Government lobbied on expanding infrastructure investment for SMSFs

The SMSF Association and Financial Services Council have presented a common policy front, calling on the National COVID-19 Commission (NCC) Advisory Board and the national cabinet to recommend the establishment of unitised, transparent and liquid investment vehicles to house infrastructure assets.

The SMSF Association said infrastructure investment vehicles will make them attractive to all superannuation investors and overcome community concerns around illiquidity and asset pricing. In the past, SMSF Association CEO John Maroney said SMSFs, in particular, have been largely excluded from this asset class, due to the high dollar threshold for this investment and the illiquid nature of the asset.

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“The benefits of this asset class to SMSFs include managing longevity risks in retirement by offering long-term investment options with low volatility, moderate yield relative to inflation and capital growth, and the desire of trustees to have control via direct investing,” Mr Maroney said.

“Infrastructure offers a relatively low-risk investment alternatives to cash and term deposits at a time of record-low interest rates.”

The opening up of infrastructure investment to SMSFs in an unlisted, liquid form, he said, would provide a new avenue for SMSF investment that could help fund Australia’s recovery and future infrastructure investment needs.

In addressing the liquidity issue and removing the administrative barriers such as high entry costs, the FSC proposal, he said, goes a long way to removing the challenges that SMSFs face in accessing an asset class that dovetails their investment profiles with Australia’s economic need for infrastructure development.

FSC chief executive Sally Loane said that opening up infrastructure investment to SMSFs and superannuation investors would democratise investment in critical domestic infrastructure, as well have the benefit of offering stable, predictable income streams to fund Australians’ retirement.

“Stronger infrastructure investment would allow the national cabinet and state governments to turbocharge asset recycling to finance new job-creating infrastructure projects and create jobs,” Ms Loane said.