Jim Chalmers has signalled the Albanese government is open to considering sweeping reforms being championed by industry superannuation funds to unlock billions in private capital to fund Australia’s clean energy transition.
After meeting on Tuesday with banks, venture capital firms, super funds and investor groups in Canberra, the treasurer told journalists he had committed to consider specific measures proposed by AustralianSuper, cbus, HostPlus, CareSuper, Hesta, UniSuper and the behemoth Australian fund IFM Investors.
The industry funds, which manage about $1.2tn, are seeking specific commitments including concessional finance or “availability payments” to bankroll the new transmission infrastructure required to link renewable power generation to the grid and production tax credits to help develop a sustainable Australian aviation fuel industry.
The chair of IFM, Cath Bowtell, gave a presentation to Tuesday’s investor round table convened by Chalmers and the climate minister, Chris Bowen. IFM is owned by 17 Australian industry super funds and had approximately $217bn under management last financial year.
Chalmers said IFM and super funds outlining potential reforms to supercharge the transition was “a really good development because there are vast industrial opportunities here in the clean energy transformation”.
“There’s a lot of good work and a lot of deep thinking that’s gone into those proposals,” the treasurer said. “We’ve committed to consider them.” He said delivering the entire wishlist was “unlikely” but “it might be possible for us to do some of them after we carefully consider it”.
The government has also agreed to consult on options to improve the superannuation performance test to better balance the imperatives of achieving steady growth in retirement incomes while unlocking capital for economic priorities such as the net zero transformation and housing.
Chalmers said the government wanted to ensure the performance test was “designed in a way that it’s intended to, and in a way that doesn’t deter investment in important areas”.
In addition to specific measures to spur new investment, the investor community has pressed the government to outline detailed sectoral plans for decarbonisation of the economy. The plans, in essence, set the roadmap for meeting Australia’s emissions reduction targets for 2030 and 2050.
The government has committed to developing six plans covering electricity and energy, industry, resources, the built environment, agriculture and land, and transport. Tuesday’s investor round table agreed on a set of principles to guide the sectoral plans.
Rebecca Mikula-Wright, the chief executive of the Investor Group on Climate Change, said Tuesday’s agreements were a “crucial move towards the clarity and confidence that investors need to deploy capital into Australia’s economic future and deliver the best risk-adjusted returns to their beneficiaries”.
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“The global transition to net zero has already started and Australia is now taking the steps to make our path clear instead of chaotic,” she said. “To keep moving together we need to keep working together.”
The independent Climate Change Authority warned last week that Australia risks falling short of its 2030 climate target and time was running out for it to make a prosperous transition to net zero emissions on its own terms.
The government pre-empted this warning – having already received the authority’s report – by announcing an expanded taxpayer underwriting scheme to drive the private investment needed to meet the energy goal.
A range of groups are lobbying the government to create more incentives to keep private capital for Australia’s clean energy transition in the country rather than chasing favourable investment incentives in the United States, the United Kingdom, Europe, Canada and Japan.
The Biden administration’s Inflation Reduction Act, which includes $369bn (A$560bn) support for clean energy has escalated global competition for climate-focused investment. IFM confirmed last month it will sink £10bn (A$19bn) into infrastructure and energy transition projects in Britain by 2027.
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