Billionaire hedge fund manager Michael Hintze believes Australia’s financial services sector is underperforming as an export generator relative to sectors such as education and would perform better with reforms to the tax and funds management regimes.
Sir Michael, a member of the international panel advising the Financial System Inquiry, said Australia needed to play to its strengths as one of the largest investment pools in the world and a creator of talented financial services executives.
“Proportionally, the education sector is earning considerably more than our financial services sector,’’ Sir Michael told The Australian.
“We can definitely improve the performance of the financial services sector.’’
In Sydney to visit clients of his CQS funds business, the London-based expatriate nominated Morgan Stanley chief executive James Gorman, Macquarie Group’s world-beating infrastructure investment business and his fellow panel member JPMorgan Chase technology banker Jennifer Nason as among Australia’s best financial services exports.
But he said to take advantage of that talent in Australia tax reforms were needed to make the market more attractive for fund managers to run money for international clients in Australia. “It’s very difficult to find something you can structure appropriately onshore and manage third-party funds,’’ Sir Michael said. “We have it in the UK but in Australia it is almost impossible.’’
A Sydney-educated former Wall Street banker who set up CQS in London in 1999, Mr Hintze was ranked as one of the top three hedge fund managers in the world last year.
He is estimated to be worth $1.75 billion after growing his CQS funds business to $12.3bn under management, and last year received a knighthood and an Order of Australia.
Joe Hockey appointed him last month to an international advisory panel that includes Ms Nason, former Westpac chief executive David Morgan and former Hong Kong central banker Andrew Shen.
Mr Hockey said the panel would guide the inquiry headed by former Commonwealth Bank chief executive and Future Fund chairman David Murray with “an expert perspective’’ on technological change, Australia’s global competitiveness and offshore regulatory frameworks.
The inquiry is the first significant review of the financial system in Australia since the global financial crisis and has been charged with making recommendations to foster an efficient, competitive and flexible system.
“It is a fairly broad-ranging … inquiry which David Murray is running with a very thoughtful panel,’’ Sir Michael said. “One of the ways we can make Australia more competitive in the financial services sector is to look at ways we can leverage off our comparative advantage as a nation.
“We are in the right time zone to do a lot in the industry, and another strength we have is the concentration of funds in the superannuation sector.’’