Australian superannuation fund Rest has flagged it has A$500 million ($321 million; €295 million) to deploy into agriculture – but warned that the country’s early super withdrawal scheme could hinder its ability to make long-term investments in the asset class.
The fund announced that it has now paid out A$1.08 billion under the early withdrawal scheme as of May 21. The scheme was introduced by the federal government in April and allows members to withdraw A$10,000 before June 30 and another A$10,000 after that date if they have suffered financial hardship because of the covid-19 pandemic.
Data released by the Australian Prudential Regulation Authority this week showed that Rest, which has A$53 billion of assets under management and draws much of its membership from the hard-hit hospitality sector, was among the top four largest payers of early withdrawals, behind only AustralianSuper, Sunsuper and Hostplus.
Rest chief executive Vicki Doyle highlighted the role that the fund’s capital has played in supporting employment and sustainable development by pointing to its investments in agriculture.
The fund has A$330 million invested in what Rest described as “99,000 hectares of rain-fed cropping farms in Victoria, New South Wales, Queensland and Western Australia,” which Agri Investor understands is managed by Warakirri Asset Management.
Doyle added that the fund intends to deploy a further A$500 million in agriculture over the next five years. Rest had not responded to a request for additional comment on further deployment prior to publication.
Doyle also cautioned against the early withdrawal scheme becoming a permanent feature of Australia’s superannuation landscape due to the effect it could have on hindering long-term investments like agriculture, arguing that superannuation has a “much larger role to play” in helping the economy.
“As a major investor with A$53 billion in funds under management, Rest is well placed to provide long-term capital investment into important community infrastructure and capital raisings that can generate returns for our members and support Australia’s economic recovery,” Doyle said.
“However, in order to invest in infrastructure and raise capital for Australian companies, it’s critical superfunds have stable policy settings. Uncertainty will constrain our ability to invest for the long term on behalf of our members.”
She said it was important that a “short-term approach to the current crisis does not create a longer-term crisis for Australia’s savings” and that the fund would have to invest on shorter time horizons if super accounts were regularly used to provide fiscal support to the economy.
Doyle said that the amount withdrawn so far has remained “significantly below” the fund’s forecasts and is comfortably within its provisioning.
“We are now typically receiving around 3,000 to 4,000 applications in each daily set from the Australian Taxation Office, and these continue to trend downward,” Doyle said.
“We remain financially well placed should volumes increase as the scheme continues through to September.”