Victoria lacks appeal to foreign investors

A report by professional services company Deloitte Touche Tohmatsu on behalf of the Department of Innovation, Industry and Regional Development describes the local industry's strengths in funds management and electronic security.

But the report lists a series of weaknesses in Victoria's business environment, including a perceived lack of access to decision-makers (including regulators), the absence of capital markets and investment banks, and less research and development than in NSW.

The report says Melbourne is recognised by those who do business in the city as a centre of excellence in funds management and finance education. Overseas, however, the city "has no discernible profile for specialisation or strength".

"Melbourne today is positioned as an alternative to Sydney with no clear discrimination in capabilities or critical mass dimension that will attract like-minded businesses," the report says.

The report found 74% of financial services professionals in Victoria were unaware of the State Government's Action Plan for the industry, a policy document released in 2004 under then financial services minister Tim Holding.

The plan's initiatives were set to be completed in June 2006. Since then, the Government has had no new policy regarding the industry. DIIRD has issued no new plans, either under former financial services minister Andre Haermeyer or under Theo Theophanous, who assumed responsibility for financial services when the ministerial position was dissolved in 2006.

A parliamentary inquiry into the industry was set to report on July 31, but sources from both major political parties said the emergence of the Deloitte report was considered to have made the inquiry redundant. Parliament has rescinded the inquiry's terms of reference.

Financial services is the third-largest industry in Victoria's economy, contributing about $18 billion to the state's gross product. The local industry's focus on funds management exposes it to the legislated growth in the industry because of compulsory superannuation.

Jobs in the industry have increased by 28% since 1999 - twice the rate in NSW.

"We have rebuilt the industry from the dark days of the Kennett government, when Jeff Kennett said 'we don't want to build a finance industry, let Sydney do that'," Mr Theophanous said.

The Deloitte report is based on information gathered in January and February 2007, just weeks after Mr Theophanous took over the portfolio.

Bradley Treadwell, managing director of consultancy the Osborne Group and convener of the Melbourne Financial Services Symposium, said the industry required outreach from the Treasurer: "The financial services sector is not on his radar screen."

KEY POINTS

? Deloitte Touche Tohmatsu has identified weaknesses in Victoria's business environment.

? Melbourne has "no discernible profile" among overseas institutions.

LINK

? See the report and associated appendixes at tinyurl.com/5ws3gd