New lamps for old


By Julie Sibraa

It never ceases to amaze me how old problems, ideas and stories get dusted off, polished up and sold as new around this time of the year. Today we've discovered that superannuation funds, as the custodian of Australian workers’ retirement funds, would be the ideal owners of former public assets like ports, electricity and water utilities.

The reasoning is that if governments can divest themselves of assets they do not need to own or operate they can use the sale proceeds to fund new investment to plug the gaping infrastructure shortfall and meet the needs of our growing population. And if those same assets are owned by Australian superannuation funds then effectively they would be still be owned by the Australian public.

For superannuation funds, ports and other utilities including airports, which exhibit monopoly-like characteristics, represent good investments on the basis they provide earnings stability and long term maturity, that is, a reliable steady revenue stream likely to increase over time.

So it’s a great idea!  It’s a wonder no one has thought of it before.

Well they have. And some people have been advocating it for a long time.

I seem to recall back in 2010 when I worked for the peak infrastructure group, Infrastructure Partnerships Australia (IPA) it was also discovered that there was this massive, lazy pool of superannuation savings lying around that could be used to buy well established infrastructure assets and fund new infrastructure.  There was the Cooper superannuation enquiry which amongst many other issues looked at this and reported favourably.  IPA, amongst many others at the time, produced a thoughtful research policy paper on the issue, exploring not just the upside of such investment but the barriers as well, with some suggestions for government intended to assist overcome these obstacles.

But aside from the NSW Government’s successful 99-year lease of Ports Botany and Kembla to superannuation company Industry Funds Management last year, it still doesn’t seem to happen.

According to a Deloitte report released last September (Dynamics of the Australian Superannuation System: The next 20 years: 2011-2033) there are approximately $1.6 trillion in total assets currently in the Australian superannuation system, with the pool projected to grow to $4 trillion in the next decade and to $7.6 trillion by 2033.

So why doesn’t it happen? 

It all comes down to the ability and courage of our political leaders to properly explain to Australians why this is a good and necessary thing to do.  With the costs of health, education and social security – surely the very bedrocks of government responsibility – rising steeply and inexorably year by year, eating up more and more of every government’s revenue stream, there is a need for governments to divest themselves of things they don’t need to own or operate. 

When political leaders find it within themselves to honestly and factually explain the need for measures like the sale of public assets, they may find Australian people willing to listen and provide permission.

And that is definitely not a new idea.