Cbus commits $500m to help tackle ‘diabolical’ housing affordability issues
Cbus chairman Wayne Swan says tipping $500m into the government’s Housing Australia Future Fund will also deliver a reasonable return.
Cbus has committed half a billion dollars to support the government’s Housing Australia Future Fund, which Wayne Swan, chairman of the industry super giant, said would help deal with the country’s “diabolical” affordability issues.
In a major win for Jim Chalmers following his inaugural investor roundtable in Sydney on Friday, Mr Swan said “our common purpose today is to meet our obligations for appropriate risk-adjusted returns for members, but we should also bear in mind that our members are many of the same people who are struggling in the housing market”.
“Cbus is a seasoned and long-term investor in the property sector and we have supported developments along the housing continuum – our commitment to the housing sector is part of our fund’s DNA,” Mr Swan said.
“That’s why Cbus has worked closely with NHFIC (the National Housing Finance and Investment Corporation) over the last four years and why we believe the most constructive first step we can take today is to ensure the success of the Housing Australia Future Fund.
“And to that end I can outline a Cbus commitment of half a billion dollars over five years to support the HAFF, subject of course to all the necessary commercial settings being workable.”
The Cbus commitment comes as Housing Minister Julie Collins in Parramatta on Friday unveiled a landmark agreement between NHFIC, AXA Investment Managers and community housing provider St George Community Housing to deliver affordable housing, starting with 350 new homes in Westmead.
“We want to see affordable housing where it’s needed, and more workers at the (Westmead) hospital will soon be able to have somewhere close and convenient to call home,” Ms Collins said.
“By bringing the private sector together with all levels of government, we can work together to address Australia’s housing challenges.”
The Housing Australia Future Fund, which was announced at the October budget, will be a $10bn fund managed by the Future Fund, with the investment earnings going to NHFIC to help finance the construction – according to government modelling – of at least 30,000 social and affordable homes over five years.
The Treasurer through the National Housing Accord is seeking to bring together private investors, the building industry and all levels of government with an aspirational goal of funding and delivering one million “well-located homes” over five years from 2024.
The $500m from Cbus will provide initial funding to NHFIC to start delivering on the HAFF goals early, without having to wait for the proceeds of the $10bn fund to begin flowing.
“The $500m we are putting on the table for the HAFF is what we see as a proportionate commitment for a fund of our size to ensure NHFIC has the capital to succeed in unlocking tens of billions in new, non-market housing investment,” Mr Swan said.
Cbus manages more than $70bn on behalf of 850,000 members drawn from the construction and building industry and associated unions.
The government’s plans to stimulate private investment to housing, particularly from the $1 trillion industry super sector, face the hurdle of engineering investment opportunities that offer reasonable rates of returns.
The $260bn AustralianSuper has said it would need returns in the order of 6 to 11 per cent to invest in residential housing.
Housing Industry Association chief executive of industry policy, Kristin Brookfield, said there was a strong commitment to find the ways that we can get more funding and finance into the affordable and social building space”.
“HIA is certainly on board to see those homes get built. The nub of it now is how do we get investment in housing where those (private) investors do think the returns are enough,” Ms Brookfield said.
But Mr Swan, a former Labor federal treasurer, said “we believe that investing through the HAFF will meet the best financial interests of our members”.
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