Brexit: What’s next for Australia?
“Some questions are simply too complex for a yes or no answer,” said ICAS Melbourne Chair Ken Weldin CA, Partner Audit & Assurance at PKF Melbourne, as he hosted an ICAS event called Building Knowledge: Brexit What Next.
“The vote itself, the campaign and now the devil in the detail, provides a lesson in governance. Reflect that if the ballot paper had a box saying, ‘Dear EU, I am a bit out of love with you right now and you have disappointed me. Pull your finger out!’, it would have won.”
The panel Ken was hosting broadly agreed. Its experts included the eternal optimist David McCredie, CEO of the Australian British Chamber of Commerce and Andrew Peeler, Director Finance and Commercial Australia/New Zealand with Bupa Australia, who opened by cautioning that without strong leadership we could see the possibility of another GFC on its way, one that is largely fuelled by social unrest. Rounding out the panel were Douglas Gration, a barrister on the Victorian Bar, and Eric Williamson, Chief Risk Officer, Corporate and Institutional Banking at NAB.
Ken introduced the event, and ICAS, to a room of 75 accountants in the Melbourne offices of Chartered Accountants Australia New Zealand. Douglas opened the discussion with the view that for many the Brexit question was driven by emotion, with no real appreciation of the various consequences.
In fact, the British Government could have made plans and outlined the effect of a win by Exit voters, but they saw such planning as a sign of weakness, David said.
The lack of planning and the unprecedented decision to separate itself from the EU leaves the UK in a situation where bartering can only begin in earnest now, and where absolutely everything is on the table.
Opportunities for Australian business
What does it all mean for Australia, Ken asked. It will likely provide great opportunities for Australian business, David said. Once fully independent of the EU and back on its feet, however long that may take, the UK will continue to deeply value its close cultural and historical bond with Australia.
However, Australian business managers must also remember that while the nation has a strong bond with Great Britain, all of the action right now is in China and in other parts of Asia, Eric said. There is a burgeoning middle class in China that will be hungry for products and services, and a level of wealth that is unprecedented. Though their rates of GDP growth and demand may be slowing, they are still of huge importance to Australia.
The geographical location of Australia, and the trade agreements the nation boasts with several Asian economic powerhouses, makes it a perfect base for British and other European businesses looking to break in to the Asian market, David said. In terms of Australians still having the ability to work in London, Australia’s great track record in financial services, investment and wealth management etc, also means professionals will always be welcome in London, the financial centre of the world.
Left to right: Eric Williamson, Ken Weldin CA, Bec Elphinstone, Douglas Gration, David McCredie and Andrew Peeler.
The knock-on effects
This was the silver lining, so where was the cloud? Andrew expressed his concerns around the knock-on, macro-economic effects of Brexit and of other events around the globe, from the Trump Presidency to economic troubles in various European nations and to social unrest in working classes around the globe. Forthcoming elections across Europe will be very interesting to watch, he said.
Fear not though, Douglas joked, financial crises are disasters for everybody except accountants and lawyers! And speaking of lawyers, he said as he turned serious, all accountants should be advising clients with an interest in Europe or the UK to be preparing for a mass of new legal issues. The days of the UK being a smooth and simple springboard to the EU are well and truly over.
The lively audience raised questions around some of the various planks of the Brexit negotiations: trade deals, drivers of macro-economic stability and the all-important freedom of movement. Andrew noted that this latter feature (the subject of much debate in the make up of future trade deals) was a massive asset for CFOs working in Europe, reflecting on his time working on the continent. Even the finer points of the accounting profession were covered, including financial reporting regimes, audit regulation through mandatory firm rotation, holding company domiciles and taxation.
Risk management is vital
And so, Ken said, the major learnings so far are that analysis and planning are more important than ever, particularly around risk management.
Even if your organisation thinks it will be able to stand still or to carry on business as usual, your peers, suppliers, competitors and customers may change their behaviours, which by extension will force you to change yours. It all comes back to the importance of quality information to feed a decision-making process that is not driven by fear, uncertainty or emotion, he said.
In the end, even Andrew was convinced of some of the potential benefits for Australia once the Brexit process is complete. “I’m much happier than I was at the beginning,” he smiled. “I remain concerned about knock-on effects from other countries, but with our common heritage and culture we have a lot to leverage in our dealings with the UK. And I’m glad I’m being paid in Australian dollars!”
Perhaps the event was best summed up by Eric, who discussed the positive economic environment in which Australia finds itself. “I’d rather be here than not be here,” he smiled, “and that’s why I am here.”