Infrastructure, Investments

Call for SMSF access to infrastructure assets

infrastructure assets

The establishment of liquid investment vehicles to house infrastructure assets would give SMSFs overdue access to this asset class, the SMSFA and FSC say.

The SMSF Association (SMSFA) and Financial Services Council (FSC) have called for investment in infrastructure assets to be opened up to SMSFs as part of the federal government’s economic recovery plan.

As part of a joint proposal to the National COVID-19 Commission advisory board recommending the establishment of liquid investment vehicles to house infrastructure assets, the two bodies said the vehicles would ease the concerns regarding illiquidity and asset pricing, which had historically prevented most SMSFs from investing in this asset class.

SMSFA chief executive John Maroney said: “It has always been a bone of contention with the association that SMSFs have been largely precluded from investing in infrastructure.

“The opening up of infrastructure investment to SMSFs in a unitised, liquid form would provide a new avenue for SMSF investment that could help fund Australia’s recovery and future infrastructure investment needs.”

Allowing SMSFs to access this asset class would provide trustees with a low-risk alternative to cash and term deposits during the current period of record low interest rates resulting from the COVID-19 pandemic, Maroney pointed out.

“The FSC proposal, in addressing the liquidity issue and removing the administrative barriers such as high entry costs, goes a long way to removing the challenges that SMSFs face in accessing an asset class that dovetails their investment profiles with Australia’s economic need for infrastructure development,” he added.

FSC chief executive Sally Loane said: “Opening infrastructure investment to SMSFs and superannuation investors would democratise investment in critical domestic infrastructure, as well have the benefit of offering stable, predictable income streams to fund Australians’ retirement.

“Stronger infrastructure investment would allow the national cabinet and state governments to turbocharge asset recycling to finance new job-creating infrastructure projects and create jobs.”

Yesterday, the SMSFA said the temporary compliance relief measures provided by the Australian Securities and Investments Commission during the COVID-19 pandemic had highlighted the effectiveness of a simplified regulatory approach to financial advice and it urged the government to consider a system of less complex regulations for practitioners as part of its coronavirus economic recovery plan.

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