AFIA calls for policy reform to regulate for growth not risk

The Australian Finance Industry Association (AFIA) is urging the Australian Government to shift its policy focus from risk aversion to enabling growth, calling for wide-ranging regulatory and economic reforms to boost national productivity and support innovation.

In its submission to Treasury’s Economic Reform Roundtable, AFIA outlines a series of policy recommendations spanning financial services, capital markets, artificial intelligence (AI), housing, and taxation. The submission argues that current regulatory settings often prioritise stability at the expense of innovation and productivity.

“Regulation is where Australia’s productivity manifests – it determines how capital, labour and technology are allocated,” said AFIA CEO Diane Tate.

“Australia needs a policy framework that supports innovation, competition and investment while safeguarding consumers. One that empowers markets, rather than simply fearing disruption.”

AFIA’s submission places particular urgency on reforming the financial services sector and preparing for the widespread adoption of AI, which the association says could unlock up to A$60 billion in economic growth by 2035.

Among the key proposals:

A productivity-focused Statement of Regulatory Expectations for financial regulators to ensure regulation delivers measurable outcomes in productivity, growth and wellbeing.
Expansion of the Council of Financial Regulators to include the Australian Competition and Consumer Commission (ACCC), allowing innovation and competition to be considered alongside financial stability and consumer protection.
Capital markets reform to improve efficiency and ensure capital is allocated to its highest use, while bolstering system resilience.
Balanced regulation of AI, aimed at encouraging innovation while managing emerging risks.
Investment in financial and digital literacy, with a focus on cybersecurity skills for both consumers and businesses.
Support for electric and hybrid vehicle policy to advance Australia’s transition to a low-emissions transport system.
A broad-based review of the taxation system, focused on intergenerational fairness and productivity.
Long-term housing and planning reform, to improve housing accessibility through coordinated national policy.