IN A week in which jobs continued to be shed in banking and financial services, industry leader John Brogden has attacked the federal government's subsidies and preoccupation with an "unsustainable" car industry.
Mr Brogden, CEO of the Financial Services Council, compared the privileged treatment of the car industry with that of financial services.
Financial services was facing a revolution with the Future of Financial Advice legislation before Parliament, he said in a keynote address to the Deloittes Leadership Series lunch in Sydney yesterday.
"That this revolution will take place in poor markets and ongoing international uncertainty is no joy, but simple reality. So the performance of Australia's largest sector is critical to the Australian economy," he said.
"Governments need to understand that, and they need to remember that unlike the unsustainable car industry an industry that has been subsidised by the Australian taxpayer since 1908 and for every year without exception since we don't have our hand out for money."
Financial services was the biggest single sector in the economy, responsible for 10.6 per cent of GDP, and employed 428,000 people, he said.
Speaking later to BusinessDay, Mr Brogden also said that, unlike the car industry, large profits from financial services remained in Australia, through the auspices of superannuation.
"It's an extraordinary frustration that a declining industry like vehicle manufacturing instantly gets government attention and talk of more subsidies yet financial services . . . is regarded [by government] as a pariah because of its decision to be efficient."
On the financial advice reforms, he said the government was discussing with industry a transition period before the legislation's headline start of July this year. This would either be a hybrid approach, where some measures started in 2012, others in 2013, or where early adoption was encouraged, but there were no penalties for non-compliance. The council has estimated the cost of implementing the reforms is $700 million in the first year and $375 million every year after.
The sector covers financial advice, life insurance, funds management and superannuation.
In key markers:
The number of financial advisers declined last year by 1.7 per cent to 15,500, the first decline in 12 years and compared with 2 per cent growth for most years.
Funds under management peaked at $1.85 trillion in June, falling to $1.79 trillion in September. Funds flowing into the sector grew by $30 billion over the 12 months to September.
Money paid directly to superannuation funds, which reflects discretionary contributions, last year was $5.5 billion or 25 per cent lower than before the GFC.