The federal government is seeking to entice the superannuation sector to invest in social and affordable housing as part of its plan to tackle a ballooning supply shortage.
Assistant Treasurer and Minister for Financial Services Stephen Jones held a round table with peak industry group Association of Superannuation Funds of Australia (ASFA) this week in a bid to secure their investment.
The meeting followed the Prime Minister and Treasurer last week announcing the government would make up to $575 million from the National Housing Infrastructure Facility (NHIF) available to encourage private investment, particularly from superannuation.
That move was aimed at improving the risk-reward ratio for super funds, with the government seeing a larger role for superannuation investment in growing the economy.
The facility cannot currently be used to fund social and affordable housing.
The superannuation sector has not opposed the move but is yet to be convinced, citing high risk and low financial returns.
The Treasurer has committed to establishing an investor round table to examine obstacles and opportunities to best leverage co-investment funds.
The Assistant Treasurer told the round table there were many opportunities for joint cooperation between government and superannuation funds.
"There are many areas where the government can partner with the super funds to advance the national interest," Mr Jones said.
"Super funds are already major investors in assets that earn great money for members and produce huge economic benefits for the community [and] we need to find new ways to do this.
"Supercharging our economy with Australian workers' own savings is smart.
'Smart governments look for all available options to solve these [economic] problems. Engaging with our super funds is one way we can work together to do that."
Super funds wary of risk, returns
In a communique released following the round table, ASFA said it was the start of the conversation.
"Identifying models for investment which work economically, both for the government and for fund members, will be key," it read.
"Where the Commonwealth can create pathways to prove out investment methodologies, there will be greater scope for superannuation fund investment.
"Orchestration of the policy settings will be crucial — requiring ongoing effort and collaboration by stakeholders."
The superannuation industry has suggested assisting with planning permissions, increasing compensation and ensuring better returns would boost the likelihood of the sector investing further.
Housing shortage 'endemic' across Australia
A report prepared for the Community Housing Industry Association estimated the shortfall of social and affordable housing will exceed 700,000 by 2036.
A further paper from Swinburne University associate professor Christian Nygaard, released in March, found the shortage in affordable housing to be endemic across Australia.
That study found the social and economic cost of that shortfall to be in the order of $676 million per annum, a figure projected to rise to $1,286,000,000 by 2036.
A fifth consecutive interest rate hike on Tuesday dealt another blow to housing affordability, a message echoed by federal Housing Minister Julie Collins.
"It will make it more difficult for more Australians to find a safe and affordable place to call home," she told Question Time.
Minister Collins said the decision to unlock up to $575 million to encourage super funds to invest in social and affordable housing was one part of the government's plan to improve access.
"This facility has been under-utilised and we want to work with the other tiers of government, social housing providers, but also to try and unlock private capital such as superannuation investment into more social and affordable housing across the country," she said.
"[Federal, state and territory ministers] are having another meeting at the end of this week to talk about the national plan and get things happening.
"We want to get as many houses on the ground as quickly as possible."
A report by think tank Per Capita in May estimated less than 55 per cent of Australian residents born after 1990 will own their own home by the time they turn 40, compared to a historical high of nearly 72 per cent.
Sweetener for pensioners to downsize
The government will on Wednesday introduce legislation to parliament seeking to incentivise pensioners to downsize and free up larger houses for families.
The bill seeks to extend the asset test exemption on pensioners' home sale proceeds for a further 12 months.
The deeming rate, an assumed rate of return on assets used to determine pension amounts, would be lowered from 2.25 per cent to 0.25 per cent per annum.
Social Services Minister Amanda Rishworth said the changes would provide more flexibility for pensioners.
"We don't want people putting off downsizing to a more suitable home because they are concerned about the impact it could have on their payment rate and overall income," Minister Rishworth said.
"These changes will hopefully free up larger housing stock for younger families who need it."
