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Overview
Australia has a highly developed and competitive financial system, in which foreign firms compete on equal terms with domestic rivals. Value added in the financial sector accounted for 8.7% of GDP in 2018, making it the economy's largest industry, ahead of mining (7.8%) and construction (7.6%) according to the Australian Bureau of Statistics (ABS). Finance employed 3.5% of the labour force in 2018, down from the record-high 3.8% registered in 2015.
A group of "Big Four" banks continue to dominate lending and deposit taking. There are many smaller banks, both foreign and locally owned, but they have limited reach.
The banking majors came under close scrutiny from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. Its final report, released in February 2019, came down heavily on all four banks for governance lapses in a fee-for-no-services scandal, and it singled out National Australia Bank (NAB) for failing to learn from past instances of misconduct. This resulted in the resignation of both the chairman and chief executive of NAB-Dr Ken Henry and Andrew Thorburn. However, the report did not recommend breaking up the Big Four or other far-reaching structural reforms of the industry. Legislative action on the report's recommendations will probably be delayed until after elections that are likely to be held in May 2019.
In recent years several of the main banks have made notable disposals in domestic life insurance and fund management, with tighter capital requirements obliging banks to slim down. Notably, Zurich Insurance Group (Switzerland) has bolstered its position with the acquisition of operations from both Macquarie and Australia and New Zealand Banking Group (ANZ). These and other transactions reversed a previous trend towards the formation of "financial supermarkets". NAB has also pledged to sell its wealth management business, MLC, by the end of 2019, either through a stake sale or IPO.
| Income and demographics | ||||||||||
| 2014a | 2015a | 2016a | 2017a | 2018a | 2019b | 2020b | 2021b | 2022b | 2023b | |
| Nominal GDP (US$ bn) | 1,457.5c | 1,234.6c | 1,267.9c | 1,386.5c | 1,421.1 | 1,439.5 | 1,516.6 | 1,641.7 | 1,761.2 | 1,862.7 |
| Population (m) | 23.5c | 23.8c | 24.1c | 24.5c | 24.8 | 25.1 | 25.4 | 25.7 | 26.0 | 26.3 |
| GDP per head (US$ at PPP) | 47,352c | 46,775 |