OPINION PIECE - by Michael Potter, Senior Policy Manager – Economics & Tax
The FSC released an important report this past week: Accelerating Australia’s Economic Recovery. The key proposal in the report was that Australia should introduce a new investment vehicle that would promote a much wider range of investment into infrastructure.
These new structures, called Australian Superannuation and Infrastructure Investment Vehicles, or ASIIVs, would be unitised and tradable, increasing liquidity compared to existing unlisted infrastructure vehicles.
Currently, most infrastructure investment by super funds is from the larger institutional funds; the ASIIV would open this investment up to a broader range of super funds, including SMSFs. This democratisation of infrastructure investment will substantially widen the asset classes available to super funds, while allowing infrastructure to tap a much wider range of investors having well over $1 trillion to invest.
The new vehicle should help Australia out of its current economic downturn by increasing private sector investment into infrastructure and increasing the options for Governments to recycle existing infrastructure assets to invest in new projects. The need for a boost to investment is clear, with business investment forecast to fall to its lowest level on record as a share of GDP.
The report also recommends lowering the company tax rate to 25 per cent for all business to help with Australia’s current investment drought. There are many other tax recommendations in the report, including removing highly inefficient stamp duties, particularly on life insurance, and fixing numerous tax issues that are resulting in excessive taxation for investors in Australia’s managed funds – in many cases, the Government has publicly committed to solving the problems but we urge them to complete the job as soon as possible.