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Super industry 'willing, enthusiastic' to inv -

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ELEANOR HALL: The peak body representing industry super funds in Australia says they are "willing
and enthusiastic" investors but will only sink money into Australian infrastructure projects if the
deals and returns stack up.

More than five-million Australian workers have money tied up in industry super funds. The funds now
invest between 10 and 15 per cent of their money in infrastructure projects which deliver a return
of around 10 per cent to fund members.

David Whiteley is the executive manager of the Industry Super Network and he says that until now,
industry superannuation funds have opted to put their infrastructure money overseas.

He has also been speaking to Alexandra Kirk.

DAVID WHITELEY: The message we gave to Government was very clear: industry funds have been long
standing investors in infrastructure, both in Australia and overseas. Many funds invest round and
about but in excess often of 10 per cent of their total assets in infrastructure. We're very keen
investors in infrastructure.

ALEXANDRA KIRK: Clearly the Government wants more.

DAVID WHITELEY: Well the Government wants more and the message from the industry fund movement is
very clear as well. We're very keen; we're enthusiastic investors, but we need to make sure that
the return that we would get from that investment is suitable for the broader asset allocation and
portfolios of the super funds.

ALEXANDRA KIRK: So what sort of returns then are you looking for in terms of your contributors?

DAVID WHITELEY: The return that we would seek to achieve could often be, or would often be
dependent on the level of risk. But to give you an impression, infrastructure as an asset class
over the last five years has delivered a return to industry fund members of somewhere in the order
of 10 per cent.

The critical thing for the industry fund movement is this: we are a keen and enthusiastic investor
in infrastructure; we've got a track record of that over 10 years. In fact, investment in
infrastructure, like other unlisted assets, has been a reason for much of our performance of
industry funds. However, the deals have to stack up in terms of returns to our members.

ALEXANDRA KIRK: And if the Government wants superannuation funds to invest more in nation building
projects, is there a quid pro quo here? Do you expect something also from the Government?

DAVID WHITELEY: Well what we expect from the Government are well-structured deals which build the
economy, which create jobs, but which deliver returns, appropriate returns to industry fund
members. Unless the returns are there, unless the deals stack up then we won't be able to

ALEXANDRA KIRK: Do you think that Australians, that is superannuation contributors, want their hard
earned money to be invested, or more of it to be invested in infrastructure?

DAVID WHITELEY: Well as I said, industry funds have five-million members. Industry funds have
invested in infrastructure for well over 10 years and our investment in infrastructure has led in
part to the investment out-performance of industry funds when compared to retail funds.

Industry fund members are clearly satisfied with that investment out-performance and therefore as
long as these arrangements and these deals are suitably structured, continue to deliver an
appropriately risk adjusted return, then I'm quite sure they'll be satisfied with these decisions.

ALEXANDRA KIRK: And how many billions lie there, waiting to be invested in more infrastructure?

DAVID WHITELEY: We currently have around about, collectively $200-billion in funds under
management. Quite clearly, only a fraction of that can be invested in infrastructure. It's not so
much about how much money is available there at the moment, it's really about looking at each deal
on a case-by-case basis.

ALEXANDRA KIRK: Well considering the big slide on the stock market, do you think that it's
inevitable that more superannuation funds will invest in infrastructure?

DAVID WHITELEY: Well look, not necessarily. Certainly at the moment many funds are investing
inflows into cash and that's a prudent decision for those funds that are doing that. They are also
likely now to be underweight in equities and that will be something that the funds will be managing
as well. So there's a range of complexity to this.

But you know, investment in infrastructure is a long term investment. Super funds by their nature
are patient, long-term investors. So we believe that where the appropriate opportunities arise, the
industry funds will be enthusiastic participants as long as the returns are there for our members.

ALEXANDRA KIRK: More enthusiastic than previously?

DAVID WHITELEY: We've been enthusiastic investors for over 10 years. One of the great frustrations
for industry funds in recent years has been the lack of national leadership by the previous federal

We now have a federal government that is offering strong leadership on investment in infrastructure
in Australia. It's worth noting for example that industry super funds have continued to invest
heavily internationally, in international infrastructure, because the opportunities weren't offered
within Australia.

ALEXANDRA KIRK: So if there are infrastructure deals now on offer in Australia and they offer say
the same comparative return, do you think then your preference would be then to invest in projects
in Australia?

DAVID WHITELEY: Well that's going to be a decision obviously for each individual super fund and
industry super fund but quite clearly given the broader economic crisis, the need, the vital need
for investment in infrastructure in Australia. The fact that we've got five-million Australian
workers as members of industry super funds, investing at home, if the deals rack up, would be a

ELEANOR HALL: The Industry Super Network's David Whiteley, speaking to Alexandra Kirk.