In our blog last month, we advocated for the Morrison Government to not waste a crisis and this month we spoke with the Australian Financial Review (AFR) about the opportunity the Government has to consider new ways of financing infrastructure projects.
Australia is now in its first recession in 29 years, following the economic impact of the pandemic and the largest quarterly decline in consumption in 34 years.
Investing in infrastructure projects has always been a key strategy in stimulating economic activity during a downturn. Superannuation funds are a primary source of investment in infrastructure projects and the question of how best to structure these infrastructure project deals to be attractive to superannuation funds is something the Morrison Government is considering closely.
During times like this, it’s important that the enormous pool of superannuation savings, approximately $3 trillion, is invested domestically, rather than abroad.
Treasurer Josh Frydenberg has confirmed that he will be assembling a group of senior investment executives from across super funds to consider such new investments.
Crescent Wealth director and former Liberal Party leader John Hewson along with chief investment officer Jason Hazell told The Australian Financial Review that an independent fund set up by the government could benefit from fast-tracked regulatory approval for new infrastructure projects.
“We want the government to consider a 30 to 50-year guaranteed infrastructure bond, the proceeds for which would be used by an independent fund set up by the government to invest in Infrastructure Australia’s wish list of projects”. Structured Islamically “This is definitely something that we would invest in,” Mr Hazell said.
Dr. Hewson seconded this, saying that “introducing a long-term infrastructure bond with a government guaranteed coupon would be an attractive fixed income investment for Australian super funds.” He added that it was not just the vehicle with exposure to fast-tracked infrastructure projects that would appeal to super funds, but also the AAA-rated credit rating of the bonds.
Crescent Wealth hopes that the Morrison Government can be proactive in considering new vehicles and products for infrastructure investment that are being proposed by itself as well as the broader superannuation industry.
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Talal currently serves as a Non-Executive Director on the Whitlam Institute and Western Sydney University Foundation Council Board. He also serves as Chairman of First Quay Capital and Chairman of the Australian Arab Dialogue. Talal has also served on the Australia Post, Board of Sydney Ports, Macquarie University and the Western Sydney Area Health Service and the Chairman of the Department of Foreign Affairs and Trade; Council of Australia Arab Relations. In an executive capacity, Talal spent 10 years at PwC as a director and strategist, and at investment firm Babcock & Brown in the Corporate Finance Group and later in the Technical Real Estate Division. Later Talal held leadership positions in Better Place Australia, Platinum Hearing and Star Transport Australia.