Treasurer Jim Chalmers has committed to “looking at the super performance test”, but made it clear that the government is not considering abolishing it.
Speaking on Thursday afternoon, following the conclusion of the three-day roundtable event, Chalmers said: “We are not talking about in any way interfering with the sole purpose of super funds, which is to deliver the maximum returns that they can for the members. I want to be perfectly clear about that.”
He acknowledged there is interest, both from the government and more broadly, in ensuring there are no “unnecessary obstacles or impediments to institutional investors like super investing in areas like housing and other areas where there is clearly a national need”.
Chalmers said he would take “another look” at special investment vehicles to ensure they are “doing the job we need them to do”, including venture capital and other parts of the economy.
“SIVs might be a way we can get closer to an ideal version of that,” he added.
Earlier this week, ASFA’s CEO, Mary Delahunty, said she would propose to the government’s economic roundtable that the “important work of the performance test” needs to be built upon to ensure there is a “genuine member outcome approach”.
“It’s pleasing to see ASIC looking at the unintended consequences that RG 97 has had on institutional housing investment,” Delahunty said at the time.
“Now is the time to explore further ways to modernise the performance test so it doesn’t constrain investment opportunities and, in turn, member outcomes in the future.”
ASFA’s call was backed by a number of funds, including Rest which called for a major overhaul of the test, warning in its submission that the current framework risks stifling investment in emerging industries critical to Australia’s future economy.
“This is an essential reform to encourage investment in economy-enhancing local businesses and infrastructure,” the fund’s submission read.
Speaking to InvestorDaily on Thursday, ahead of the Treasurer’s press conference, Delahunty could not confirm the Treasurer’s commitment but noted that both the Treasurer and Assistant Treasurer have always been open to discussing the test.
“They’ve been inquisitive and alive to some of the potential issues,” Delahunty said. “They’re also fairly keen to make sure that the gains from the performance test, like really having a good eye to performance, are not lost, and we agree with them on that.”
She too emphasised that the process is not about deregulation but rather building on “good policy” and ensuring it is “modern”.
“That’s an important balance to get right because we’ve got a compulsory system, so we do need a measure of performance,” she said. “We need that measure of performance to make sure that it’s contemporary so that this incredible pool of investors that we’ve built here in Australia have the chance to apply their skills in such a way that they are making the best of the opportunities that are in front of them.”
Speaking on the latest episode of the Relative Return Insider podcast, AMP’s Shane Oliver agreed that the government needs to ensure the performance test is “operating appropriately” – meaning that it is not discouraging funds from investing in local opportunities.
“For example, affordable housing even falls into that category,” Oliver said.
Touching on the corporate regulator’s commitment to review RG 97, the chief economist suggested the government should go a step further. Rather than simply altering the way it is disclosed, Oliver suggested stamp duty should be scrapped entirely.
“Stamp duty is a ridiculous tax,” he said. “It’s been an annoyance. It should have been abolished at the time of the GST.”
On RG 97, Delahunty earlier said the ASIC’s initiative is “exactly the kind of targeted reform” needed to help the super sector “supercharge national productivity”, allowing more of the $40 billion deployed quarterly to flow into residential property while boosting overall economic productivity.
“The superannuation sector has raised concerns about RG 97’s treatment of stamp duty since ASIC started developing the regime,” Delahunty said.
“Stamp duty is fundamentally different to other transaction costs covered by RG 97. It’s an unavoidable tax that cannot be reduced through efficient portfolio management or changing investment strategies.”
Delahunty argued that the current RG 97 unfairly penalises funds that invest directly in Australian residential property, as opposed to foreign residential property or indirectly through real estate investment trusts.
“We expect a swift resolution, as potential solutions have been well-canvassed in previous consultations with ASIC,” she said.
“This is a small regulatory tweak about where stamp duty disclosure sits – the duty will still be still paid, but it won’t distort investment comparisons.”
