Surely there can be ways to get superannuation funds to do a better job debt-funding Australian businesses. Everyone will just have to give a little
The supply side solution to establishing Australia’s corporate debt market hasn’t worked. Australian corporates have, by and large, continued to run to the banks or offshore debt capital markets, with only bits and pieces left for superannuation funds and other private capital providers.
Super funds are well aware which way the money is starting to flow. The problem, as AustralianSuper chairman Don Russell put it, is that members still want their fund to, which is what they’ve come to expect. And he wants to keep making good returns, as compensation to members for lumping them investment risk, which is a key tenement of the defined contribution system.
Reporting season has also shown non-bank lenders such as Pepper Group struggling to compete against the major banks in mortgages. Could the banks, which are heavily regulated and required to hold equity against loans, step back further, though? Could there be a day when super funds even provide some of the equity a bank would normally be required to hold against a loan? That’s what former prime minister Paul Keating would like to see, while billionaire Anthony Pratt is pushing hard to see the market take flight.
In the middle of it all is the regulator APRA, which makes no apologies for its risk-weighted assets system that keeps banks safe but makes it more expensive for them to write long-term loans.There is also treasurer Jim Chalmers, who is all over the ageing Australia thematic and is blessed that he inherits a strong superannuation system. While the ageing population is growing fast, demand on the commonwealth budget is not, at least as far as pensions are concerned.
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