Superannuation key to uplifting national productivity: ASFA

Ahead of the Economic Reform Roundtable next month, the Association of Super Funds of Australia (ASFA) has released new research detailing the significant contributions the country’s superannuation system’s has made to its economic productivity.

According to predictive modelling conducted by the association, the superannuation system has helped Australia’s gross domestic product (GDP) to measure two per cent higher than it would have been today if compulsory super was never introduced.

A similar uplift in labour productivity was also determined, with ASFA estimating that there was an approximate difference of $2,500 per year for the average Australian worker on full-time wages.

The report, titled The Impact and Opportunity of Superannuation on Australia’s Productivity, found that the $4.1 trillion Australians currently have in superannuation – across institutional super and self-managed super funds (SMSFs) – has an investment claim on 25 per cent of the country’s capital stock.

“Investment from the superannuation sector is fundamental to lifting improvements in productivity,” ASFA chief executive, Mary Delahunty, said.

“Super funds deploy around half a million dollars in new financial capital every day on behalf of members. When businesses harness this capital effectively, it delivers both economic dividends and generational progress. But there is more Australia can do.”

According to the report, households have managed to save an extra $1 trillion as a result of superannuation and compulsory contributions beginning in 1992. It also indicated that Australia’s superannuation system has “historically” been the largest venture capital investor, backing early-stage technology, innovations, the digital transformation, the energy transition and infrastructure upkeep.

“The productivity conversation must dare to go beyond the ‘bosses versus workers’ narrative which risks anchoring the outcomes to ‘ways of working’ and misses the opportunity to consider the role of capital to deliver a national vision,” Delahunty said.

“The productivity challenge is not unique to Australia, but Australia has a unique national asset that gives us a head start in tackling it – our multi-trillion dollar superannuation system. Ensuring we have the right settings will allow this capital to reap dividends for all Australians.”

ASFA also made a number of recommendations to further allow superannuation to boost productivity, including:

• “Codifying policy stability for long-term investment vehicles: Reducing regulatory volatility will encourage confident, long-term capital deployment;
• Reforming performance benchmarks to support future-focused sectors: Adjusting benchmarks will drive investments in long-term sectors including clean energy, digital infrastructure, and advanced manufacturing;
• Removing stamp duty from transaction cost disclosures under RG97: Levelling the playing field for Australian residential property investments compared to international assets is part of the solution to unlocking more housing supply;
• Creating structured pathways for public-private investment coordination: Streamlining approvals and co-investment mechanisms for nationally significant projects, especially in energy transition will help Australia on the path to decarbonisation;
• Modernising capital gains tax arrangements to reduce inefficiencies and enable funds to restructure investments without triggering tax events; and
• Creating a productivity-focused working group within the Treasurer’s Investor Roundtable initiative to maintain the pace of reform.”