Industry Super Funds are calling on state and federal governments to be more proactive in partnering with super funds to develop clear infrastructure investment pipelines that will boost productivity and economic growth, and diversify member savings.
Research released today by Industry Super Australia (ISA) shows Australia’s not for profit industry super funds are effectively leveraging the scale and long term investment horizon to invest in real economy assets which have been the foundation of superior member returns.
The research clearly demonstrates that, over a generation, Australia’s not-for-profit industry super funds have:
• Consistently outperformed bank-owned and retail super funds , delivering superior returns to their members;
• Increased the pool of national savings, reducing reliance on foreign debt and lowering borrowing costs for everyone;
• Added billions of dollars to GDP, lifting tax revenues and lowering debt interest payments; and
• Stabilised equity markets during economic downturns, such as the GFC and the end of the mining boom.
Author of the report, Stephen Anthony, ISA Chief Economist, said, “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.”
The report confirms that the appetite industry super funds have for unlisted assets is growing even larger, but that more can be done to identify a pipeline of appropriate, ‘investment-ready’ infrastructure projects.
“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, “Anthony said.
In launching this report ISA is calling on both state and federal governments to work more collaboratively with industry super funds to better identify and prioritise investment and capital expenditure on infrastructure assets that are in the national or regional interest.
“Industry super funds have spent 30 years improving their investment model to the benefit of both members and the broader economy. They are ready, willing, and able to develop the large infrastructure that Australia needs to jump-start growth. We look forward to working with governments of all stripes to identify what their priorities are”, Anthony concluded.