Tuesday, 25 October 2022
Aware Super, one of Australia’s biggest institutional investors and super funds, has welcomed tonight’s Federal Budget as the necessary ’next step’ to inject the economic and fiscal certainty needed for the nation at a time of continued global economic disruption.
It also applauded the suite of measures to help boost confidence for Australia’s retirees and workers concerned about the effect of rising cost-of-living pressures on their retirement security.
Aware Super’s Chief Executive Officer, Deanne Stewart, said tonight’s Budget signalled the Government was committed to working alongside the private sector to tackle a triple threat of structural problems in the Australian economy: housing affordability, energy transition and improving women’s economic participation.
”We’re hearing first-hand the struggles Australian workers, families and retirees are facing and welcome the Government’s steps to re-energise the national investment environment to stimulate economic growth and tackle some of our society’s greatest needs,” Ms Stewart said.
Super charging a national housing solution
Ms Stewart said she was particularly optimistic the Government’s landmark National Housing Accord 2022 – which set an aspirational national target of delivering a total of one million new, well-located homes over five years from 2024 – signalled a new era of cooperation and collaboration needed to solve the nation’s housing supply crisis.
”Institutional investors can play a critical role in partnership with the construction industry, Community Housing Providers, and all levels of government in addressing the nation’s need for significantly more housing supply at a time where current projections have almost one household in every 10 needing a new home1 ,” said Ms Stewart.
”We are clear our primary obligation as a super fund is to act in the best financial interests of our members and help them achieve their best possible retirements. Diversifying our portfolio and investing in new areas such as build-to-rent helps us achieve this.
”We have also heard the clarion call that to redress the current housing emergency, Australia needs to supply one million urgently needed homes which is why it is vital the Government continues to foster the right policy settings to make it acceptable for institutional investors to play in this space.
”It has to make sense for us to first meet the best financial interests of our members, in order for us to contribute to the strengthening of the communities in which they live, work and retire.”
Aware Super is one of Australia’s largest build-to-rent developers, with $1.5 billion already committed to further build the fund’s residential property portfolio by 2025. Central to Aware Super’s residential strategy is its Essential Worker Housing Program, which began in 2018. The program offers eligible residents rent at 80% of the market rate for quality apartments close to important urban infrastructure such as hospitals, schools and transport
Healthcare and social assistance workers earn on average $1,287 per week, with those in education earning $1,3752 . This means a significant number of Australia’s essential workers are forking out almost half their wage to afford the median rental price of $490 in our capital cities.
In Sydney and Canberra, which have a weekly average rental price of $550, and Darwin with $500, the situation was more severe – especially with increasing cost-of-living pressures.
Ms Stewart said: ”Essential workers have not only kept Australia moving during the COVID-19 pandemic but continue to be vital team players as our nation finds it feet once again.
”What our members are now telling us is that the post-lockdown jump in rental prices is pushing nurses, teachers, police and other essential workers into poorer-quality accommodation further away from their places of work.
”This trade-off is unacceptable and we’re committed to playing our role alongside government initiatives such as the National Housing Accord 2022 to address the national housing supply issue.”
Strong commitment for sustainable investing
Aware Super’s Chief Investment Officer, Damian Graham, also welcomed the Powering Australia Plan, which builds on previous Rewiring the Nation commitments, saying the renewed policy certainty would enable institutional investors and super funds to pursue compelling new sources of strong risk-adjusted returns for members.
”The ability of our investments to generate more homes for Australians and help transition our national electricity grid to unlock renewables and decrease energy prices is just the icing on the cake,” Mr Graham said.
”Their real value lies in unlocking new sources of strong returns for our 1.1 million members through diversification into new asset classes,” he said. ”This is critical as we, along with other institutional investors around the world, are investigating new avenues of growth with strong defensive qualities to meet our longterm investment objectives in a disrupted economic environment.”
Mr Graham said Aware Super had more than $1 billion invested in renewable energy and believed the development of storage capacity was a key area of opportunity to also generate strong returns for the fund’s members.
He added that while the short-term investment environment remained challenging for performance across the super industry, managing risk was a key part of the fund’s investment process.
”We’re in it for the long-term,” he said. ”We invest for the long-term and we’re focused on delivering our members the strong returns they expect from us to help bolster their retirement savings and support their retirement income.”
Gender equality and education
Ms Stewart, who is a Workplace Gender Equality Agency Pay Equity Ambassador, also said while this Budget was focused on building resilience in the economy, the inclusion of women in the workforce was one aspect that deserved to be prioritised.
She applauded the move to introduce a pay rise for 2.7 million workers on the minimum and award wages, particularly for the impact of the pay increases for caring economy workers – the majority of whom are women – as well as a $3.1 million Early Investment in a National Strategy to Achieve Gender Equality.
In addition, the funding commitment of $871.7 million over five years to provide 480,000 places for fee-free TAFE aligned to identified skills gaps, including qualifications in the caring economy, were needed to bolster a sector which had borne the brunt of the national COVID response, she said.
”As this Budget is rightly focused on driving economic growth and resilience after a period of prolonged disruption, it is important that all those who can play a role in the workforce, especially women, are present and accounted for to drive any sort of sustainable recovery,” Ms Stewart said. ”Today’s measures will add to the momentum to improve women’s workforce participation and achieve real, positive change in our economy.”
Following the pre-budget announcement that paid parental leave will be extended to 26 weeks by 2026, Ms Stewart further called on the private sector to also step-up with stronger parental leave policies.
”In modern Australia, there is now more sharing in caring responsibilities,” she said. ”An increasing number of men are staying home to care for children and allowing women access to earn more wages and continue contributing to their retirement security through super.
”We continue to call for the Government to commit to paying the Superannuation Guarantee on paid parental leave and we look forward to working closely with all stakeholders to make this a reality for Australian families.”