Superannuation's Impact on Australian Banking & Finance: A Detailed Analysis

Business Briefing: what super is doing to banking and finance. The Conversation10 MB (download)

The total of superannuation assets in Australia is a staggering A$2 trillion and contributions to this are rising. But despite this significant influence, a new study shows the effects of superannuation on banking and finance mostly balance out.

A researcher who was presenting the study, Robert Waschik from the Centre of Policy Studies in Melbourne, says the study found super funds hold more offshore assets than most households, so any increase in the guarantee for superannuation would increase demand for foreign assets leading to some depreciation in the Australian dollar. However this could be offset by the Reserve Bank raising interest rates, he notes.

Another aspect of the study tried to see whether the common gripe of bankers that an increase in superannuation could reduce the banks’ access to capital (through bank customers) could actually happen. The modelling found the banks could access more money through a few other measures, the study showed, including equity and bonds.

Waschik says the modelling points to potential threats to financial stability through an increase in the debt to equity and debt to income ratios of households, though these should be balanced out by a deepening of the market for corporate bonds in banking and strengthening of the current accounts balance.