The Liberal and Labor parties have both resisted pressure to pass on Australian infrastructure projects direct to superannuation funds.

At a Financial Services Council meeting in Sydney last Friday, Treasurer Chris Bowen was asked by a superannuation representative if he would facilitate such investment.

He was emphatic in his response: “I have never supported mandating this. A superannuation fund’s responsibility is to maximise the retirement incomes of members and that should frankly be their own responsibility.”

He made the caveat that he would assist where investment was unnecessarily hard to achieve.

“If we can assist in breaking down any barriers, then of course we should do that. That is one of the reasons we started Infrastructure Australia – to have a clearer pipeline for investors. There is more work we can do around the states to get more certainty around that pipeline.”

Earlier this month, when speaking to Investment Magazine, Senator Matthias Cormann gave an almost identical response.

“The question whether specific infrastructure projects are sensible investments for super funds is one for the trustees and relevant executives of those funds to make. It should never be up to government to direct super funds into investing in a particular category of investments.”

Like Bowen, he too promised to only go as far as making it easier for funds to invest.

“We have said that if there are regulatory barriers which are currently preventing super fund trustees from making investments in infrastructure that otherwise make commercial sense, we would be very happy to consider those.”

A model for future infrastructure investment that Industry Funds Management would like to see is one in which the federal government or individual states appoint a fund manager to work on the sale or lease of an asset. The manager would agree to a cap on fees of 0.5 per cent. Investors would, in turn, be promised a floor on their own internal rate of return, but would also accept a ceiling on those returns.

Leave a comment