THE House of Representatives Standing Committee on Economics today tabled a report on the implications of common ownership and capital concentration in Australia.

Committee chair Jason Falinski said, "The magic source of free markets is competition. It is the element above all else that promotes and provokes innovation, invention and delight in customers. There is a misconception that free markets are efficient, but this is less than half the story, what they are really good at is being dynamic, and competition is the key to that dynamism.

"The problem is that as capital markets become more concentrated, especially in Australia, that owners of capital have conflicting interests with consumers. There is an emerging field of study that is providing compelling evidence that concentrated capital is driving out competition."

Capital concentration can occur when large institutional investors dominate equity markets and influence how firms behave in the marketplace. Common ownership refers to a situation in which an investor simultaneously owns shares in competing firms.

"If financial markets are dominated by a small number of large investors, or if the same investor owns a significant stake in competing businesses, the evidence is piling up that competition suffers," Mr Falinski said. "That can lead to higher prices, lower quality goods and services, and lower relative wages — all of which are serious concerns.

"Further, the concerns of capital are not necessarily the same as the concerns of people, it is not just as consumers that we suffer, but also as employees, investors, voters, citizens and human beings."

The committee has recommended that measures be introduced to increase transparency in respect of the holdings and behaviours of institutional investors. The report also calls for Australia’s financial regulators to actively monitor capital concentration and common ownership.

Mr Falinski said, "This is an emerging issue, and some of the world’s top economic thinkers supported the committee in its inquiry. By taking steps now to empower our regulators to be proactive in monitoring and potentially responding to these phenomena, we can avoid having to deal with a larger issue in the future."

A full copy of the committee’s report is available on the committee’s website.

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THE Parliamentary Joint Committee on Intelligence and Security (PJCIS) will hear evidence from critical industries and government agencies on proposed new laws to protect Australia’s infrastructure from sophisticated cyber attacks.

The Security Legislation Amendment (Critical Infrastructure Protection) Bill 2022 addresses outstanding elements of new cyber laws passed by the Parliament last year, as recommended by the PJCIS in its Advisory report on the Security Legislation Amendment (Critical Infrastructure) Bill 2020 and Statutory Review of the Security of Critical Infrastructure Act 2018.

The committee will hear from witnesses representing a range of industry sectors including: IT, telecommunications, education, health care, logistics, energy, utilities, and key union groups. The committee will also hear from key government agencies, such as the Australian Signals Directorate and the Department of Home Affairs.

"Australia’s security outlook has never been more uncertain, and so it’s critical that government and industry are working hand in glove to identify and counter sophisticated cyber attacks," PJCIS Chair Senator James Paterson said.

 "The second tranche of cyber laws aims to achieve just that, and I look forward to hearing from the government and private sector alike to ensure a unified response to threats against our nation," Senator Paterson said.

Further information on the inquiry can be obtained from the committee’s website.

Public hearing details

Wednesday, 16 March 2022
​10am – 5pm (AEDT)
​Committee Room 2S1, Parliament House, Canberra

A program for the hearing is available online and the hearing will be broadcast live at aph.gov.au/live.

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HESTA has reached a key milestone, with its in-house Australian Equities team actively investing as the $68 billion industry superannuation fund embarks on the next phase of its ambitious internalisation investment program.

Plans to bring its fixed interest and cash teams in-house are well underway, with HESTA targeting at least 15 percent of its portfolio being internally managed in the short-to-medium term.

HESTA CEO Debby Blakey said the fund’s hybrid strategy – which combines direct investment capability alongside leading external asset managers – aims to continue generating strong, competitive, long-term investment performance at a lower cost, directly benefitting members.

“This is an exciting and new chapter for our fund that builds on a track record of delivering outstanding investment performance for members," Ms Blakey said.

“Our internal asset management team will help bring us even closer to capital markets, giving us greater access to cutting-edge global investment thinking. This will help us continue to deliver strong, long-term returns and ensure members’ investments are well positioned for a dynamically changing world.”

HESTA CIO Sonya Sawtell-Rickson said the internalisation program aims to enhance investment thinking across the whole portfolio, as well as its responsible investment activities, with its internal Australian equities team to strengthen the fund’s established direct engagement program.

“Our HESTA impact program has a strong focus on identifying investment opportunities arising from long-term sustainability trends such as the transition to a low carbon future and the outperformance companies with strong, inclusive and diverse cultures can achieve," Ms Sawtell-Rickson said.

“We’re well placed to continue developing first-hand knowledge of company business models that can increase our ability to generate competitive, sustainable returns, while amplifying the positive impact we can have on behalf of members."

The internalisation program resulted in a new leadership structure with a number of key appointments made over the last two years including general m for growth assets Steven Semczyszyn, who joined in 2020, to lead the internal Australian Equities team. 

“Our senior leadership structure has been carefully designed to help deliver the overall investment program and portfolio strategy and is aimed at enhancing an innovative, leading investment team, with plans to support future growth in capability and capacity," Ms Sawtell-Rickson said.

The fund has further invested in its systems and data, including the implementation of a whole-of-fund portfolio management system which can be leveraged for internalisation across asset classes.

“We’re bringing in some of the best and brightest minds to help manage a growing and significant pool of assets. Over the next two years we plan to have half of the active Australian Equities money managed in-house," Ms Sawtell-Rickson said.

Recruitment of the fund’s fixed interest and cash teams is well underway and expected to be fully operational by late 2022.

“We’re continuing to build capability across a range of asset classes that will allow us to keep delivering outstanding results for members,” Ms Sawtell-Rickson said.

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CLEAN ENERGY is a multi-billion-dollar sector that employs hundreds of thousands of Australians. However, the jobs across the whole energy sector, including renewable energy and energy efficiency, have never been systemically counted.

Australia is to adopt the United States’ gold standard of measuring energy sector jobs with the Commonwealth Department of Industry, Science, Energy and Resources (DISER) announcing a commitment to delivering the inaugural Australian Energy Employment Report (AEER). This survey will identify jobs and skills in the energy sector to train and prepare the workforce of the future.

The AEER is a key outcome of research by the Reliable Affordable Clean Energy Cooperative Research Centre (RACE for 2030) 2021 report, Developing the Future Energy Workforce.

RACE for 2030’s CEO, Jon Jutsen said, “We welcome the commitment of the Commonwealth Government at this crucial time to understand employment in the energy sector. The clean energy transition will cause a dramatic shift in employment. New skills and resources are needed to ensure the transition provides the greatest employment opportunities, and benefits Australia both environmentally and economically.”

To date, there has not been a systemic national framework to measure or forecast Australia’s clean energy jobs needs. The AEER is an important step in addressing this gap and will allow both industry and government to capture the economic opportunities as the Australian energy sector transitions to net zero carbon emissions.

“Australia’s energy transition is proceeding rapidly. This survey will provide up-to-date information on energy jobs across the sector. We look forward to collaborating with DISER and our partners to deliver the inaugural AEER over the coming year,” said Jessica Breadsell, RACE for Everyone Program co-leader.

RACE for 2030's partners who contributed to Developing the Future Energy Workforce report were UTS Institute for Sustainable Futures, Monash University, Energy Efficiency Council, ClimateKIC, Startupbootcamp, Energy Lab and the Australian Power Institute.

https://www.racefor2030.com.au/opportunity-assessment-reports/

About RACE for 2030 CRC

RACE for 2030 is an industry led collaborative research centre established in July 2020 with $68.5m of Commonwealth Government funding.

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