Treasurer Jim Chalmers wants funds to invest in energy transition and affordable housing

First, Keating called on the Australian Prudential Regulation Authority to ease its capital controls to allow Australian banks to join corporate “lending club” arrangements.

Two bank CEOs who attended the roundtable, Shayne Elliott of ANZ and Matt Comyn of Commonwealth Bank, strongly opposed this idea.

They defended APRA’s capital adequacy rules and questioned the economic returns that would be obtained from financing corporations with loan terms of more than seven years.

Pay attention to social license

Second, Keating urged superfunds to invest more of their growing assets in Australia rather than in “tech stocks in the US and highways in Italy,” or lose their social license to operate.

He says that superfunds should not be forced to invest in “sub-economic things”, but there is “the possibility of developing new asset classes: rental construction is one of them, and social housing”.

Chalmers and Keating spoke at the annual retirement loan roundtable hosted by The Australian Financial Review and packaging multinational, Visy.

The event was attended by the CEO of Visy, Anthony Pratt, financial review Editor-in-Chief Michael Stutchbury, AustralianSuper Chairman Don Russell, UniSuper CEO Peter Chun, IFM Investors CEO David Neal, Future Fund CEO Raphael Arndt, Aware Super CEO , Deanne Stewart, AI Group CEO Innes Willox, AIA Australia Chief Information Officer Alison Murray, and Visy CFO Vin O’Halloran.

Pratt joined the nation-building theme when he opened the process with a call for 10 percent of superfund assets to be used to fund corporations. Currently, this only represents about 1 percent of the super active.

“Australia’s banking and retirement industries are the envy of the Western world,” says Pratt.

“There is a tremendous opportunity to further leverage these institutions, for the benefit of Australian policyholders and shareholders and, more importantly, Australian jobs and nation-building investment.

“This is about encouraging cooperation and partnership between banks and therefore working to their mutual benefit to use more superfund money to lend and not just invest, especially in this environment of rising interest rates and stock market returns. Lower.

“This cooperation, or club deals as Paul Keating calls them, sees banks lending not only their lending expertise to superfunds, but also their money in long-term debt.”

Chalmers spoke directly after Pratt and immediately identified his top two priorities for greater involvement of superfunds in the Albanian government’s economic development policies.

He wants to get feedback from superfunds on how they can help fund and finance the energy transition.

Coherence and transparency

“We’ve already started a lot of work on disclosure of climate risks and opportunities,” he says. “But what we want to do is try to catch up and keep up with global regulatory developments here so that there is some consistency and some transparency.

“For investors, particularly large institutions like yourselves, we are told that if we do it right, we do it comparable, we do it consistent, it will be easier for them to invest in the transition.

“But obviously, that’s not enough on its own. So once the job is done,
most likely this fiscal year we will have a new set of transparency and disclosure arrangements for climate risks and opportunities.

“We will do it after a lot of consultations. But we’re interested in starting work on what comes after that. What else do you think we could do responsibly about climate finance, financing the energy transition, with a role for the super and some kind of role for the government as well?”

Chalmers then turned his attention to residential housing, including the stark contrast in the superfund’s growing exposure to infrastructure and relatively flat exposure to housing over the past eight years.

energy transition

Superfund investment in infrastructure since 2014 has increased from 3.7% to 6.6%, while superfund investment in residential housing has increased from 7.4% to 8.5%.

“Investment in infrastructure does not align with what we would love to see in residential housing, and the obvious question for all of us is: how do we turn that around?” he said.

A prominent banker who did not attend the roundtable later told Chanticleer that residential housing financing would likely dovetail with energy transition financing because the housing stock would have to meet the climate goals of the Paris Agreement.

However, this would add another layer of complexity to the challenge of encouraging greater investment in social and built-to-rent housing, as well as higher cost.

The place to discuss these two radical departures from the conventional superfund approach to asset allocation would be at a “treasurer’s investment roundtable” that included the superfunds, banks, and venture capital funds.

Chalmers said the meeting would “try to set up a structure to try to solve some of these difficult challenges in the economy” while examining the potential role of government-controlled and quasi-government hedge funds in co-investment.

The suggestion here is that the billions of dollars sitting in government-owned entities, including the Clean Energy Finance Corporation, the Future Fund and the Northern Australia Infrastructure Facility, can be enlisted to serve the transition energy and greater investment in residential housing.

One topic sure to come up at the Treasurer’s Roundtable is the potential conflict between investing to serve government policy priorities and the fiduciary duty trustees owe to members.

Another topic of discussion is the increased costs that superfund members would bear if there is a further move away from standard asset classes such as equities and fixed income.

This became apparent last week when AustralianSuper, which has $260bn in assets, said its investment fees had risen as much as 45 per cent in the year to June 30.

In a note to members, AustralianSuper said its investment in several large real estate and infrastructure assets had incurred upfront costs, such as stamp duty, and this increased the investment fees for its balanced option by 15.8 per cent. . Rates on its stable option increased 44.7% to 0.55%, and rates on its high-growth option increased 11.6%.

Members have been told that the transactions that caused the high fees were for assets that will be held for the long term.

During the roundtable discussion, AustralianSuper chairman Don Russell said the retirement industry had reached the point where industry fund investment committees were looking for places to put their money knowing they had to generate higher CPI returns. 4 percent.

Be the first to comment

Leave a Reply

Your email address will not be published.