Nation Building and Infrastructure
Think you own the road? Well, you probably do.
More than 5 million Industry SuperFund members are part owners of Australia’s roads, airports, sea ports, schools, hospitals, train stations, power generation plants and other important infrastructure - thanks to long term, nation building investments by Industry SuperFunds.
Many of these investments enable Industry SuperFunds to partner with governments to help meet the needs of communities and generate employment.
For example, members’ retirement savings are being invested in major projects such as Melbourne’s Comprehensive Cancer Centre, the Royal Adelaide hospital, and Axiom Education in New South Wales.
How does infrastructure investment benefit Industry SuperFund members?
Investment in Infrastructure has long term benefits for the Australian economy and super fund members. Over the long term, investment in these types of “illiquid” assets have delivered high returns - on average, 12% a year over 18 years. Returns on these assets have also, on average, outperformed returns on shares with only a third of the volatility.
How does infrastructure investment benefit Australia and build the nation?
One of the biggest demographic challenges facing Australia in the next 40 years will be maintaining a decent standard of living as our population ages and our workforce shrinks. Our prosperity will rely on the country’s ability to produce more with fewer workers. The good news is that national productivity can be significantly stimulated by deep infrastructure investment in the real economy.
With our national pool of superannuation savings approaching $2 trillion, and projected to reach $7 trillion by 2035, we already have the resources for immediate and deep investment in long term projects.
Greater productivity will generate higher wages, higher super contributions and ultimately a more comfortable and self-sufficient retirement for as many people as possible. This will take pressure off the age pension and the number of taxpayers needed to pay for it. If Australia could lift productivity growth to 2% per annum, our economy would be 15% larger and GDP per person would be around $16,000 higher by 2050.
Industry SuperFunds rightly view infrastructure investment as a priority in delivering a strong economy and decent living standards. Importantly, a strong safety net of superannuation default funds is fundamental to this task - ensuring a stable inflow of money is available for nation building projects.
Over the past 20 years, during Australia’s much-heralded period of uninterrupted economic growth, one industry has outpaced all others: finance.
ISA's response to the Murray inquiry into the financial system's final report. Issued on the 31 March 2015