Treasurer rebuffs super rule change call

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Treasurer Joe Hockey has stressed that building infrastructure is a key government focus but superannuation investment rules will not be adjusted to allow better access to capital for infrastructure investments.

At a media conference in Sydney yesterday, Treasurer Joe Hockey said the best way to stimulate the economy and drive job growth is to start investing in new and productive infrastructure.

“What we have to do is to give mums and dads the opportunity to own Australian infrastructure that has a proven return on investment. I get superannuation companies and industry funds coming to me all the time saying there aren’t enough infrastructure assets in Australia for us to own.

“Superannuation money is going offshore to invest in infrastructure in other countries. Now they are looking for a proven track record of return on investment and governments do hold a lot of assets that have proven track records. Government does have the capacity to invest in new infrastructure if it can recycle the investment.”

The Association of Superannuation Funds of Australia recently made a submission on the Federal Budget, recommending any impediments which stall superannuation fund investment in infrastructure assets be removed.

The most important way to help super fund investment in infrastructure is to develop a “pipeline” of investable projects, ASFA CEO Pauline Vamos said.

"This would give super funds and other long-term investors the confidence to develop infrastructure bidding teams."

According to ASFA, bidding costs is an area where significant improvement is needed to help match superannuation savings to infrastructure projects.

“At present, the bid costs in Australia are among the highest in the world. Streamlining bid processes would help drive these costs down, creating a more favourable environment for super funds to invest,” said Vamos.

"What we do support is the removal of red-tape processes that add cost and complexity to infrastructure financing arrangements.”

Hockey was asked at the media conference whether there is any scope for changing the rules on super investment in order to access more capital and give super funds certainty and cash flow over 20 or 30 years.

Hockey replied the government would not legislate for a lesser return for superfunds, which he believed would happen if rules were adjusted.

“Ultimately, people are going to rely on their earnings from their superannuation to sustain their quality of life when they retire.”