ACFS Annual Review 2017

Australian Centre for Financial Studies Annual Report 2017

TABLE OF CONTENTS

Research in the public interest

Australian Centre for Financial Studies

+61 3 9903 8289 | | australiancentre.com.au

Page 1

TABLE OF CONTENTS About Us .......................................................................................................................... 3 Contact ............................................................................................................................ 3 From Maria Wilton, Chair, Industry Advisory Board .............................................................. 4 2017 Highlights ................................................................................................................. 5 2017 Highlights ................................................................................................................. 6 Research Publications ........................................................................................................ 7 Research Publications – Not for General Distribution ............................................................ 8 Academic Publications ...................................................................................................... 10 Research Grants ............................................................................................................... 11 Commissioned Papers ....................................................................................................... 12 Submissions ..................................................................................................................... 13 Financial Policy Briefs ....................................................................................................... 14 Industry Engagement ....................................................................................................... 15 Melbourne Money and Finance Conference ..........................................................................................15 2017 Events and Conferences: a sample ............................................................................................... 16 Industry Impact and Media Exposure.................................................................................. 17 Media opinion articles ........................................................................................................................... 17 Media Mentions ................................................................................................................................... 19 Board and Committees ..................................................................................................... 20 Advisory Board ..................................................................................................................................... 20 Research Committees .......................................................................................................................... 20 The People Behind ACFS ................................................................................................... 23

Australian Centre for Financial Studies +61 3 9903 8289 | | australiancentre.com.au

Page 2

ABOUT US The Australian Centre for Financial Studies (ACFS) is an influential public-interest research centre within the Monash Business School in Melbourne.

Our research is accessible, independent and relevant, with a primary mission to inform public policy, community debate and industry practice in Australia and, increasingly, overseas.

We are an intellectual hub, bringing together some of the best minds in business, government and academia to tackle contemporary issues in Australian and international business and finance.

Since our launch in 2005, AFCS has grown significantly in scope, reach and public profile. We make a positive impact on public debate, policy and practice in a number of ways, including: 

Publication of our original research in influential peer-reviewed academic journals;



Providing a platform for collaboration between academics and experts from government and industry through joint research projects, seminars and other major events;



Active and frequent participation in forums and research projects run by other organisations;



Wide exposure of our research findings in both specialist industry publications and mainstream media outlets, including the Australian Financial Review (see details in page 34 of this report); and



Promoting Australia as an international centre for finance practice, research and education.

Our research topics are chosen in collaboration with industry and government, and pursued with the support of an Advisory Board comprising a diverse group of senior business and government practitioners.

Our mission To serve the public interest by undertaking evidence-based research relating to the financial sector, collaborating constructively across sectors, and promoting insightful dialogue around important financial-sector issues.

Our commitment to independence Our research is driven by demand from industry, and is undertaken with a high level of expertise from within ACFS and across our wide network of academic and practitioner collaborators. We welcome a diversity of views, but are not beholden to any vested interests. The value of our work is underpinned by its independence. To this end, we produce evidence-based and applied research that is non-partisan and non-sectoral in its perspective.

CONTACT Events c-acfsevents@monash.edu General Information: info@monash.edu

Melbourne Office: Level 13, 30 Collins Street, Melbourne VIC 3000 T: +61 3 9903 8315 australiancentre.com.au monash.edu/business

Australian Centre for Financial Studies +61 3 9903 8289 | | australiancentre.com.au

Page 3

FROM MARIA WILTON, CHAIR, INDUSTRY ADVISORY BOARD I am pleased to be able to inform our stakeholders of another successful year for the Centre. For more than a decade now, ACFS has undertaken public-interest research and promoted policy debates: it has a track record of which we are very proud.

The Centre operates as a platform for industry, regulators and policymakers to engage with the academic community. A wide range of stakeholders have made a significant contribution to both suggesting research ideas and funding specific research projects. The research evolves through interaction between the academic researchers and the project stakeholders before being released into the public domain through events, conferences, journals and commentary.

The model has been highly successful. Since its inception, ACFS has: • • • • • • • •

Conducted 296 events, bringing together industry, government and academic practitioners Dispensed some $2.1 million in research funds through the ACFS Academic Research Grant scheme to academics at affiliated Universities, generating the publication of over 80 refereed journal articles; Published research papers and independent commentary from ACFS and its academic associates in numerous forms, including submissions to public inquiries, discussion papers, op-eds, journal articles, conference papers, event presentations etc.; Driven significant research programs, including Funding Australia’s Future, the Melbourne Mercer Global Pension Index, the CSIRO-Monash Superannuation Research Cluster, the Australian Equities Database, and the Financial Integration in the Asia-Pacific project; Developed a network of highly influential individuals as part of its Advisory Board, its three Research Program Committees (in banking, funds management and insurance), and its Affiliated Experts; Attracted a growing number of industry sponsors and supporters; and Established a strong presence in the media and broader financial services community.

The continuing financial support from stakeholders provides the backbone to the Centre’s work. The Australian Institute of Superannuation Trustees, the Bendigo and Adelaide Bank, Finsia, Mercer, National Australia Bank, Monash University, RMIT University, the University of Melbourne, the University of South Australia and the Victorian Government have been generous in their support. The willingness of government agencies – RBA, Federal Treasury, ASIC and APRA in particular the Victorian Department of Economic Development, Jobs, Transport and Resources – to engage with our various events and working groups has helped strengthen the research output.

2016 was a year of transition. Importantly, the Centre became part of Monash University and the Monash Business School, which has provided ACFS with greater budgetary certainty. Other changes include the move of our Director Amy Auster on to become Deputy Secretary of the Victorian Treasury and the appointment of Professor Deep Kapur as Director effective November 2017. In the interim, Professors Rod Maddock and Edward Buckingham have done an excellent job of leading the Centre as Interim Directors.

We have a very hard working and engaged group of staff, and an engaged set of stakeholders, all of whom have helped ensure the ongoing success of the Centre.

Australian Centre for Financial Studies +61 3 9903 8289 | | australiancentre.com.au

Page 4

2017 HIGHLIGHTS The Australian Centre for Financial Studies had an outstanding year in 2017. True to our core mission, we advanced numerous major research projects in collaboration with industry, the government sector and academic institutions. Our research was brought to a wide audience through conferences and other events, and through mass media exposure. This helped enhance our reputation among the nation’s most influential research organisations.

While ACFS experienced significant change as an organisation in 2017, including the transition to a new Director, the fundamentals remained constant: the pursuit of rigorous, independent and relevant research with an overriding aim of influencing public debate, policy and industry practice for the broader good of society, both in Australia and abroad.

Melbourne Money and Finance Conference Two of our top researchers presented at the prestigious annual Melbourne Money and Finance Conference held on 10-11 July. Professor Rodney Maddock and Professor Kevin Davis were part of an elite group of experts brought together to discuss issues facing the financial services industry. The 2017 theme was “Evolutionary Trends in the Australian Financial Sector”. The conference, sponsored by the Reserve Bank of Australia and APRA, was one of a large number of events and projects in which ACFS researchers collaborated and presented in 2017. Other major events in which we took part are detailed elsewhere in this report.

Change at the top With his appointment in November as Director of the Australian Centre for Financial Studies, Professor Deep Kapur (left), has brought a rich combination of high-level business and academic experience to the top role at our organisation. As well as being Professor of Practice at Monash Business School, he has had a distinguished career in international funds management and investment, including managing director positions with Salomon Smith Barney, Citigroup Global Markets, Symphony Financial Partners and Daiwa Capital Markets. Professor Edward Buckingham, who served as interim Director until November, said: ‘’Deep’s appointment is significant for ACFS and its stakeholders because wealth management… is a complex field of analysis involving both financial sector issues and major policy interests.’’ Professor Rodney Maddock, interim Director from January-May 2017, said Deep’s mix of academic and business skills, and long sector experience, should further strengthen the Centre.

ACFS research makes an impact in Indonesia ACFS extended its engagement with Australia’s closest regional neighbour, Indonesia, throughout 2017. Three papers were written specifically for the Indonesian Ministry of Finance, and other insightful ACFS research with a focus on financial services in Indonesia was referenced and highlighted in debate surrounding the implementation of new laws in that country. One of the papers, ‘’Catching up with Indonesia’s Fintech Industry’’, published in May 2017 (left), explores the new Indonesian regulation of platform lending in the light of regulatory problems, international experience, and the particular needs of Indonesian development.

Australian Centre for Financial Studies +61 3 9903 8289 | | australiancentre.com.au

Page 5

2017 HIGHLIGHTS Global acclaim for Melbourne Mercer Global Pension Index ACFS recontracted with the Victorian Government to continue producing the hugely successfully and internationally cited Melbourne Mercer Global Pension Index. The Index – a research partnership between ACFS and Mercer – provides a unique means to benchmark national pension systems.

The Index has become a major reference for government planners and academics studying pension systems around the world. As a result, it attracted broad international media attention throughout 2017, with hundreds of citations in outlets across all continents. Without fact-based research of this type our worldwide understanding of financial provisions for ageing populations would be significantly poorer. It provides a basis to ask questions about the sustainability of current pension planning – both in countries that enjoy demographic dividends, as well as those with rapidly ageing populations.

Kevin Davis serves up policy solutions to governments In another year of extraordinary output, the ever busy and insightful Professor Kevin Davis, Research Director at ACFS (left), challenged conventional practice in state and federal governments with his Policy Brief series. The series provides independent analysis and commentary on current issues in financial regulation, with the objective of promoting constructive dialogue among academics, industry practitioners, policymakers and regulators and contributing to excellence in Australian financial system regulation. In one paper, Replacing Stamp Duties (Nov 1, 2017) Professor Kevin Davis provided a simple solution for states to transition away from reliance on stamp duties towards property taxes. It involves abolishing stamp duty and applying property taxes only to those properties on which the last sale did not incur stamp duty, which avoids “double taxation” of home-owners. https://australiancentre.com.au/publication/property-tax-transition/

ACFS leads media conversations Leading ACFS researchers were in demand for their expert views and commentary in major Australian media outlets in 2017. Professor Rodney Maddock was notably prolific, with multiple opinion pieces published by the Australian Financial Review, The Conversation and other prominent outlets, on topics ranging from the banking Royal Commission to trade and economic growth.

Professor Kevin Davis was also published in both the Conversation and the Financial Review. Others who had commentaries published in mainstream and industry media included Professor Steve Worthington, Professor Deborah Ralston, Professor Edward Buckingham, Dr Stephen King, Jeremy Duffield and Dr Sam Wylie. A full list of ACFS researcher media opinion pieces published in 2017 is contained elsewhere in this report.

Tapping into the Fintech Revolution The fintech revolution prompted much interest and activity in 2017. A major ACFS initiative in this area was a copartnership with Cambridge and TsingHua Universities on a survey of the growth of marketplace lending in the Asian region. This provided further impetus for our research on fintech issues in Indonesia.

Conclusion of major superannuation research project In 2017 ACFS successfully concluded its four-year research project exploring superannuation's role within the Australian economy and its impact on retirement outcomes. The innovative project - a collaboration with local and international universities, government agencies and the superannuation industry built an evidence base, academic expertise, and strong cross-industry relationships which will inform policy development and promote product innovation as the superannuation system matures.

Australian Centre for Financial Studies +61 3 9903 8289 | | australiancentre.com.au

Page 6

RESEARCH PUBLICATIONS Cultivating Growth: The 2nd Asia-Pacific Region Alternative Finance Industry Report Written for the University of Cambridge, September 2017 This paper, part of a global study of alternative finance markets, surveyed over 600 alternative finance companies across the Asia-Pacific Region to assess the market’s size and growth. Australia’s alternative finance market is growing rapidly (especially in business lending) and is now the second largest in the Asia-Pacific. However, it is dwarfed by the Chinese market, which accounts for over 99 per cent of alternative finance activity in the region. https://australiancentre.com.au/publication/cultivating-growth/ Barriers to entry and financial integration in Asia and RCEP countries Alex Erskine, July 2017 This paper informs those interested in the Regional Comprehensive Economic Partnership (RCEP) trade agreement on the barriers to trade in financial services and the frameworks for regulatory cooperation that facilitate financial integration. For the RCEP to produce region-wide trade facilitation and related benefits, it requires region-wide cooperation between negotiators, regulators and the private sector. Negotiators may find that unilateral reforms to reduce barriers to trade in financial services would be simpler and quicker, only requiring explanation to trading partners. https://australiancentre.com.au/publication/barriers-entry-financial-integration-asia-rcep-countries/ Socially Responsible Investing in Australia Written for the National Australia Bank, June 2017 The report seeks to explain the seven categories of socially responsible investment (SRI) strategies and undertakes an extensive review of global performance data overall, which concludes that SRI does not come with a detriment to financial returns. Indeed, the incorporation of environmental, social and governance factors into the investment process might result in an outperformance effect. https://australiancentre.com.au/publication/socially-responsible-investing-australia-2/

A Question of Trust: Post-Truth Paradigms and the Challenge to Financial Regulation Professor Justin O'Brien, Monash University, June 2017 https://australiancentre.com.au/publication/aquestion-of-trust/

The Global FX Code: Transcending Symbolism?

Professor Justin O'Brien, Monash University June 2017 https://australiancentre.com.au/publication/global-fx-code-transcending-symbolism/

Direct Charging of Card Fees, May 2017 Australia’s payment card regulations are similar to those used in a variety of countries around the world.

However, as it is argued in this paper, they are complex, open to gaming and have failed to win support from consumers. This paper presents an alternative approach to regulation involving direct charging for card fees. This approach is technically feasible, improves transparency, meets the objective of efficiency of the payments system, and is simpler than current regulation.

Australian Centre for Financial Studies +61 3 9903 8289 | | australiancentre.com.au

Page 7

https://australiancentre.com.au/publication/direct-charging-card-fees/ Catching up with Indonesia’s fintech industry Written for Otoritas Jasa Keuangan (Indonesian Financial Services Authority), May 2017 The innovative use of technology in finance is challenging regulators to balance the desire to encourage competition from new businesses, while protecting the system and consumers from excessively risky behaviour and potential disruption. This paper explores the new Indonesian regulation of platform lending in the light of standard regulatory problems, international experience with regulating the sector, and the particular needs of Indonesian development. https://australiancentre.com.au/publication/catching-indonesias-fintech-industry/ Chinese capital account liberalisation: process, structure and consequences Dr Guonan Ma and Professor Rodney Maddock, May 2017 What happens in China, matters to the world economy. Australia has a huge stake in a successful and relatively smooth financial integration of China into the global market. To add to the risk to this historical transition, China currently faces the challenges of rising leverage and slowing economic growth as it tries to transition from a development model based around public investment and export-led growth. https://australiancentre.com.au/publication/chinese-capital-account-liberalisation/

RESEARCH PUBLICATIONS – NOT FOR GENERAL DISTRIBUTION Review of State Government of Victoria Draft Paper – “Discount Rates: Research Paper” Written for the Victoria Department of Treasury and Finance, April 2017 This peer review re-examined the issue of how to determine a discount rate for evaluation of public sector projects. The peer review assessed the arguments advanced in the State Government of Victoria’s draft paper, and also provided editorial comments where the exposition of the paper could be improved. This paper is not available for general distribution.

Export Opportunities and Capabilities of the Funds Management Industry in Victoria Written for the Victorian Department of Economic Development, Jobs, Transport and Resources, March 2017 Victoria’s funds management industry is large by global standards as a consequence of compulsory superannuation and strategic decisions by organised labor to establish industry funds. This report makes recommendations on how to grow the local industry, as well as to support direct and indirect export of funds management and its related services. This paper is not available for general distribution Home Equity Release: Who Wins, and How Much?

Written for Bendigo & Adelaide Bank, January 2017 The family home is the largest asset for most retiree households, and financial products that allow retirees to access this wealth could become an important element of the retirement income system. Current welfare settings discourage the use of such products, as income gains are largely offset by a loss of Age Pension eligibility. Without policy change, equity release products are best suited for accessing capital for on-off expenses. This paper is not available for general distribution

Australian Centre for Financial Studies +61 3 9903 8289 | | australiancentre.com.au

Page 8

How High Can We Go? Foreign Ownership of Insurance Companies in Indonesia Written for the Indonesian Ministry of Finance, January 2017 This paper examines the key benefits of foreign ownership in Indonesia’s insurance industry to help facilitate evidencebased policy making on this issue by government and the industry. It analyses the relationship between foreign ownership and the performance of insurance firms, to determine an appropriate level of foreign investment in Indonesia’s insurance industry. This paper is not available for general distribution From Individual Ring-Fencing to Collective Guarantee: The Way Forward for Policyholder Protection in Indonesia Written for the Indonesian Ministry of Finance, January 2017 This study assesses policyholder protection practices in Indonesia within the context of global regulatory trends. It examines the key supervisory and regulatory issues arising as part of the transition from a ring-fencing mechanism to a collective fund guarantee, and the implications for the Indonesian insurance industry. This paper is not available for general distribution The Governance and Demutualisation of Mutual Insurance in Indonesia Written for the Indonesian Ministry of Finance, January 2017 This paper outlines international best practice in terms of the governance of mutual insurance companies, the key drivers of demutualisation and its implications. It examines demutualisation as a possible option for Indonesia’s only mutual insurance company, AJB Bumiputera 1912, following its poor performance in recent years. This paper is not available for general distribution Depositor Protection, Bank Liquidity Regulation and Taxation: Distortions Affecting Superannuation Written for the ANZ A number of prudential and other regulations, and specific taxes affecting banks, reduce the interest rates paid by banks on the short-term deposits of institutional superannuation funds relative to those paid to other retail investors. These have implications for retirement income balances, and affect the structure of the financial system and financial product design.

For release in 2018

Australian Centre for Financial Studies +61 3 9903 8289 | | australiancentre.com.au

Page 9

ACADEMIC PUBLICATIONS ACFS research generated numerous academic publications in 2017. These included: Journal publications (ACFS staff)   

O’Brien, Justin "The FX Global Code: Transcending Symbolism?" Law and Financial Markets Review, 2017, 113.

Davis, Kevin, Maddock, Rodney, and Foo, Martin. "Catching up with Indonesia’s Fintech Industry." Law and Financial Markets Review 11, no. 1 (2017): 33-40.

O’Brien, Justin. "A question of trust: post-truth paradigms and the challenge to financial regulation" Law and Financial Markets Review, 2017, 1-13.

Journal publications (ACFS commissioned):             

Andréasson JG, Shevchenko PV. "Assessment of Policy Changes to Means-Tested Age Pension Using the Expected Utility Model: Implication for Decisions in Retirement". Risks. 2017; 5(3): 47.

Andréasson, Shevchenko, and Novikov. "Optimal Consumption, Investment and Housing with Means-tested Public Pension in Retirement." Insurance Mathematics and Economics 75 (2017): 32-47.

Becker, Chris, Peter Rickards. "Secured Money Market Transactions: Trends in the Australian Repo Rate." JASSA, no. 1/2 (2017): 13-21.

D'hulster, Katia. "Concentration and Contagion Risks in the Australian Banking System." JASSA, no. 1/2 (2017): 45-53.

Duong, Huu Nhan, Paul Lajbcygier, and Van Hoang Vu. "The Information Content of Special Orders." PacificBasin Finance Journal 45 (2017): 68-81.

Fung, Man, Gareth Peters, and Pavel Shevchenko. "A Unified Approach to Mortality Modelling Using State-space Framework: Characterisation, Identification, Estimation and Forecasting." Annals of Actuarial Science 11, no. 2 (2017): 343-89.

George, Jordan. "The Outlook for the Self-managed Super Fund Sector." JASSA, no. 1/2 (2017): 22-30.

Hirz J, Schmock U, Shevchenko PV. "Actuarial Applications and Estimation of Extended CreditRisk+". RISKS. 2017; 5(2): 23.

Murgulov, Zoltan, Alistair Marsden, S. Ghon Rhee, and Madhu Veeraraghavan. “Venture capital-backed and commitments test entity initial public offerings on the ASX”. Accounting and Finance, 2017.

Pappas, Scott N. "The Shifting Sands of Asset Management: The Rise of Indexing and Evolution of Active." JASSA, no. 1/2 (2017): 31-37.

Pearsall, Angela, Hennessy, Liam, and Taylor, Jessica. "Regulation of Culture in Finance." JASSA, no. 1/2 (2017): 38-44.

Pham, M. C., Duong, H. N., and Lajbcygier, P. "A Comparison of the Forecasting Ability of Immediate Price Impact Models." Journal of Forecasting. 2017; 36(8): 898-918.

Ralston, Deborah, Jun Feng. "Towards a Self-funded Retirement: Will Superannuation Substitute for the Age Pension?" Australian Tax Forum 32, no. 3 (2017): 607-28.

Australian Centre for Financial Studies +61 3 9903 8289 | | australiancentre.com.au

Page 10

RESEARCH GRANTS ACFS aims to both promote the creation of knowledge by academic finance researchers and to disseminate that knowledge to industry and government. It also aims to transfer knowledge in the reverse direction, recognising that many advances in financial research have their origins in practice, and that the subject matter of academic research is ultimately the product of industry activities and practice.

The Research Grants program concluded in 2017, and has disbursed some $2.1 million in funding across 145 grants since 2005. In 2017, these contributing universities were: Monash University; RMIT Universit; University of Melbourne and the University of South Australia.

Academic Research Grant Program Successful applicants must apply their grant funds towards research that leads to at least one publication in a reputable, peer-reviewed academic journal. A final publication should be completed within an 18-month timeframe. In addition, awardees must submit a 3000-word piece outlining the results of their research to JASSA: The Finsia Journal of Applied Finance. Previous recipients of research grants have delivered presentations at a range of international conferences as well as at ACFS-organised conferences and seminars.

2017 grants: Project: Assessing the Risk and Return of Australian Superfunds Across Investment Options - Banita Bissoondoyal-Bheenic, Monash University Project: The Valuation of Speculative Position-Taking and Imputation Tax Credits within the BHP Billiton Group Dual-Listed Structure - Sean Pinder, University of Melbourne Project: Volatility connectedness between equity index sectors: Dynamics within the ASX - Ronald McIver, University of South Australia Project: Is there a deficit of consumer trust in the financial sector? If so, what concrete measure can be implemented to remedy this? - Lisa Farrell, RMIT University Project: Where does the crowd feel confident? The role of culture, politics and institutions - Abu Zafar Shahriar, Monash University Project: Stock market returns and macroeconomic activity: Australia over the long term - Rajabrata Banerjee, University of South Australia

RECENT PUBLICATIONS FROM PREVIOUS ACFS RESEARCH GRANTS Venture capital-backed and commitments test entity initial public offerings on the ASX Lead investigators: Zoltan Murgulov (Monash University), Alastair Marsden, S. Ghon Rhee and Madhu Veeraraghavan https://www.researchgate.net/publication/313493855_Venture_capitalbacked_and_commitments_test_entity_initial_public_offerings_on_the_ASX Does It Pay to Pay Attention?

Lead investigators: Antonio Gargano (Melbourne University), Alberto Rossi https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2846149

Australian Centre for Financial Studies +61 3 9903 8289 | | australiancentre.com.au

Page 11

COMMISSIONED PAPERS Each year, ACFS awards three special grants to expert academics to conduct commissioned research on topical industry issues. Academics are required to produce reports that are suitable for an industry audience, and that are published by ACFS. (The underlying research may later be turned into an academic journal publication as well.) A final publication should be completed within a six-month timeframe. There is no restriction on the use of funds by the author(s) other than those imposed by the employing university.

In 2017, ACFS published two commissioned papers: Data access and availability in funds management and superannuation Paul Lajbcygier, Monash University This paper examines data access and availability in the Australian funds management industry, in order to isolate which data deficiencies exist and how they may be rectified to drive better outcomes for Australian stakeholders. It recommends an Australian Government agency collect data on monthly portfolio holdings, and managerial compensation and characteristics for all Australian managed funds. Publishing accurate funds management data would enhance the competitive environment and improve outcomes for Australian investors by enabling them to observe the trading behaviour, performance and incentives of fund managers. https://australiancentre.com.au/publication/data-access-availability-australian-funds-management-superannuation/

Data flows for life insurance – mental illness disability data Ian Enright, Reinsurance Group of America This paper provides an overview of the collection, use, disclosure and dissemination of mental illness disability (MID) data, in relation to life insurance. In conjunction with this ‘map’ for data in the context of its function in the life cycle of a life insurance policy, the report makes recommendations to improve the quality and accessibility of MID data, including: improving the process for checking and validating MID data; widening the existing claims database to include MID data; using and disseminating a resultant ‘National MID database’ on the widest public access basis. https://australiancentre.com.au/publication/data-flows-life-insurance-mental-illness-disability-data/

In 2017, ACFS commissioned three papers for publication in 2018:   

Foreign Banks in Australia: What difference have they made? Barry Williams, Monash University Health Insurance: policy approaches towards greater competition and reform. Ronald Donato, University of South Australia Social impact investing. Sean Pinder, University of Melbourne

Australian Centre for Financial Studies +61 3 9903 8289 | australiancentre.com.au

Page 12

SUBMISSIONS Proposed Revisions to Prudential Standard APS 330 Public Disclosure (Nov 13, 2017) ACFS welcomed the opportunity to contribute to APRA’s Inquiry into proposed revisions to Prudential Standard APS 330 Public Disclosure.

Our submission offered comments and suggestions focusing primarily on the risk and capital adequacy disclosures.    

Recommendation 1: Banks should be required to provide APS 330 Public Disclosure information in a form that enables direct copying of the tabular data into a table format in spreadsheets and other software without need for further formatting.

Recommendation 2: APRA should provide on its website the historical and current disclosures of all ADIs in a form which is convenient for analysis and comparison across ADIs. Recommendation 3: The required reporting time for publication of APS330 Public Disclosures should be significantly reduced from 40 days.

Recommendation 4: The required quarterly disclosures should be the same as required for the semi-annual disclosures (and possibly also for the annual disclosures).

Submission to Enhancing Victoria’s Economic Performance and Productivity (Aug 2, 2017) In a submission to the Premier’s Jobs and Investment Panel Inquiry into Enhancing Victoria’s Economic Performance and Productivity, ACFS focused on financial services, particularly superannuation management.

We propose:  

Strengthening the intellectual base of the superannuation industry; and Freeing up various public-sector superannuation funds to undertake a wider range of activities.

This should build on Victoria’s strong set of institutions and reap the rewards available as a result of:  

The high average wages available in the sector (25% above average) The high financial-sector job growth expected in Australia (around 8000 per year).

We estimate this process should be able to capture at least another 10,000 well-paid and skilled jobs for Victoria.

Submission to the Senate Economics Legislation Committee Inquiry (June 15, 2017) In a submission to the Senate Economics Legislation Committee’s Inquiry into the Major Bank Levy Bill 2017 and the Treasury Laws Amendment (Major Bank Levy) Bill 2017, we shared short papers that members of ACFS published after the bank levy was announced.

Designing Capital Instruments for Mutual ADIs (May 17, 2017) In an FPB written as a submission for the Hammond Review into Reforms for cooperatives, mutuals and member-owned firms, Professor Kevin Davis advocated allowing mutual ADIs to issue preference shares to members (and others) to raise external regulatory capital. He also argued that “bail-in” requirements for such securities to meet regulatory capital requirements need to be reconsidered, both in terms of their rationale and, if maintained, their design.

Australian Centre for Financial Studies +61 3 9903 8289 | australiancentre.com.au

Page 13

FINANCIAL POLICY BRIEFS The ACFS Financial Policy Brief series, lead authored by Professor Kevin Davis, provides independent analysis and commentary on current issues in financial regulation, with the objective of promoting constructive dialogue among academics, industry practitioners, policymakers and regulators and contributing to excellence in Australian financial system regulation. A sample of briefs follow and a full list can be seen on the ACFS website under publications https://australiancentre.com.au/publication Replacing Stamp Duties (Nov 1, 2017) Professor Davis provides a simple solution for state governments to transition away from reliance on stamp duties towards property taxes – as advocated by the Productivity Commission. It involves abolishing stamp duty and applying property taxes only to those properties on which the last sale did not incur stamp duty, which avoids “double taxation” of home owners. Securitising future property tax receipts enables the government to avoid the adverse cash flow effect of loss of stamp duty revenue. The securities so created are long term, suitable for superannuation funds and the design of retirement income products, and could (depending on design) provide indirect exposure to the asset class of residential property – facilitating enhanced diversification of investment portfolios. https://australiancentre.com.au/publication/property-tax-transition/ MySuper Dashboards: Not So Super! (Aug 28, 2017) This brief examines the target return and risk level information provided on the required “dashboards” of MySuper providers. It is startling that, across providers, there is no positive relationship between target return and projected risk level as basic finance theory would predict. There are a number of possible explanations for such an outcome, although they do not give comfort that the dashboard information provided is reliable. APRA, if it is not already doing so, should be investigating the apparent anomalies across MySuper providers in their target return and projected risk figures. https://australiancentre.com.au/publication/mysuper-dashboards-not-super/ Banker Remuneration and Accountability (Aug 8, 2017) Professor Davis examines the commentary about who should bear responsibility in the CBA anti-money laundering compliance issue, and the introduction of the Bank Executive Accountability Regime. In this context, it is worth considering what we know about banker remuneration. The answer: not much despite very large remuneration disclosures in annual reports. https://australiancentre.com.au/publication/banker-remuneration-accountability/ Reforming the Fair Entitlements Guarantee (FEG) Scheme (May 25, 2017) Professor Davis submitted this policy brief to Treasury and the Department of Employment’s consultation on Reforms to address corporate misuse of the FEG scheme. The deficiencies of the scheme and its predecessors have been apparent since its inception, and changes proposed to improve the operation of the scheme, as proposed by the current consultation, are warranted. But by focusing only on employee entitlements they miss a bigger, more general problem (of which non-payment of employee entitlements is a subset), and alternative solutions. https://australiancentre.com.au/publication/reforming-fair-entitlements-guarantee-feg-scheme/ Bank Disclosures Could Be Better (March 7, 2017) Professor Davis and Andrew Zhang examine the likely efficacy of the Basel 3 disclosures which are required of Australian banks. They argue that while compliance is observed, the presentation of disclosures is not likely to be helpful in achieving the objectives which the Basel Committee (and APRA) had in introducing disclosure requirements. Some simple, low cost, changes to the disclosure practices are recommended. https://australiancentre.com.au/publication/bank-disclosures-better/

Australian Centre for Financial Studies +61 3 9903 8289 | australiancentre.com.au

Page 14

INDUSTRY ENGAGEMENT ACFS conducts numerous events each year for practitioners and academics. In 2017 we conducted 26 events across our major areas of banking, funds management and superannuation, and insurance.

Events are targeted to various markets, industry specialties and sectors and are intended to be unique. We aim to provide access to local and international keynote speakers who rarely form part of the “speaker circuit” and would be of interest to both industry and academics.

ACFS events aim to promote and encourage knowledge transfer and sharing of ideas and innovations to best practice principles, stimulate debate, provide an independent voice across the financial services industry, and develop opportunities for academic research.

Our events cover a range of types, including international lectures, conferences; roundtables; boardroom briefings; industry lunches; finance forums; panel discussions; workshops; and academic seminars. Since inception in 2005, ACFS has conducted 296 events for the finance community.

Melbourne Money and Finance Conference The Melbourne Money & Finance Conference (MMFC), first held in 1987, has provided a forum for Australia’s foremost financial experts to discuss the key issues facing the financial services industry.

Through the open exchange of views and opinions from delegates of various backgrounds, MMFC has been successful in anticipating key developments in the Australian and global financial services sector, affecting public policy and academic research in the industry. Papers presented at past conferences have been published in books and academic journals individually or together as a special conference edition. Annually, JASSA, Finsia’s quarterly Journal of Applied Finance, publishes an issue devoted to papers from MMFC. The theme of the conference is selected annually and aligned with current issues. In 2017, the event was sponsored by the RBA and APRA, and the theme was “Evolutionary Trends in the Australian Financial Sector”. Professor Ian Harper, Chair of the Competition Policy Review, provided the keynote speech.

More than 75 invited delegates freely discussed and express their views. Papers presented:             

Banking Regulation: Has Complexity Worked? (Professor Kevin Davis, ACFS) Concentration and Contagion Risks in the Australian Banking System (Katia D’Hulster, World Bank) Offshore Funding and Investment: Balance of Payments Implications of Growth of Superannuation (Professor Rod Maddock, ACFS) Barriers to Trade and Integration in Asia and RCEP Countries (Alex Erskine, Erskinomic Consulting) Regulation of Culture in Finance (Angela Pearsall and Liam Hennessy (Clifton Chance) The Global FX Code: Transcending Symbolism (Professor Justin O’Brien, Monash University) The Shifting Sands of Asset Management: The Rise of Indexing and Evolution of Active (Aidan Geysen, Vanguard Investments Australia) Outlook for the SMSF Sector (Jordan George, SMSF Association) Insurance – Challenges to the Business Model (Mike Thomas, Deloitte Access Economics) Outlook for the Australian Securitisation Market (Chris Dalton, Australian Securitisation Forum) Current Trends in Australian Capital Markets (Steve Lambert, National Australia Bank) Secured Money Market Transactions: Trends in the Australian Repo Rate (Chris Becker, Peter Rickards, RBA) Reflections on Competition in Australian Financial Markets (Professor Ian Harper, Deloitte Access Economics – Dinner Speaker)

Australian Centre for Financial Studies +61 3 9903 8289 | australiancentre.com.au

Page 15

2017 Events and Conferences: a sample 1 December 2017 – Indonesian Fintech Delegation Briefing – The Impact of Fintech on the Banking Industry ACFS Speakers: Professor Deep Kapur, Professor Kevin Davis, Professor Edward Buckingham Event Partners: AIPEG, Victorian Government, ACFS Location: Monash University Law Chambers, Melbourne 23 November 2017 – ANZ Senior Management Briefing – Future of Finance (Part 2) Speakers: Professor Edward Buckingham, (ACFS) and Dr John Vaz, (Monash University) Location: ANZ Melbourne 15 November 2017 – Roundtable – Indonesian Ambassador on Financial Services (His Excellency Kris Legowo) ACFS Speakers: Professor Deep Kapur, Professor Edward Buckingham and Professor Kevin Davis Event Partner: Department of Premier and Cabinet Venue: ACFS Melbourne 23 October 2017 – Melbourne Mercer Global Pension Index Launch Speakers: The Hon Ben Carroll MP (State Government of Victoria), Diane Maxwell (New Zealand Commission for Financial Capability), and Dr David Knox (Mercer) Project Partners: ACFS, Mercer and the Victorian Government Venue: Invest Victoria Melbourne 20 September 2017 – Alternative Finance Benchmarking Report Launch Speakers: Ian Pollari (KPMG), Professor Edward Buckingham (ACFS), Panel – Lachlan Heussler (SpotCap), Anthony Nantes (Direct Money) and Jonny Wilkinson (Equitise) Project Partners: Cambridge Centre for Alternative Finance, University of Cambridge, Tsinghua University, Monash University In Collaboration with: KPMG, CME Group Foundation and HNA Capital Venue Partner: KPMG Sydney 4 July 2017 – Lunch Briefing – Fostering Sustainable Growth: The Role of Monetary Policy in a Post Recovery World Speaker: Dr John C Williams, President and Chief Executive Officer, Federal Reserve Bank, San Francisco Event Partner: Economic Society of Victoria Venue Partner: Future Fund, Melbourne 10 April, 2017 - Roundtable – US Economy and Monetary Policy Speaker: James “Jim” Bullard, (Federal Reserve, St Louis) Event Partner: Economic Society of Victoria Venue: ACFS Melbourne 10 April, 2017 – International Distinguished Lecture – US Economy and Monetary Policy Speaker: James “Jim” Bullard, President and CEO (Federal Reserve, St Louis) Event Partner: Economic Society of Victoria Venue: RACV Club Melbourne 24 February 2017 – Roundtable –– Regional Strategy (The Hon Tim Watts MP) ACFS Speaker: Professor Rodney Maddock Location: Melbourne 8 February 2017 – Boardroom Briefing –– Current Economic Outlook for USA Speaker: Dr Chris Waller (Federal Reserve, St Louis) Event Partner: Monash University Venue: ACFS Melbourne Australian Centre for Financial Studies +61 3 9903 8289 | australiancentre.com.au

Page 16

INDUSTRY IMPACT AND MEDIA EXPOSURE ACFS aims to inform public policy, community debate and industry practice through its research, commentary and events.

As well as producing and commissioning original research, it works to diffuse this research into the public sphere to improve understanding and analysis of issues affecting the Australian financial system.

In 2017, it produced:    

20 opinion pieces 10 radio and TV appearances 25 presentations at industry or policy conferences Five submissions to public inquiries

Additionally, ACFS research was widely reported – featuring in over 950 media articles across 55 countries. This includes coverage in major international financial publications such as the Financial Times, through to major domestic news sources such as news.com.au. The ACFS websites remain a key resource for insight into the Australian financial system, receiving over 160,000 page views in 2017.

As well as receiving broad media coverage, ACFS research was used by leading voices in the finance sector, including Federal Treasurer Scott Morrison, the RBA, the Victorian Department of Treasury and Finance, the Indonesian Ministry for Finance, and the Productivity Commission.

Media opinion articles 

Culture Easy, But Wrong, Culprit in Banking Royal Commission (December 7, 2017) – Professor Rodney Maddock (The Australian Financial Review)



Balancing Incentive and the Customer’s Best Interests (December 3, 2017) – Professor Deborah Ralston (The Australian Financial Review)



Broad Mandate for Financial Services Royal Commission takes the Heat Off Banks (December 1, 2017) – Professor Kevin Davis (The Conversation)



In Payments, Fraud Never Changes (October 13, 2017) – Professor Steve Worthington (ANZ BlueNotes)



Fintech in Indonesia (September 6, 2017) – Professor Edward Buckingham (The Australian Indonesia Centre)



Out with the Political Staffers: CBA’s Government and Corporate Affairs Fail (August 31, 2017) – Professor Rodney Maddock (The Australian Financial Review)



How Commonwealth Bank Confused Co-Operation with Complacency (August 9, 2017) – Professor Rodney Maddock (The Australian Financial Review)



Computer Says No: Robo-Advice is growing but we still Don’t Trust it (August 4, 2017) – Andreas Duenser, Dr Andrew Reeson (The Conversation)



Bank Industry Reputation Tarnished by CBA Failures over Money Laundering (August 4, 2017) – Professor Kevin Davis (The Australian Financial Review)



APRA’s Unquestionably Average Bank Capital Information Paper (July 19, 2017) – Professor Rodney Maddock, Stephen King (The Australian Financial Review)



Alibaba, Fintech & Techfin (July 21, 2017) – Professor Steve Worthington (ANZ BlueNotes)



If Only We Could See All the Credit Card Fees We Pay (June 30, 2017) – Stephen King (The Conversation)



The ATM Celebrates 50 (June 27, 2017) – Professor Steve Worthington (The Conversation)

Australian Centre for Financial Studies +61 3 9903 8289 | australiancentre.com.au

Page 17



A Better Alternative to Levying the Bank Tax (June 14, 2017) – Professor Kevin Davis (The Conversation)



Replace Bank Tax with GST (June 6, 2017) – Professor Kevin Davis (RFi Group)



A Cashless Utopia? Dream On! (June 2, 2017) – Professor Steve Worthington (ANZ BlueNotes)



Even Our Second-Tier Banks Are Too Big to Fail, Government Would Bail Them Out (May 25, 2017) – Professor Rodney Maddock (The Australian Financial Review)



FactCheck: Do Australian Banks Have Double the Return on Equity of Banks in Other Developed Economies (May 18, 2017) – Professor Rodney Maddock (The Conversation)



Budget 2017: The Economic Case for The Bank Levy (May 14, 2017) – Professor Kevin Davis (The Australian Financial Review)



Budget 2017: Meet APRA, The New Co-Manager of Your Bank (May 10, 2017) – Professor Rodney Maddock (The Australian Financial Review)



Budget Bank Levy: Too Big to Fail, Not Too Big to Take a Hit (May 10, 2017) – Professor Kevin Davis (The Conversation)



Trump, Brexit Clouding Australia’s Trade Deal Focus (April 27, 2017) – Professor Rodney Maddock (ABC)



Here’s How Superannuation is Already Financing Homes (April 13, 2017) – Professor James Giesecke, Jasson Nassios (The Conversation)



Stagnation Nation? Australian Investment in Low-Growth World (April 11, 2017) – Professor Rodney Maddock (Grattan Institute Melbourne)



Three Charts on Mortgage Stress: It isn’t as bad as you might think (April 10, 2017) Professor Rodney Maddock (The Conversation)



Apply Pay may have won the battle but it may not win the way (April 4, 2017) – Professor Steve Worthington (The Conversation)



APRA’s Wayne Byers Makes Wise Move on Lending but at a Cost to the Bank Sector (March 31, 2017) – Professor Rodney Maddock (The Australian Financial Review)



Most Retirees Should take on more Risk, Study Finds (March 27, 2017) – Professor Rodney Maddock (Investment Magazine)



Banks Must Lift Quality of Capital Reporting: FSI Member (March 6, 2017) – Professor Kevin Davis, (The Australian Financial Review)



Despite Superannuation Changes, One Tax Loophole Remains (March 1, 2017) – Professor Kevin Davis (The Conversation)



Superannuation Needs Greater Outcomes Focus (February 2, 2017) – Jeremy Duffield (Cuffelinks)



Should Pensioners Leave Assets to Kids? (January 29, 2017) – Professor Kevin Davis, (4BC 1116 News Talk)



Masterclass: Is there a Bubble in Australian House Prices? (January 13, 2017) – Dr Sam Wylie, (Soundcloud)



Fintech Offers Indonesia’s ‘unbanked’ a Lifeline; but Regulators Struggle to Stay Ahead, Professor Rodney Maddock, Impact, 31/05/2017

Australian Centre for Financial Studies +61 3 9903 8289 | australiancentre.com.au

Page 18

Media Mentions ACFS research received hundreds of media mentions around the world in 2017. Findings of the Melbourne Mercer Global Pension Index were a particular focus of local and foreign media attention. The following is a small sample of how our work was brought to a wide global audience throughout the year. 

Yes, Same-sex marriage will deliver economic benefits – The Sydney Morning Herald, 9/12/2017



The banking royal commission Rorschach test: where everyone sees what they want – Financial Review, 6/12/2017



The addiction ruining seniors’ retirement finances – Over Sixty, 4/12/2017



Det skal bedre kunne betale sig at spare op til sin pension (It’s better to pay off to retire) – Berlingske (Denmark), MMGPI 23/11/2017



Mercer-Analyse zur Performance der Pensionskassen: Auf die Mischung kommt es an - Professionelle Veranlagung sorgt für minimierte Risiken und höhere Erträge (Mercer analysis on the performance of pension funds: It all depends on the mix – Professional Investment ensures minimised risks and higher returns) – Tafesbote (Austria), MMGPI 22/11/2017



Saving For Your Future: Should You Max Out Your CPF Voluntary Contributions Every Year? - Dollars and Sense (Singapore), MMGPI 16/11/17



ПЕНСИОННЫЕ ФОНДЫ И ИНФРАСТРУКТУРНЫЕ ИНВЕСТИЦИИ ЗА РУБЕЖОМ (Pension Funds and Infrastructure Investments Abroad) - Investinfra (Russia), MMGPI 16/11/17



World looks to Australia for pension policy – Financial Times (Hong Kong), MMGPI 13/11/2017



The State of the Nation: Filling the gaps in Malaysia’s pensions framework – The Edge Markets (Malaysia), MMGPI 13/11/2017



Eenderde Nederlanders ontevreden over pensioenfonds (A third Dutch dissatisfied pension) – WP Online (Netherlands), MMGPI 12/11/2017



Australia’s A$2.3tn pension pot is the envy of the world – Financial Times (United Kingdom), MMGPI 12/11/2017



Este país tenta reformar a Previdência desde 1995 – Praitec – Solucoes Contabeis (This country tries to reform the pension since 1995 – Praitec – Accounting Solutions) (Brazil), MMGPI 11/11/2017



Har Norge verdens beste pensjonssystem? – Det er din Pensjon (Norway has the world’s best pension system? – It’s your pension) (Norway), MMGPI 8/11/2017



Retirement security: How does India stack up? – BBC Iindia (India), MMGPI 8/11/2017



Classement annuel, 9e édition Mercer 2017 des systèmes de retraite dans le monde – Le Soir d’Alferie (Annual Ranking, 9th edition 2017 Mercer Pension systems in the world) (Algeria), MMGPI 7/11/2017



墨尔本美世全球指数．大马养老金只拿C (Melbourne Mercer Global Index. Malaysia pension plan and only C) – (Malaysia), MMGPI 5/11/2017



Pensioni, l’Eldorado è la Danimarca (Guesthouses, Eldorado is Denmark) – MSN Italia (Italy), MMGPI 3/11/2017



Indeks Sistem Pensiun Mercer (Index System pension) – InfoBank News (Indonesia), MMGPI 2/11/2017



Could land tax 'Bowie bonds' be a nifty fix for stamp duty? - The Age, 01/11/2017



How the gig economy could cost retirement - Investment News for financial advisors in New Zealand (New Zealand), MMGPI 29/10/2017



Mercer Warns South Africa's Pension Models Are At Risk – Africa Biz (South Africa), MMGPI 29/10/2017



Il sistema svizzero di previdenza perde (ancora) terreno (The Swiss social security system loses (still) ground) – Ticinoline (Switzerland), MMGPI 24/10/2017



St. Louis Fed's Bullard Discusses the U.S. Macroeconomic Outlook - Targeted News Service, 09/04/2017

Australian Centre for Financial Studies +61 3 9903 8289 | australiancentre.com.au

Page 19

BOARD AND COMMITTEES The ACFS thanks its Advisory Board, Research Program Committees, Affiliates, Project Committees and staff (past and present) for their ongoing commitment, engagement and support throughout 2017.

Advisory Board In 2017 the Advisory Board members consisted of a broad spectrum of expertise across the financial services industry.

We take this opportunity to thank all members of the Advisory Board both present and those that stepped down during 2017, namely: Robin Bowerman (Vanguard), Professor Edward Buckingham (ACFS), Guy Debelle (RBA), Professor Tim Fry (RMIT), Tom Garcia (AIST), Meghan Quinn (The Treasury), and Professor Rodney Maddock (ACFS) that have advocated, provided guidance, leadership and contributed to the overall success of the Centre during the past year.

Members: Maria Wilton (Chair) Franklin Templeton Investments Australia Limited, Jeremy Duffield (Deputy Chair) SuperEd, Mark Adam ASIC, John Bailey Victorian Government, Marnie Baker Bendigo & Adelaide Bank, Syd Bone CP2, Professor Christine Brown Monash University, Diane Brown The Commonwealth Treasury, Jeff Brunton AMP Capital, Annabelle Butler Suncorp Group, David Cox, Economist , Tim Coyne EY, Joan Fitzpatrick Emergency Services and State Super, Nicole Gamerov MyCareSpace, Julie Greenall-Ota Commonwealth Treasury, Fiona Guthrie Financial Counselling Australia, Professor Deep Kapur ACFS, Christopher Kent Reserve Bank of Australia, Dr David Knox Mercer and Senior Actuary for Australia, Steve Lambert National Australia Bank, David Link Verrency, Professor Rodney Maddock Monash University, Zachary May Industry Super Australia, Professor Imad Moosa RMIT University, Daniel Mulino Victorian Government (Observer), Paul Murphy Vanguard Investments Australia, Victor Perton Victor Perton Global Partners, Eva Scheerlinck Australian Institute of Superannuation Trustees and Chris Whitehead Finsia.

Research Committees The ACFS Research Committees provide a regular forum for key researchers, regulators and practitioners to discuss major issues facing Australian financial services.

The forums provide ideas and a different perspective for all parties in thinking about Australian financial services. Another important objective of the Research Committees is to provide a non-partisan space in which representatives of government organisations can voice thoughts and opinions and benefit from the expert insights of the group.

Common elements of each group’s considerations will be aspects of: Regulation – impact and effectiveness, cost and benefit trade-off, efficiency vs equity considerations; Governance – organisation / industry structure, whether efficiency contributes to improved governance outcomes; and Innovation – in financial products / markets / successful implementation of innovative instruments / techniques.

Each group comprises senior academics, regulators and industry experts who meet three times a year to review and evaluate issues for further discussion and research.

The responsibilities of the Committee are to:   

Develop a research agenda for finance academics and postgraduate/honours research students.

Provide feedback on research ideas and outputs generated by, or affiliated with, ACFS. This includes jointly overseeing the development of one Commissioned Paper per year.

Contribute to the research agenda, with individual contributions including commentary, feedback or other forms of communication.

Australian Centre for Financial Studies +61 3 9903 8289 | australiancentre.com.au

Page 20

The Banking and Capital Markets research program covers research related to Australian banks, credit unions, building societies, capital markets, and associated financial intermediaries, and is chaired by Professor Kevin Davis, Research Director of ACFS. Members: Professor Kevin Davis, Australian Centre for Financial Studies (Chair), Molly Choucair, ACCC, Dr Silvio Contessi, Monash University, Andrew Cornell, ANZ Banking Group, Steven Cunico, Deloitte, Chris Dalton, Australian Securitisation Forum, Matthew Davison, Martin Currie Australia, Tim Dring, EY, Sarah Edmondson, ASIC, Ross Edwards, National Australia Bank, Roxane Foulser-Piggot, Suncorp, Robert Gallimore, Australian Securitisation Forum, Gavin Gunning, Standard & Poor's Financial Services, Brendon Harper, APRA, Professor Deep Kapur, Australian Centre for Financial Studies, Yianni Katiforis, Australian Centre for Financial Studies, Professor Rodney Maddock, Monash University, Professor Nadia Massoud, Melbourne Business School, Dr Daniel Melser, Monash University, Dr My Nguyen, RMIT University, David Norman, Reserve Bank of Australia, Louise O’Brien, Bank Australia, Stewart Oldfield, Field Research, Jeff Oughton, FIMA, Tony Pearson, Australian Bankers’ Association, Alex Sell, ExSell Group, Professor Michael Skully, Monash University, Stuart Stoyan, MoneyPlace, Dianne Thomson, Deakin University, Maria Trinci, KPMG, Craig Williams, Citi Investment Research, and Matthew Wilson, JCP Investment Partners.

During 2017 we saw Gordon Allison (NAB), Richard Home (ACCC), Martin Foo (Standard & Poor’s Financial Services), Adam Vise (ANZ Banking Group) step down from the committee. We thank them for their involvement, commitment and support during their tenure.

In 2017, the following presentations were delivered to the Committee: Presenter: Professor Alistair Milne, Loughbrough University UK - Issue: is a disruptive revolution in bank payments imminent? Professor Milne shared his research, contending that the extent, to which the “Fintech” Revolution’s outcomes would result in a transformation of banking to the benefit of customers, depended critically on the appropriate use of competition law and policy, in particular the regulation of access to banking platforms.

Presenter: Ian Hendey, Property Exchange Australia (PEXA) - How PEXA operates, and implications for the conveyancing & settlement process, as well as for the financial sector more generally. Mr Hendey outlined PEXA’s intention to deliver a single, national e-Conveyancing solution to the Australian property industry. The benefits of assisting lawyers, conveyancers and financial institutions with the completion of financial settlements electronically and online include time and cost efficiency and the transparent provision of more accurate data, which results in a reduced number of failed land transactions.

Presenter: Professor Kevin Davis, University of Melbourne, ACFS and Monash University - The Murray Inquiry Innovation/Technology Recommendations – Current Status Professor Davis presented an update on the current status of the Innovation/Technology Recommendations resulting from David Murray’s Financial System Inquiry, which concluded in 2014. In this update, he discussed the progress made by regulatory bodies in removing impediments and enhancing flexibility, through the support of data-driven business models and government-business cooperation.

The Funds Management and Superannuation research program covers research related to superannuation/pensions, venture capital, managed funds, private equity and charitable trusts and is chaired by Syd Bone, Executive Director of CP2.

Members: Syd Bone, CP2 Limited (Chair), Dulce Asensi, ASIC, Alistair Barker, AustralianSuper, Professor Ron Bird, University of Technology Sydney, Ross Clare, ASFA, Benedict Davies, UniSuper, Professor Kevin Davis, Australian Centre for Financial Studies, Michael Davison, CPA Australia, Professor Michael Dempsey, RMIT, John Donovan, AFM Investment Partners, Michelle Dowdell, Treasury, Sam Ferraro, Evidente, Dr Vince FitzGerald AO, ACIL ALLEN Consulting, David Haynes, Australian Institute of Superannuation Trustees, Ross Higgins, Austock Group Limited, Hugh Hodges, Harper Bernays Limited, Carla Hoorweg, Financial Services Council, Professor Deep Kapur, Australian Centre for Financial Studies, Craig Keary, AMP Capital, David Knox, Mercer (Australia) Pty Ltd, A/Professor Paul Lajbcygier, Monash University, Eliana Maddock, Australian Centre for Financial Studies, Paul Murphy, Vanguard, Dina Phillips, APRA, Stephanie Rickard, APRA, Chris Rylands, William Buck, Dennis Sams, Independent, Dr Chander Shekhar, The University of Melbourne, Dr Zhen Shi, Melbourne University, Alun Stevens, Rice Warner, and Maria Wilton, Franklin Templeton Investments.

Australian Centre for Financial Studies +61 3 9903 8289 | australiancentre.com.au

Page 21

During 2017 we saw Rachel Blackwood (Treasury), Robin Bowerman (Vanguard Investments Australia) and Graeme Miller (Telstra Super) step down from the committee. We thank them for their involvement, commitment and support during that time.

In 2017, the group heard the following research presentations: Presenter: Deborah Ralston, Monash University - CSIRO-Monash Superannuation Research Cluster. Professor Ralston provided an overview of the Superannuation Cluster’s final round of publications, as well as ongoing research partnerships which build on the work of the Cluster.

Presenter: Jimmy Feng, Monash University - Designing Comprehensive Income Products for Retirement (CIPR) - A Fund Members’ Perspective. Dr Feng presented an experiment that superannuation funds could use to understand how their members value the different features of a retirement income product, including income, flexibility, risk-protection and healthcare.

Presenter: Dinh Tang, Monash University - The role of high-frequency traders during mini flash crashes. Mr Tang shared his research, exploring high frequency traders actions during mini flash crashes, and noted that while they are often thought of as market makers, the majority instead act as market takers.

Presenter: Alex Lee, Monash University. - HFTs Trading Behaviour: An analysis on ASX200 Index Rebalance events. Mr Lee shared research testing whether high frequency traders supply liquidity and improve market efficiency in the context of ASX200 index rebalancing events.

Presenter: Jody Fitzgerald, Australian Unity - Reimagining the retirement system. Ms Fitzgerald discussed the challenge in providing products for retirees which manage the interaction between their various income sources, to create sustainable solutions for an individual to fund the expenditure side of the equation.

The Insurance research program covers research related to general insurance, life insurance, reinsurance, disaster risk management and the actuarial profession in Australia and is chaired by Annabelle Butler of Suncorp Group.

Members: Annabelle Butler, Suncorp Group (Chair), John Anning, Insurance Council of Australia, Justin Breheny, Nuchev Group, Emma Curtis, ASIC, Professor Kevin Davis, Australian Centre for Financial Studies, John Della Bosca, Every Australian Counts, Kate Elix, ANZIIF, Ian Enright, Reinsurance Group of America, Elayne Grace, Actuaries Institute, Carl Greenhalgh, LMI Group, Jurgen Hoffman, APRA, Dr Joachim Inkmann, The University of Melbourne, Professor Deep Kapur, Australian Centre for Financial Studies, Yianni Katiforis, Australian Centre for Financial Studies, Larry Li, RMIT University, Alan Mason, Professional Financial Solutions, Denis Nelthorpe, Footscray Community Legal Centre, Caitlin O’Dea, BUPA, Colin O’Hare, Monash University, Dr Bob Officer AM, Acorn Capital, Clim Pacheco, Business Transformation Solutions, Frank Peppard, Insurance Box, Dr Paul Raschky, Monash University, Michael Rumsewicz, Bushfire and Natural Hazards CRC, Dr Richard Tooth, Sapere Research Group, Chris Wallace, Australian Reinsurance Pool Corporation, and Celeste Young, Victoria University.

During 2017 we saw Dr Farzad Alavi Fard (RMIT University) and Meg Brideson (ANZIIF) step down from the committee.

We thank them for their involvement, commitment and support during that time.

In 2017, the following presentations were delivered to the Research Committee: Presenter: Ian Enright – Reinsurance Group of America – Data Flows for Life Insurance – Mental Illness Disability Data Research Paper . Mr Enright presented research on the topic of Data Issues in Insurance, providing an overview of the currently available primary data sources and highlighting deficiencies in this area, with reference to examples in comparable countries. Consideration was also given to issues associated with enabling the provision of private, commercially valuable data for research.

Presenter: Mike Thomas, Deloitte Access Economics – Insurance – Challenges to the Business Model. Mr Thomas discussed the potential for upcoming change to the ‘traditional’ insurance business model, courtesy of increasingly prevalent technological influence, particularly with regards to the nature of risk and its pricing, but also through the onset of increased competition at separate parts of the insurance value chain.

Australian Centre for Financial Studies +61 3 9903 8289 | australiancentre.com.au

Page 22

Presenter: Elayne Grave, Actuaries Institute – Mental Health and Insurance. Ms Grace drew attention to the Actuaries Institute’s Green Paper ‘Mental Health and Insurance’. The publication outlined difficulties faced by insurers attempting to balance the competing objectives of maintaining an affordable and sustainable product, while meeting the expectations of the community in relation mental health conditions.

THE PEOPLE BEHIND ACFS Deep Kapur (Director) Deep Kapur is a Professor of Practice at Monash Business School and Director of the Australian Centre for Financial Studies. Before assuming these positions in November 2017, he worked in the investment industry for 28 years in institutional portfolio management, principal investing, research, advisory and business administration. He has held Managing Director positions with Salomon Smith Barney, Citigroup Global Markets, Daiwa Capital Markets and with the event-driven hedge fund group Symphony Financial Partners.

Professor Kevin Davis (Research Director) is Professor of Finance at the University of Melbourne, Research Director at ACFS and a Professor of Finance at Monash University. His primary research interests are financial regulation, financial institutions and markets, financial innovation and corporate finance. He is co-author/editor of 16 books in the areas of finance, banking, monetary economics and macroeconomics and has published numerous journal articles and chapters in books. He is the Deputy Chair of SIRCA, a member of the Australian Competition Tribunal, and has undertaken an extensive range of consulting assignments for financial institutions, business and government. In 2014, he was a member of the David Murray-led Financial System Inquiry.

Professor Rodney Maddock, Rod is a Professor at Monash University and Vice-Chancellor’s Fellow at Victoria University.

In the decade to 2012 he was a senior executive at the Commonwealth Bank of Australia. Earlier roles included Chief Economist for the Business Council of Australia and Head of Economic Policy in the Victorian Cabinet Office. He was also a Professor and Head of the School of Business at La Trobe University.

He has a distinguished academic record with extensive academic publications and experience working in a number of countries. His main books include Rational Expectations, The Australian Economy in the Long Run, and Unlocking the Infrastructure. His ongoing research is in the areas of finance and Australian economic development.

Australian Centre for Financial Studies +61 3 9903 8289 | australiancentre.com.au

Page 23

Frieda Kukulka is the Senior Manager, Marketing and Events and joined ACFS in October 2009.

With extensive experience across the financial services industry in areas of banking, operational administration, marketing, communications, event management, sponsorship / industry engagement, project and membership management, Frieda brings extensive industry knowledge and organisational management skills to the Centre. Frieda previously held managerial positions within ANZ Banking Group Limited, AIBF/Finsia, MDS Financial Group Limited and the Australian Bullion Company.

Eliana Maddock is a Senior Research Officer and joined ACFS in November 2014. Prior to joining ACFS, Eliana held research positions with Monash University and the Victorian Competition and Efficiency Commission. She has produced research reports on a range of economic and public policy issues including energy, competition, education and inequality. Eliana holds a double degree in Science and Arts from the University of Melbourne and has completed postgraduate studies in economics at Harvard University.

Yianni Katiforis is a Research Support Officer and joined the ACFS in March 2016. Prior to this role he worked as a Client Support Officer at several financial institutions in Melbourne, and as a private tutor for over five years. Yianni has a Bachelor of Biomedicine from University of Melbourne, and is currently completing a Graduate Diploma in Science with a major in Applied Mathematics.

Ioanna Zografou is the Executive Assistant to the Director. Ioanna joined ACFS in April 2016 and provides daily administration assistance. She worked for the last ten years in the engineering and consultancy industry as well as at financial institutions in the areas of banking, administration, project coordination and human resources.

Ioanna holds a Bachelor of Tourist and Hotel Administration from the University of Crete, Greece and a Master of Public Relations and Management from the University of Athens.

Australian Centre for Financial Studies +61 3 9903 8289 | australiancentre.com.au

Page 24