Speaking at the International Symposia for Next Generation Infrastructure in Sydney yesterday, Association of Superannuation Funds of Australia (ASFA) director for investments and economy Gordon Noble said Australian super funds were among the first in the world to invest in infrastructure.
“Australian superannuation funds are invested in infrastructure assets across the country. Airports, ports, toll roads, energy pipelines, wind farms, bus interchanges, desalinisation plants are all owned by Australian superannuation funds,” said Mr Noble.
If Australian super funds have looked offshore for infrastructure investments in the past, it has only been due to a shortage in well-structured deals domestically, he said.
The biggest challenge for superannuation funds is liquidity, said Mr Noble – particularly given that “the ability of superannuation funds to hold illiquid assets is only going in one direction”.
“As superannuation fund members age, the portion of assets that can be held in illiquid assets is likely to decline, due to the need to preserve cash to meet pension payments,” he said.
While the total superannuation pool will grow over time, illiquid investments as a proportion of superannuation fund assets are likely to decline, said Mr Noble.
“The good news is that we are not at the limit of the system's ability to absorb new illiquid investments. The continued cash flow of superannuation contributions into superannuation means superannuation funds remain in a strong position to invest in new infrastructure projects,” he said.
But just because the system has the capacity to invest in infrastructure doesn’t mean that investment would be in Australia, warned Mr Noble.
“We need to have the right assets at the right price to invest,” he said.
