Instead, he wants major developments broken up into smaller projects and the opportunity for equity partners to enter long-term arrangements with the government in a proposal he describes as being “four wins” for the economy, jobs, super fund members and local companies.
“We look at this misalignment of short-term constructor-focused model with what we’re trying to achieve, which is long-term, productive, economy-building projects and think there must be a better way.”
A short-term focus on big taxpayer-funded projects can lead to poor outcomes for the public with unexpected complications, cost blow-outs and delays, he said.
The federal government is looking to improve the country’s economic future and the unemployment rate by backing major infrastructure projects that will help boost jobs, as the unemployment rate jumped to 7.4 per cent in June.
Data from the Australian Bureau of Statistics released on Thursday showed almost 1 million people out of work and the worst jobless figure in over two decades due to the shock of business shutdowns from the coronavirus pandemic.
Treasurer Josh Frydenberg encouraged super funds in June to invest in big developments and do more to help the recovery.
However, a multi-billion dollar bid from a private consortium including IFM to build Melbourne’s airport rail link is expected to be rejected by the Victorian and federal governments in favour of a cheaper option.
Despite this, Mr Neal said there had been “lots of interest” across state and federal governments about IFM’s suggested changes to the procurement rules. IFM manages about $150 billion, including $70 billion in infrastructure.
“We’re trying to bring a constructive suggestion that says [to the government] you’ve got a lot on your plate and lots of people asking for your money,” Mr Neal said.
“We’re not asking for your money, we’re asking for the opportunity to contribute superannuants’ money. There are billions here that are ready to be deployed to support nation-building projects,” he said.
“Bring the projects forward with the right procurement model and we’ll engage keenly.”
Industry Super Australia chairman Greg Combet, who is also the chairman of IFM, recently accused Liberal MPs of being “hugely disruptive” and trying to undermine the super system following revelations of a backbencher push to delay the legislated superannuation increase. He has warned a $19.5 billion plan from IFM and Industry Super Property Trust to spend on infrastructure and property, creating 200,000 jobs, could be derailed by major policy changes.
Mr Neal is also concerned about the future stability of the superannuation industry, with a landmark report analysing the retirement system including super and the pension due to Treasury on July 24.
“Superannuation is a long-term savings vehicle. I think stability to the policy environment for anything that’s long-term in its nature is critical,” he said.
“It’s very hard to develop long-term investment strategies if there are sudden, unexpected changes.”
Aware Super, formerly First State Super, chief executive Deanne Stewart also warned this week major upheavals to the system could affect the super funds’ plans to invest in the economy.
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Jennifer Duke is an economics correspondent for The Sydney Morning Herald and The Age, based at Parliament House in Canberra.