The new Assistant Treasurer and Minister for Financial Services Daniel Mulino says he wants the financial services sector to mobilise to preserve and grow productivity gains as inflation eases and wages grow.
“It’s now timely to keep our attention on inflation and making sure that we see real wages increase, but it’s also a good time to pay attention to productivity and its role in boosting long-term living standards,” Mulino tells Professional Planner in an exclusive interview ahead of the Albanese government’s August Economic Reform Roundtable later this month.
“We know that in the long term, productivity is an absolutely key driver of our living standards [and] by some measures, the financial services sector is right up there in the top one or two or three sectors of our economy in terms of size, in terms of employment, GDP, value-add. So productivity in that sector is absolutely critical, given how large it is.”
But there’s “another role” that the sector plays, Mulino said.
“You look at the banks, the role they play in credit and business formation and in providing households with asset accumulation over the life cycle,” Mulino says.
“You look at the risk management of insurance companies, and you look at the asset accumulation of superannuation funds and the capital allocation role they play.
“All of these are absolutely foundational to the economy as a whole, and so making sure that those different parts of the financial services sector – and there’s more elements to the financial services sector than that, there’s the payment system and so many other elements – but to make sure that they’re all functioning as productively as possible is not just important to that sector, but obviously the whole economy.”
The Economic Reform Roundtable is designed to “build consensus on ways to improve productivity, enhance economic resilience and strengthen budget sustainability” by bringing together leaders from across government, business and unions.
It was previously dubbed a “productivity summit” but is understood to have undergone a rebrand over fears voters will perceive it as being supportive of job cuts, as the trade union movement escalates its campaign against AI-led labour market disruption.
A number of industry figures have been invited by Treasurer Jim Chalmers to participate in the roundtable, including Cath Bowtell, chair of asset manager IFM Investors and former CEO of advice licensee Industry Fund Services, and Andrew Fraser, chair of Australian Retirement Trust and a former Labor Treasurer of Queensland.
Sally McManus, secretary of the Australian Council of Trade Unions and an AustralianSuper board director, will also be in attendance. McManus told the ABC’s Insiders program on Sunday that the powerful union peak body would push for a repeal of “limiting” rules around how superannuation funds invest in housing.
The callout echoed a submission by the $1 billion Rest Super that said the Your Future Your Super performance test should be changed to encourage investment in social and renewable infrastructure.
“[The test should be reformed] to cater for emerging areas including the energy transition, decarbonisation, affordable housing, and possibly other emerging local industries (e.g. AI businesses and venture capital), to ensure the test helps drive productivity and efficient capital flows,” Rest said in its submission.
“This is an essential reform to encourage investment in economy-enhancing local businesses and infrastructure.”
The super fund also wants “higher certainty” of planning outcomes and increased land-availability pipelines for housing projects, as well as standardised definitions of social and affordable housing to provide a “comparable and level playing field for investors across jurisdictions”.
“Australia is facing major challenges, including climate change, an ageing population and a severe housing shortage,” said Enrico Burgio, Rest’s general manager of public policy and advocacy.
“We strongly support economic reforms and policy changes that address intergenerational inequity, boost productivity and create a fairer super system. We believe the superannuation sector has a meaningful role to play in driving these outcomes, and we welcome the chance to advocate for our members and work with the Government to unlock new ideas and build consensus on reform.”
In some of its policy recommendations for the Economic Reform Roundtable, Rest is broadly aligned with the Association of Superannuation Funds of Australia, which also believes that the performance test risks the “unintended consequences” limiting investments in infrastructure, energy transition assets, private equity and property.
“The effects of needing to manage tracking error on asset allocation decisions are likely to be more consequential for assets/asset classes that are not well-represented by the existing set of benchmarks,” ASFA said in a submission ahead of the roundtable.
“This includes the broad range of unlisted assets, but particularly unlisted ‘greenfield’ investments in energy transition infrastructure, private equity, and non-residential housing.”
