For example the MTAA super fund has done extremely well in investing about 30 per cent of its funds under management in infrastructure (according to Rainmaker data). However, in order for other superannuation funds to increase their exposure to infrastructure some other issues around the bidding process will need reform.

The major disincentive for super funds and especially those other than the largest industry fund behemoths is the cost equation for competing, bidding, negotiating, and entering a contract. There is no standard deal structure for investment in infrastructure and each State has developed different templates when it comes to documentation of these sorts of transactions with some States having multiple sets of documents depending on the types of asset and which lawyers are acting on the deal.

State and Federal governments need to agree on some standards for infrastructure much like what has happened in the UK so that the costs of bidding are kept to a minimum and so that more superannuation funds are encouraged to become involved in this emerging and important new asset class.

Another major issue is that for infrastructure to be taken seriously by the superannuation industry, there must be a pipeline of projects coming through. Currently the opportunities are too haphazard and ad hoc and the history of investment contains too many disappointments. For those projects that have come online, there have been a small percentage of failures such as the Cross City Tunnel, which always sit uncomfortably in the background when a new deal is being considered.

If the infrastructure industry becomes more professional and commercial, it is more likely to succeed. Another limiting factor for investors in infrastructure is the number of assets that are still being regulated by government. Regulatory risk is still a work in progress. When governments control the pricing for economic assets such as roads, energy and power, this impacts returns and acts as a powerful disincentive for super fund investment.

But there’s some good news on the horizon.

It has been estimated that about 75 per cent of infrastructure is the responsibility of the States (such as ports, roads, and schools), and 25 per cent is the responsibility of the Federal Government. It is well known that each of the States have developed their own idiosyncrasies in the bidding processes which adds additional time and money for potential investors.

However, the new government has announced some important initiatives including singling out a Minister for Infrastructure, who in turn has established Infrastructure Australia (IA), which is charged with providing leadership within the industry. IA is currently undertaking an infrastructure audit and by March next year will determine a list of infrastructure priorities. Infrastructure Australia already has a Federal Government commitment of $20 billion. When it comes to superannuation funds, it is interesting to note that the total amount currently invested in infrastructure is not accurately known because a lot of money is invested indirectly into projects and is therefore hard to trace.