The Treasurer announced on 30 May 1996 the establishment of an Inquiry into the Australian financial system, to report to him by 31 March 1997.
The Inquiry was directed to provide a stocktake of the results arising from the financial deregulation of the Australian financial system since the early 1980s. The forces driving further change were analysed, in particular, technological development. The Inquiry made recommendations on the nature of the regulatory arrangements that will best ensure an efficient, responsive, competitive and flexible financial system to underpin stronger economic performance, consistent with financial stability, prudence, integrity and fairness.
The Inquiry was chaired by Australian businessman, Mr Stan Wallis and was supported by a full time secretariat. The Secretary was Mr Greg Smith who was seconded from the Treasury.
The Financial System Inquiry Discussion Paper was released in November 1996.
Approach of the Committee
The Committee has adopted several lines of inquiry in its approach to the Terms of Reference. Shortly after its establishment, the Inquiry invited submissions from the public. A total of 268 submissions were received. Analysis of these submissions by the Inquiry is continuing and they have provided valuable input for this paper.
The Inquiry has also held discussions with a number of financial system participants, both in Australia and overseas. Insights from a range of these discussions are included throughout this document.
This Discussion Paper has been prepared from the above sources with the assistance of the Inquiry Secretariat.
The purpose of the Discussion Paper
The purpose of the Discussion Paper is to set out the main issues which have been identified by the Inquiry, as a basis for:
- facilitating further discussions where required with those who have made submissions to the Inquiry (or others) - this will include open meetings in the five mainland capitals in early to mid-December; and
- an invitation to those who may wish to provide a further submission - further submissions must be received by the Inquiry Secretariat no later than 5 pm on Monday, 13 January 1997.
The Discussion Paper does not cover all of the issues raised by the Inquiry’s Terms of Reference. It is mainly directed at Paragraph 3 - that is, the task of making recommendations on ‘the regulatory arrangements and other matters affecting the operation of the financial system’.
Included within this task is a review of certain Commonwealth legislation affecting the financial sector under the requirements of the Competition Principles Agreement (see Appendix B).
The paper does not provide any substantive review of ‘financial deregulation’ (Terms of Reference Paragraph 1) and provides only preliminary observations on ‘the factors likely to drive further change’ (Paragraph 2). Substantive findings on each of these matters will be presented in the Final Report.
The work of the Inquiry to date has benefited greatly from submissions the Inquiry has received and from the help and goodwill offered by a great many individuals and organisations. The Inquiry wishes to record its gratitude for this positive and timely assistance.
The Inquiry has not sought to present its own views on the issues raised in the Discussion Paper. The Inquiry’s recommendations will be included only in the Final Report.
This publication and consultation forms part of the 1997 Financial System Inquiry ('The Wallis Inquiry').
This publication also provides background information relevant to the 2014 Financial System Inquiry ('The Murray Inquiry').