Property industry welcomes overhaul of super performance test

“More than 16 million Australians have a stake in property through their super funds, so this sensible adjustment [in] the government’s superannuation settings is welcome,” Property Council chief executive Ken Morrison said.

The original methodology for the test proposed benchmarking the performance of investments in Australian property against a listed index. But, as the PCA underlined, this approach did not reflect the different risks/return profiles, volatility and fee schedules of unlisted and listed property investments. 

“Superannuation investment into property provides long-term stable financial benefits for investors, create thousands of jobs, and ensures Australia’s future supply of office buildings, industrial precincts, shopping centres and housing,” Mr Morrison stressed.  

These “common-sense changes”, he said, mean the performance of unlisted property funds will be assessed on an apples-to-apples basis, allowing investment to flow into projects that benefit the economy.  

“The government’s methodology adjustments reflect the reality of the market and demonstrate a willingness to work with industry in the implementation of these reforms.”

On Wednesday, Treasurer Frydenberg announced that the government will be making last-minute amendments to its super reforms, which would see investments in domestic infrastructure and property assets declared safe. The announcement followed a myriad of concerns the super sector could be discouraged from investing in these assets for fear of being labelled an underperformer.

“This will improve the accuracy of the performance test, strengthen the focus of the test on investment outcomes delivered to members, and ensure that Australian superannuation funds can invest with confidence in these domestic assets,” Mr Frydenberg said in a statement.

In announcing the overhaul, the Treasurer also formally launched the exposure draft consultation process, due to close on 25 May.