Industry funds claim unique status on infrastructure

Industry Super Australia (ISA) has used a submission to the Productivity Commission to claim that industry super funds are uniquely placed "to sustain relatively illiquid investments such as infrastructure".

The ISA submission to the Productivity Commission's inquiry into public infrastructure has argued for changes to the rules around infrastructure investment at the same time as claiming that the reason industry funds are uniquely placed is that their "members' long-term investment time horizon aligns with the long-term life-cycle of such investments".

It claimed the Australian Prudential Regulation Authority (APRA) had found that not-for-profit funds, such as industry superannuation funds, had characteristics which could sustain a relatively high level of illiquid investment due to scale, member demographics and strong cash flows.

"Importantly, the structure of Industry Super Funds provides additional flexibility to make strategic investment decisions on behalf of members. Such flexibility is diminished in the retail super fund and SMSF [self-managed superannuation fund] environment because investment decisions are normally left up to individual retail level financial advisers and their clients," the submission said.

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"Nevertheless, if other sectors of the superannuation industry invested to the same extent as Industry Super Funds in infrastructure, an additional $100 billion would be available for investment," it said.

"In addition to capturing higher risk adjusted returns, unlisted investments allow greater control over assets, including the ability to take a more active role in manager compensation and investor protection."