Nicolette Boele (Bradfield, Independent) Share this | Hansard source

Today, I'm here to talk about two topics that are close to my heart: climate action and superannuation. These might seem unrelated at first blush, but, when it comes to Australia's future prosperity, climate action and superannuation are very closely linked. Before I explain how, let me set the scene.

As of June 2025, the total value of assets in Australia's APRA regulated superannuation accounts was $3 trillion. That rises to $4.3 trillion if you add other types, such as self-managed super funds. Whichever way you cut it, Australia has one of the largest superannuation pools in the world. For argument's sake, by comparison the federal budget this financial year is just $786 billion.

Separately, most people in this place would agree that we need to retool the economy at pace, shifting our reliance away from energy produced by fossil fuels to energy produced from renewable sources. In other words, we need to electrify what we can and derive electricity from the sun, wind, water, plants and other renewable resources.

There are wildly different ideas about how much it will cost to electrify Australia's power system. Last year, the Australian Energy Market Operator put that cost at $122 billion, and soon afterwards the economic advisory and consultancy firm Frontier Economics put that figure closer to $600 billion. But, for argument's sake, let's take the middle ground at $300 billion to electrify the energy system. And now let's recall that Australia superannuation funds are charged with investing $3 trillion worth of our super savings—that means a mere 0.1 per cent of Australia's APRA regulated superannuation savings could fund the retooling of the country's entire domestic energy economy.

And super funds want in on this once-in-a-generation opportunity to transform our economy. They want in from the point of view of helping their members contribute to the popular goal of finding climate solutions. And they want in also for the epic economic and financial opportunities that this presents. Andrew Lill, the former chief investment officer for REST, said this last year:

The transition to a lower-carbon economy is a huge and historic investment opportunity …

He went on to say that it will not only 'provide strong long-term outcomes for members' but also help create 'the world we would like to see our members retire into'.

So why aren't Australian super funds bankrolling energy transformation? It's because of something called the superannuation performance test. The test was designed to protect members and weed out underperforming funds. The test imposes a benchmark for the returns super funds are required to earn for their members. If a fund fails to achieve the benchmark two years in a row, it is not allowed to accept new members into the fund.

The benchmark, as is currently required by regulation, favours short-term returns on investment. But infrastructure assets of the future, such as solar farms, large-scale batteries and other low-carbon projects, have very different capital and return-over-time profiles from the toll roads and airports that the current benchmark represents—that is, high upfront capital costs and low ongoing operating costs—which means that climate focused, long-term investments struggle to meet short-term, backward-looking benchmarks. The current benchmark, frankly, is not fit for the 21st century. The Australian Sustainable Finance Institute has noted:

… the test is significantly constraining the ability of super funds to adopt green or sustainable finance investment strategies at scale.

Every day that the current rules are in place and these future focused investments are delayed, Australians are paying the price, in their higher than necessary power bills, for this slow deployment of clean energy. Minor responsible updates will allow our super funds to invest confidently in tomorrow's economy while protecting members' returns today. With the stroke of a pen the benchmark roadblock could be removed, freeing billions in private capital and supporting projects that governments cannot fully fund, while helping balance the budget.

That's why I'm delighted to hear that the Treasurer said, following his economic roundtable last week, he was going to have another look at the superannuation performance test. Treasurer, I urge you to do that soon. This small, legislatively simple change to the test is exactly the kind of low-hanging reform fruit that could turbocharge climate action and superannuation investments returns for millions of working Australians, today and into the future.

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