Role for super funds in affordable housing
Super funds have a role to play in the affordable housing space provided they have the right balance of risk and return and there is “the right policy setting”, with government providing stability for the long-term investment decisions.
Super funds are already invested in national building and key drivers of the economy and productivity, however there are still some underserved sectors of the economy and affordable housing was one of them, according to Elana Rubin, non-executive director, with Slater & Gordon and Telstra, who spoke during the plenary session at the Conference of Major Superannuation Funds (CMSF) held in Brisbane.
“What we [super funds] need is to invest for appropriate risk return. It is not the highest return what drives decisions it’s the return appropriate to the risk,” she said.
“It’s just worth reminding ourselves that [super] funds are already investing in national building. We are already investing in things that are central to our economy which drive productivity which deliver jobs and importantly we evidenced for the last 30 years that we delivered strong returns to members”
However, according to Anne-Marie O’Loughlin, chair, Telstra Super, some of the benchmarks that have been used are not appropriate and fit for the purpose and they need to be reassessed and chained.
“I agree super funds have a role to play particularly in the affordable housing space […] but it needs to have the right policy settings.
“We [funds] have the capital to it and we have the will to do it, and we just need to find the way to make that happen. And then the part of that is, if we are restricted by the benchmarks in the performance test that needs to be addressed.”
Garry Weaven, Senior Advisor, Tanarra Capital, said that the question of housing supply and affordable housing was an “unfinished business” for the superannuation industry and has never been addressed in a meaningful way.
“There have been a lot of reasons and excuses given for that, but the main one is that it’s been easier to invest in other investment classes,” he said.
“In terms of housing if you If you look across the whole …, you can achieve balanced fund returns through a balanced portfolio in housing at the built-to-sell and at the affordable end, you can do that.”
The challenge ahead of super funds in the future is, however, about having a balance of risk and return, rather than funds looking for the most for the highest returning investments which always come with the highest risk.
This is where the government has a key role to play by a clever use of its policy and ability to skew the investments decisions as well by leveraging the private sector, including superannuation funds, to provide better social outcomes.
“And hopefully we have now got the government that is willing to have those discussions with funds and investors, so we can get that right outcomes not just for members but also more broadly for the community,” Rubin added.
They are already playing a role in that regards. First home super saver scheme already allows member to utilise their super as mechanism to save for first home.
This is nothing but a mechanism to grease the pockets of property developers and apartment spruikers