New South Wales Senator Andrew Bragg has voiced his concerns and is actively engaging with the Australian Prudential Regulation Authority (APRA). He is driving the conversation on whether investments, such as those by Aware Super in housing for key workers offered at a discount, pass the litmus test of the best financial interest duty.
Senator Bragg's probing questions to APRA, submitted formally as part of Senate Estimates, have highlighted this significant issue. He inquired if APRA is actively investigating superannuation funds committing to these affordable housing projects without the assistance of government handouts, focusing on whether the returns match up to the best financial interest duty standards.
Aware Super has publicly outlined its strategy, stating that their investments in housing for essential service workers will generate income through rent, reduced by 20%, as well as through potential property value appreciation over time.
Bragg has sought APRA's assessment on Aware Super's rationale for making these investment choices, questioning their conformity to the duty that necessitates investments be chosen based on the best financial gain for all members of the fund.
- Aware Super claims that these investments directly benefit key workers living in regions with high job demand, including sectors like health and education, of which many of its members are a part.
- The fund’s indication that these investments are aligned with the interests of a select segment of its membership has sparked a broader discourse on whether these initiatives meet the universal best financial interest duty, designed to be impartial and inclusive for all members.
The questions raised touch on broader implications, such as whether a fund can leverage the argument that certain investments benefit a majority of its members, despite it being open to all and whether doing so stays true to the principle of the broader financial interests of the collective member base.
In light of Senator Bragg's queries, APRA's future responses may significantly shape the governance policies overseeing superannuation fund investments. It raises the pivotal question— can investment decisions have a dual focus on social impact and financial returns without breaching fiduciary responsibilities?
