Super funds are ready to back the energy transition, infrastructure and affordable housing to power an economic recovery from the COVID crisis, the AIST has told the government, but policy has limited large-scale investments.
The Australian Institute of Superannuation Trustees (AIST) issued a statement to state governments and the National COVID-19 Coordination Commission on Thursday outlining its investment opportunities that would contribute to growth, jobs and productivity.
AIST chief executive Eva Scheerlinck said there was potential for funds to invest, but regulatory reform was needed to enable backing on a large scale.
Large-scale investment in housing is the appropriate way to address Australia’s affordable housing crisis, she commented, adding limited land availability and unfavourable tax implications had made it difficult for super funds to scale up their properties investments.
“Super funds are acutely aware of the need to improve housing affordability for their members as they recognise that it is currently very difficult for Australians to enjoy a financially secure retirement without owning a home,” she said.
“Barely a week goes by these days without one commentator or another suggesting that Australians should be allowed to tap into mandatory super savings to buy their first home. Aside from the negative impact this would have on people’s retirement incomes, it does nothing to address the root cause of Australia’s housing affordability problem, which is lack of supply.
“Turning housing into an asset class that could provide institutional investors with a competitive return would not only be a watershed for housing affordability in this country, it would create jobs to assist the economy while providing investment outcomes for the millions of Australians who invest through superannuation funds.”
According to the AIST, investment in infrastructure projects is limited by factors including regulatory uncertainty, particularly in sectors such as renewables, and short-term focussed bid processes led by developers and contractors with little regard for capital structure sustainability.
Looking at energy, suggestions included improving the energy regulatory framework to encourage greater investment in and use of embedded network structures and expanding the government’s Homebuilder scheme to include green retrofits of commercial premises.
Ms Scheerlinck added funds had identified an opportunity to create jobs and reduce final energy demand through the large-scale green retrofitting of exiting major building assets, particularly office buildings.
“Profit-to-member super funds are already significant investors in many of Australia’s major infrastructure and property assets and are well positioned to finance the green retrofitting of these assets,” Ms Scheerlinck said.
The proposal issued to government stated that funds could undertake a full energy audit of existing assets, which would also create jobs.
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].