If super funds continue to spurn local infrastructure investment in favour of offshore assets, Crescent Wealth managing director Talal Yassine believes the Islamic finance market should help make up Australia's shortfall.
Yassine called on the Federal Government to underwrite super funds' investments in local infrastructure. He argued that using Australian's retirement pool to support other countries' infrastructure amounts to "intergenerational theft."
"While this asset-rich, infrastructure-poor reality is becoming increasingly well-known, solutions seem too hard for the nation's leaders to apply," he explained.
"This can't be allowed to continue. It is not enough to simply be the 'lucky country'. We need to think, plan and invest now to maintain our standards and grow into the forward-thinking nation that we all want to be a part of."
Yassine said that if super funds weren't part of the solution, "Islamic finance investment should be seriously considered."
"Islamic investment principles and values align with low risk-medium returns over the long period and with Islamic banking assets expected to reach about US$3.4 trillion globally this year, Islamic finance has the scale to be a real alternative. Only a very small fraction of this would be needed to provide Australian infrastructure with the lifeblood it needs," Yassine said.
"Australians who think it may be hard to source Islamic debt need only look at the UK, which in 2014 became the first Western country to issue an Islamic bond, otherwise known as a sukuk. This five-year sukuk raised GBP£200 million and was 10 times oversubscribed, with investor demand exceeding GBP£2.3 billion.
"The Australian Government is equally well placed, and possibly even better placed by geography, to issue sukuks to assist in the funding of our infrastructure. Local financial institutions, such as National Australia Bank and Crescent Wealth have expertise in building compliant Islamic debt structures, and could be used in these funding initiatives."
