With $2.7 trillion in superannuation, our system is well-placed, with its size and strength, to help Australia recover from the current economic crisis and emerge stronger than before.
The role super funds can play in economic recovery was demonstrated to a lesser degree during the Global Financial Crisis (GFC) when roughly 150 Australian businesses were able to secure almost $120 billion in new equity to support their growth – and almost half of that came from Australia’s superannuation sector.
Fast-forward 10 years, and as the sector grows and consolidates, the opportunity for superannuation to support innovation and stimulate the economy has never been greater or more important.
In years to come, a handful of large funds are likely to dominate the industry and, with size and scale, comes the opportunity to diversify portfolios, seek new asset types and direct investments that not only deliver strong returns for members but support the Australian economy and community as well.
Super funds have stepped up to the challenge and been there to support Australians through the COVID-19 pandemic with fund members accessing more than $13 billion through the early access support package.
And as an industry, we remain in a solid position to be a key player in the economic recovery now and into the future.
Despite predictions of a mass liquidity squeeze, the industry is well placed to not only absorb the early-access changes but to play a significant role in rebuilding the economy by providing much-needed capital for recovery.
With Australia’s super system expected to grow to $4.8 trillion over the next 15 years, its firepower to support economic growth by providing capital to successful, growing companies will only increase.
As long-term investors, super funds offer a source of patient capital that may provide an alternative to support offered by governments and big financial institutions such as banks.
Across the industry, there is a real focus on recovery and bringing new jobs into the economy with many funds like First State Super being active and public on their position on this.
There’s a role for super funds to support many sectors of the economy – from helping to fund major infrastructure projects, assisting businesses to raise equity during the current crisis, supporting innovative entrepreneurs with the next great idea, or supporting small to medium-sized businesses to take the next step on their growth journey.
Housing is another vital element of Australia’s economic prosperity – the latest Performance of Construction Index showed construction slumped in April due to cancelled or suspended projects and cuts in investment spending.
At the same time, we face a housing affordability crisis in many metropolitan areas, and we know super funds can play a critical role in solving this issue while delivering strong returns for our members and providing much-needed support for the construction industry.
Having spent years post GFC building their strength and improving their operational resilience, banks are also playing a key role in supporting Australians during this unprecedented economic downturn by deferring loans to individuals and businesses that are struggling.
The big four delayed home loan payments for 424,000 customers worth about $150 billion in the March quarter, as coronavirus shutdowns forced people out of work.
The role of banks and super funds is clearly changing over time with super funds now playing a more prominent role by stepping up to the table to invest, where banks keen to hold on to their financial capital may be more hesitant.
While we don’t have the luxury to take our fortunate position for granted in Australia – times like this call for innovation and collaborative thinking so that we can continue to advance and strive. The truth is, all of us have a role to play in helping to drive economic growth into the future across all sectors, whether that be from policymakers, business, banks, super funds and everyday Australians.
Long-term investors such as funds have a key role to play in delivering for their members and supporting the broader community.
Vision, cooperation and harmony among public and private sectors will achieve this, and the national pool of savings that super funds are a part of is here to continue playing a key role.