The Federal Government is canvassing changes to the Corporations Act and Superannuation Industry (Supervision) Act to facilitate so-called “social impact” investing.
The Federal Treasurer, Scott Morrison has released a discussion paper which canvasses possible changes to the rules which would make it easier for both professional investors and superannuation funds to invest in socially valuable projects such as social housing and water infrastructure.
However the discussion paper issued by Morrison made it clear the Federal Government saw social impact investing as being something primarily pursued by private investors and the states with the Commonwealth acting as a facilitator of the processes.
The discussion paper said one way for the Australian Government to develop social impact investing was to create an enabling environment and canvassed treating so-called private ancillary funds as “sophisticated” or “professional” investors.
It also noted a need to investigate “the interaction between superannuation law and social impact investing” and the treatment of program-related investment in the tax system.
The Treasury paper said the Government was seeking submissions from a wide range of participants and potential entrants in the social impact investing market “as to the extent these issues are barriers to the growth of the social impact investing market and, if they are a barrier, what the Australian Government could do to address them”.
Releasing the discussion paper, Morrison cited the United Kingdom’s experience with social impact investing and the level of demand for social housing in Australia.
“This consultation is the next step in implementing the Financial System Inquiry’s recommendation to explore ways to facilitate the growth of the social impact investment market,” he said. “A key objective is to create an enabling environment for social impact investment that doesn’t displace private sector financing.”
“There are currently over 180,000 people on social housing wait lists across Australia. The number of social housing dwellings would need to grow by almost 50 per cent in order to accommodate this number of people.”
“We need to create an investment environment to make a meaningful increase to the available stock of affordable housing, one where the involvement of private investment can contribute to increasing supply as demand grows.”
