Australian industry super funds have already outlaid about $100 billion on infrastructure, making them the biggest investors as a group in the Australian sector.
And Industry Super Australia (ISA) has pledged to invest another $19.5 billion in new projects such as airport runways, the aged care sector and commercial buildings, creating 200,000 jobs and a vital boost for Australia’s battered economy.
ISA chair Greg Combet says the investments will help member balances and get the economy growing again.
“The projects include new commercial construction, redevelopments, public infrastructure upgrades and making assets more energy efficient,” he said.
“Industry super fund members already collectively own more than $104 billion in Australian infrastructure, property and other physical assets. These investments create jobs and drive productivity and growth.”
Mr Combet added that while the economy may benefit, so too do industry fund members.
“The profits generated by these investments have been critical to the good performance of the funds, with members reaping the benefits through strong returns. Analysis shows that $100 invested in unlisted assets 15 years ago is now worth $510. In comparison, $100 invested in international shares would be worth $351 now,” he said.
He also highlighted the role superannuation has played since the last global slowdown.
“Since the COVID-19 downturn, Industry super funds have poured hundreds of millions into the balance sheets of good Australian business; this helps them to rebuild and to expand operations,” he said.
“And there could be billions more to come. At the end of the global financial crisis, superannuation funds provided a significant portion of the $120 billion in capital raised by local businesses.
“Industry super funds hold a major stake in Australia’s economic life. They invest in Australian listed companies (holding 10 per cent of the ASX), are active in debt markets, have significant infrastructure and property holdings and invest in the wider Australian financial system.”
He said the government could do more to work with super funds to find better ways to utilise the resources available to the Commonwealth.
“I’ve spoken with the treasurer about the scale of our investments and what our plans are. And there’s actually more that government can do to work with super funds to mobilise more money.
“I think there’s no shortage of capital … there’s a shortage of projects.
“If governments were to … say here are the projects we need doing and taxpayers can’t fund them all but taxpayers’ super savings can help finance them and generate a return for peoples’ superannuation accounts, then we could do a lot more.”
Mr Combet also called for the tightening of eligibility criteria for the early release of super and decried Liberal Party backbenchers’ stance that an increase in the superannuation guarantee will hurt Australian workers.
He said policy stability will be “crucial” to the ability of industry funds to contribute to the economic recovery, says a Nest Egg report.
“We’ve managed the first round of early access withdrawals from super and are entering into the second round, from tomorrow, of $10,000 withdrawals,” he said.
“We’ve prepared for this. But the capacity to invest for the long term will be seriously affected should there be further policy changes impacting liquidity requirements or contributions that come into the superannuation system.
“There shouldn’t be any further delays to the super guarantee rises.
“They’ve been delayed for years. They’ve been promised repeatedly. They’ve been legislated by the parliament, and they are law … The argument that it will cost people a wage rise is a complete furphy. Freezing the super guarantee will only cost people the super guarantee.”
Cbus chief executive David Atkin agreed that the increase would benefit fund members as well as the economy.
“Frankly, given the buffeting the system has gone through, and the fact that we have seen so much money withdrawn from the system and members savings, we are going to need that increase to recover some of the lost super and lost lifestyle that will come from people accessing their super early,” he said.
The Queensland Investment Corporation (QIC) chief Damien Frawley says moving away from the SG (super guarantee) increase would also create issues for the government.
“It is also taking away a lot of pressure from government balance sheets. Moving away from the super system today and making any move to wind it back will only create issues down the road for government P&L (profit and loss),” he said.
Further clarity over the SG increase would allow funds to commit to investing more heavily in the economic recovery.
“For every dollar that is invested back into the building industry, it generates three more jobs in the industry,” said Mr Atkin.
“So, the SG increase is important to continue with, because it has a benefit to the individual in terms of a retirement outcome perspective, but it will also benefit the economy.”
Super experts also fear a ‘second wave’ of early release redemptions will further widen the retirement gender gap and the recession may also put further pressure on an already eroded retirement income system.
“The other [issue] that we are going to have to contend with as we get into this recession is early retirement and forced redundancy, which might give rise to people leaving the system at the other end,” he said.
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