The landmark Housing Accord between the nation’s biggest superannuation funds, the federal, state and local governments, builders and the community housing sector could finally unlock affordable and social housing as an asset class that will deliver stable long-term investment returns to millions of Australian workers.
The federal government’s commitment to build 40,000 social and affordable homes will help alleviate housing supply pressures and could be life-changing for thousands of families.
An increased supply of affordable housing will take pressure out of the property market and help make all types of housing more affordable.
Industry SuperFunds are excited to partner with the government and other Accord members to create projects with good risk adjusted returns while also delivering affordable shelter to thousands of Australians.
Institutional investment in housing has lagged other countries, through the Accord super funds are committed to developing innovative funding models and policy reforms that could lift housing investment.
Discussions on unlocking institutional investment in affordable and social housing has already begun and Industry SuperFunds will work with the National Housing Supply and Affordability Council on removing systemic barriers.
For many years industry super funds have partnered with the community housing sector on projects, and through the federal government’s leadership these projects can be better delivered at scale.
All levels of governments have a role to play in creating a steady pipeline of projects through identifying sites, land rezoning and expediting planning approvals.
Home ownership leads to better retirement outcomes but getting more Australians into housing as always been about boosting the supply of quality affordable homes rather than fuelling demand.
This October Budget also has a further reduction in the age limit for downsizer contributions.
But unfortunately, the government did not take the necessary action to fix the on average $4.7 billion a year unpaid super scourge impacting 2.8 million people – by mandating super is paid with wages.
Two Senate inquiries and a growing chorus of consumers groups, industry funds, unions and employers say paying super with wages will fix the problem and with the ATO only recovering a dismal 15% of the unpaid super debt its vital for members that this change is made.
While extending paid parental leave from 18 weeks to 26 weeks is great news for families, it is disappointing the government did not include paying super on its expanded scheme.
Women retire with about a third less super than men and paying super on parental leave is a concrete step towards bridging that gap which would give a mother of two at least $14,000 more at retirement.
The Budget papers has also confirmed the Super Guarantee rate will lift to 12% by 2025 as legislated – the July 2023 increase will take the rate from 10.5% to 11%.
Comments attributable to Industry Super Australia chief executive Bernie Dean:
“Investment in affordable housing is one of those issues where the financial interests of super fund members and addressing a pressing economic and social need can both be achieved.”
“Increasing affordable housing supply was always going to rely on mature leadership at the federal level and bringing the key players together – this Accord does just that.”
“Industry SuperFunds can play a role in developing housing as an asset class by using their tremendous capacity and long-term approach to investing, diversifying member’s savings securing good risk adjusted returns while delivering much needed additional housing supply that’s affordable for thousands of families.”
“Each delay on fixing the unpaid super scourge means millions more Australians are missing out on billions they are owed; being underpaid super can blow a $60,000 hole into someone’s retirement savings – it can only be solved by mandating super is paid with wages.”
“Expanding the paid parental leave scheme is a good idea, but unless super is paid on parental leave it will do little to bridge the gap in retirement balances.”