Government should work with super funds to boost infrastructure
The federal government needs to intensify partnerships with super funds and leverage their scale and long-term investment horizon in order to boost infrastructure and help develop infrastructure investment pipelines, according to Industry Super Australia (ISA).
Its study revealed that not-for-profit industry super funds were investing in real economy assets which helped boost productivity, economic growth and diversify their member savings.
According to ISA chief economist, Stephen Anthony, the super funds also demonstrated an appetite for unlisted assets, but said more should be done to identify appropriate, ‘investment-ready' infrastructure projects.
Australia's not for profit industry super funds also:
- Outperformed bank-owned and retail super funds;
- Increased the pool of national savings, reducing reliance on foreign debt;
- Helped lift tax revenues and lower debt interest payments; and
- Helped stabilise equity markets during economic downturns.
The ISA's report called on both state and federal governments to work more closely with industry super funds to prioritise investment and capital expenditure on infrastructure assets that were in the national or regional interest.
"We risk consigning the economy to a low growth trajectory unless we more effectively connect our pool of long-term superannuation capital to investment opportunities that will be future drivers of growth like infrastructure and private equity," he said.
"In an era of below-trend growth, Australia needs to find ways to increase capital expenditure; investors trading existing assets for short-term gain are doing little to increase either growth or productivity. Companies remain reluctant to invest capital, creating a self-fulfilling cycle, sending returns even lower.
"As a consequence of their longer investment horizons, Industry super funds, will invest in improving assets, adding both jobs and economic growth and delivering steady returns to fund members."
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