Government urged to act on impact investment
Monday, 8th April 2019 at 4:20 pm
Peak impact investing groups are warning Australia will fall behind globally if the federal government doesn’t pick up the pace on scaling the nation’s impact investment market.
The push from the Australian Advisory Board on Impact Investing (AAB) and Impact Investing Australia (IIA) comes after the federal budget allocated $5 million to establish a taskforce that will examine the government’s role in the social impact investment market.
The policy is modelled on the UK government’s 2013 expert taskforce, which was established to create a social impact investment market.
Federal Minister for Social Services Paul Fletcher said the taskforce would draw on international, private sector and government experience in social impact investing.
Both AAB and IIA welcomed the announcement, but said while the centralised government approach would be good for driving cross-sector engagement, it was vital the previous research and work done by AAB was leveraged going forward.
“There is enough evidence within Australia and internationally to provide confidence around the right actions and necessary steps to take this for-purpose market to the next level,” Rosemary Addis, AAB chair, said.
“The global market for impact investment has now broken through US$500 billion (AUD$705 billion), and for Australia to participate in a more significant way it is critical for the government, working with the AAB, to expedite the implementation of the policy already identified as needed to drive scale.”
Sally McCutchan, IIA CEO, told Pro Bono News what they really wanted to see was a one-time government investment in Impact Capital Australia, designed as an independent institution, to unlock capital and capacity to tackle social issues at scale.
“It would help with the market development piece in terms of being a centralised place for knowledge and expertise, help to seed new impact investment by actually providing the seed capital for those funds, and it would also in and of itself be a self-sustaining organisation which could continue to do that over time,” McCutchan said.
The budget also included $14.1 million over five years to establish three social impact investment trials, that aim to increase workforce participation of people who receive income support payments and to strengthen the wellbeing and self-reliance of families with children.
But Addis said other nations were already moving towards larger scale initiatives, such as Canada where a CA$750 million (A$790 million) commitment was made to a social finance fund.
She said Australia had to catch up.
“Australia will need to move faster to maintain the interest of both local and global investors to position as a destination for impact capital and scalable solutions,” she said.
McCutchan said the government had a clear role to play, including pulling policy levers and partnering with the private sector on initiatives, in order to realise the potential benefits for Australian communities.
IIA and AAB have not been advised as of yet on how involved they would be in the expert taskforce, but McCutchan said she was hopeful they would be given a role given their experience on the issue.
“We believe we’ve got a whole depth of experience in our work on the issue… so it’s really critical that the work that the AAB has already done is used to accelerate progress,” she said.