complacency. The Australian economy will face a number of opportunities and challenges in the coming decades. Each of these has implications for the financial system:
- Future financial crises: History has demonstrated that financial crises can and will occur at significant cost to the economy. Although we cannot predict their cause ortiming, our financial system framework should reduce the likelihood and impact of such events.
- Fiscal pressures: The Commonwealth’s fiscal position will continue to come under long-term pressure, particularly from the effect of an ageing population.
- Productivity growth: On its current trajectory, productivity growth will not be able to sustain the same rate of income growth experienced over the past decade. The financial system has an important role to play in facilitating higher productivity growth through funding the economy more efficiently, including funding new businesses and using new technology.