Aware, HESTA, Hostplus, Rest and CBUS join campaign to invest big in Keir Starmer’s big green agenda

Deal-hungry Australian superannuation funds have embarked on a power play with UK counterparts to bankroll Prime Minister Keir Starmer’s green energy agenda.

Industry super funds Aware, HESTA, Hostplus, Rest and Cbus have put their name to ambitious calls for changes to UK regulation, public sector investment and accounting policies to reduce barriers to investment.

Ahead of meetings with UK officials in Westminster on Wednesday, Australian and UK retirement savings players pushed for the Brexit bleeder to improve its integration with European Union energy markets and allow for tariff-fee trading.

The Australians are keen to get momentum into their UK ambitions, as revealed last November when super investment manager IFM Investors signed a memorandum of understanding with the former Tory government mooting £10b of investment by 2027.

The six Australian funds, five UK counterparts and related industry groups now argue a raft of policy tweaks are needed before they can confidently bankroll the ambitious clean power agenda of the new Labour government.

The groups claim it could cost upwards of £10bn each year to double onshore wind generation, triple solar power and quadruple offshore wind power by 2030.

The 11 funds and the UK’s Pension and Lifetime Savings Association on Wednesday endorsed a report by Australian super fund-owned manager IFM Investors ahead of the Westminster meetings.

Boasting more £1.7 trillion ($3.3tr) under management, the report called on the government take an active approach across planning, climate, energy and fiscal policy to provide investment managers with “greater confidence and clarity”.

IFM executive director Gregg McClymont said while there are “number of steps” to unlocking investment in UK infrastructure, a change to the accounting treatment of productive taxpayer-backed investments was crucial.

“The government should account for infrastructure assets more like a long-term investor, and less like a commercial bank holding equity as loan collateral to be sold in a fire sale,” Mr Clymont said.

With Australian super contributions totalling $184 million in 2023-24 and the savings pool heading towards $4tr, managers are keen for new big ticket deals to spread investment risk while not cluttering portfolios.

But they are facing increased competition from private equity and private debt players, with US deal maker KKR and Atlassian co-founder Scott Farquhar beating the $350b AustralianSuper in a bidding war for regional player Queensland Airports.

SuperRatings manager Kirby Rappell said super funds had to continually worked on developing ways to “keep investing” and were attracted to partnerships that minimised fees.

Mr Rappell said this involved continually exploring offshore for opportunities. “They’re hungry to find ways to make money for their investors,” he said.

IFM and UK fund investment bosses will argue for the lifting of accounting barriers to agencies such as Great British Energy and National Wealth Fund partnering in major infrastructure projects.

While these agencies’ project liabilities are counted in public sector net debt calculations, their investments in productive assets are given zero value in these politically-sensitive ratios.