The Financial Services Council has called for the government to tap into the $1.7 trillion in SMSF and retail super funds to put towards building infrastructure, as well as top up super accounts diminished by the early access scheme, as part of a proposal for the nation’s post-pandemic recovery.
The FSC has made the recommendation in its plan for the financial services sector to help Australia rebound after the coronavirus crisis, with a number of policy ideas and ways to tackle financial challenges.
One of the suggestions has called for the creation of new “Australian Superannuation and Infrastructure Investment Vehicles” (ASIIVs) to accelerate the financing of new infrastructure projects and expand access to existing asset recycling programs for super investors.
FSC chief executive Sally Loane said the initiative is the centrepiece of the report, to fully use Australia’s $2.7 trillion pool of retirement savings.
“The new Australian Superannuation Infrastructure Investment Vehicles (ASIIVs) will unlock a large chuck of funds – around $1.7 trillion in choice and self-managed super funds – for infrastructure projects from investors who today have limited access to them,” Ms Loane said.
“ASIIVs will allow National Cabinet to turbocharge asset recycling programs by selling assets into a common vehicle to finance new job-creating infrastructure projects. They will also enable the creation of tailored vehicles for greenfield projects, such as community housing.”
The industry body has called for the National Cabinet to establish two categories of ASIIVs. The first category is single-asset ASIIVs to finance new developments, for investors seeking exposure to a specific asset.
The second is multi-asset ASIIVs that bundle existing infrastructure assets, collectively producing a predictable and stable yield and allowing different levels of government to contribute assets into the vehicle.
“ASIIVs also overcome the current reliance on institutional investors for ownership of infrastructure,” the report stated.
“Recent experience has shown direct ownership of infrastructure by a narrow field of investors generates perceptions of liquidity risk that undermines public confidence in the superannuation system.”
Further to the new vehicles, the body has called for the government to establish a co-contribution scheme for Australians who have accessed the early super release program. It wants the government to contribute $1 for every $5 a member contributes, up to a proposed $10,000 in member contributions.
Another suggestion has also asked that Australians over the age of 50 be offered a once-off higher superannuation concessional cap of $50,000, with the option of carrying forward if unused.
Other recommendations to National Cabinet include abolishing stamp duties on life insurance products and property transactions, aligning the company tax rate to 25 per cent for all companies, encouraging business investment to modernise outdated financial products through a specialised tribunal with the aim of lowering the cost of advice and accelerating the Significant Investor Visa program to support migration and build on its past $11 billion direct investment.
“The FSC and its members want to help drive Australia’s long-term economic recovery,” Ms Loane said.
“By implementing the reforms raised in this report, the National Cabinet and Commonwealth Government can get the best bang for the nation’s buck and get Australia back up on its feet.”
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