“Australia is not the US” - ACSI’s annual conference sets the tone ahead of next month’s election

“We did not come to fear the future, we came to shape it”, affirmed HESTA CEO Debby Blakey, as she quoted former US president Barack Obama in her address to the Australian Council of Superannuation Investors (ACSI) annual conference in Melbourne.

Blakey, who is also the president of ACSI, went on to open the floor for a rather timely annual gathering of asset owners down under. While the upcoming Australian election in early May set the context of what was discussed, climate policy shifts that followed the American one set the tone.

A different relationship

That policy shifts in the US have been seismic and significant, was a reality too hard to ignore for those in the room. However, some argued that these shifts and their implications were unlikely to be directly and easily replicated in Australia.

Louise Davidson, ACSI’s chief executive, made the case that Australian asset owners are likely to ride out the current wave of disruption. “Australia is not the United States”, Davidson warned. “The relationship between investors and companies [in Australia] is very different to the one in the US”, she added.

Joe Longo, chair of the Australian Securities and Investments Commission (ASIC) advocated a similar view. “What is going on in the US is extraordinary”, he said before adding, “for us, I don’t think anything changes”. ASIC’s American counterpart, the SEC, has reversed its position on the financial materiality of climate change in recent weeks.

“In Australia things are going to keep moving forward”, Longo stated.

For Australia’s companies too, policy shifts in the US – most notably on trade - are hugely consequential. A view, that was restated at a directors panel that followed Longo’s address. Panellists, who serve on the boards of some of Australia’s largest companies, pointed out that supply chain resilience has become a matter of long term concern.

Rising private market allocations

Amongst the topics that trickled into conversations were asset owner capital allocation trends. In particular, the rising popularity of private market assets amongst Australian super funds.

“Private markets are very important to superannuation capital”, said Aware Super chair Christine McLoughlin.

Rising allocations have had several drivers including diversification and returns. In a statement published earlier this year, the Association of Superannuation Funds of Australia made the case that private market allocations have improved member outcomes.

“Every single Australian with a superannuation account has benefitted from the sophisticated approach that super has taken to exposure in private markets”, wrote Mary Delahunty, ASFA’s chief executive.

From a regulator’s perspective, however, rising private market allocations could increase concerns about lower market transparency. “For the vast majority of investors what’s going on in the private markets is a mystery”, ASIC chair Joe Longo warned.

Keeping it simple

A theme that connected conference sessions was a call for regulatory simplification – which both the regulator and the regulated agreed upon.

Longo was the first to point out the issue. “Australia has a real problem with complexity”, he said. A problem, Longo noted, that ASIC is working alongside other financial market regulators to address.

Aware Super’s chair Christine McLoughlin welcomed the discussion about regulatory simplification whilst empathising with the Longo and his colleagues. “The regulator is navigating the same maze we are”, she pointed out.