FSC links super scale to infrastructure investment
The Financial Services Council (FSC) has suggested it is open to the Australian Prudential Regulation Authority (APRA) to accelerate the further consolidation of the superannuation industry.
The suggestion is contained in the FSC's Productivity Commission public infrastructure inquiry which argues that the earlier consolidation of the superannuation industry and the consequent increasing scale of superannuation funds has better equipped them to undertake infrastructure investments.
"The FSC notes that the development of scale in the industry will be important in increasing the number of funds able to invest in infrastructure and the size of their infrastructure holdings," it said. "This will happen organically and could be accelerated by APRA as the superannuation prudential regulator."
Elsewhere in the FSC submission, the organisation argues for the stability of tax and policy settings at both the Federal and State level.
"Superannuation funds will continue to be a reliable source of capital for infrastructure financing provided the investment environment is reliable," it said.
Citing research conducted by Ernst and Young, it said that funds and investment managers consistently held the view that further regulatory and tax changes "may be counter-productive as it risks causing uncertainty in an asset class that requires stability to underpin long-term investment decisions".
"Whilst this is particularly true in relation to short-term revenue measures, such as the previous Government's decision to increase withholding tax for Managed Investment Trusts without consulting with industry, it is also true for positive tax changes that may be viewed as unsustainable and likely to be ‘wound back' by future governments," the submission said.
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