There was a lot of concern during the crisis about Australia’s dependence on the inflow of foreign capital needed to fund its economy. There are really two separate elements to the issue: will we continue to depend on foreign capital and, if so, is there any risk of it being cut off?

Australia’s financial sector has doubled the size of its contribution to the economy in the last three decades and now represents 10 per cent of total value added, one dollar in every 10 of value. Relative to other countries, this is a lot. The question is whether it is too much. Is the sector too big?