Government urged to act quickly to scale Impact Investment
The Australian Advisory Board on Impact Investing (AAB) and Impact Investing Australia (IIA) welcomed the Australian Government’s commitment to a centralised government approach to Impact investing with the announcement of $5 million for a Taskforce and urged the Government to leverage the substantive work already done by the AAB to move quickly to action to drive scale. The AAB is Australia’s leadership body for impact investing, comprised of leaders from private and community sectors, and working with partners including government across Australia and internationally.
“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”, said Mrs Rosemary Addis, AAB Chair. “It is great to see a well resourced, whole of government mandate. This will be important in driving constructive engagement across sectors further building on the AAB’s achievements in engaging practitioners and stakeholders to understand market activities and needs. The global market for impact investment has now broken through US$500 billion, and for Australia to participate in a more significant way it is critical for the Government working with the AAB to expediate the implementation of the policy already identified as needed to drive scale ”.
The AAB and IIA welcomed the related measures of $14.1 million for three social investment trials. These announcements build on the Australian Government’s $38.7 million of impact investing measures in previous budgets (2018-19 and 2017-18) as well as the Government’s commitment to partner with IIA.
“Other jurisdictions are however moving to initiatives that can more readily drive scale in impact investing through policy related to infrastructure and services designed to deliver better outcomes” said Mrs Addis. These include the Canadian Government CA$750 million commitment to a social finance fund and the development of LATAM, Indian and African US$1 billion outcomes platforms in education. “In this context, 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” said Mrs Addis.
“The Government has the immediate opportunity to drive scale by making a one-time investment in the game-changing initiative, Impact Capital Australia (ICA)”, said Sally McCutchan, CEO, Impact Investing Australia. “Designed as a catalytic, independent institution, ICA will unlock capital and capacity to tackle social issues at scale.”
“Last year, together with a broad set of stakeholders across the market we released a sector-wide strategy to accelerate the growth of impact investing in Australia”, said Ms McCutchan. “The Government has a clear role to play, including pulling policy levers and partnering with the private sector on game-changers like ICA to realise the potential benefits for Australian communities”.
A further immediate step the Government can take is to formalise an Office for Impact Investing. A focus on measurable outcomes, an investment mindset and the involvement of the private sector would represent a new way of working for many parts of government. A centralised Office would enable more targeted measures signalling commitment and unlocking private capital for public good, maximising contributions from market-based solutions; facilitating engagement and collaboration with other actors; and encouraging innovation and new models for social purpose.
The AAB and IIA were disappointed to see stagnation in Australia’s international development assistance program. “This makes it even more important to expand the finance toolbox for development, and emphasise the importance of a strong design for the announced Australian Infrastructure Financing Facility for the Pacific (AIFFP) to increase its efficacy, timely deployment and leverage of private capital for maximum regional impact” said Ms McCutchan. “A stronger design includes extending the AIFFP’s geographical remit and providing a suite of financial tools beyond a loan and grant program”.
“With Australia at the forefront of growing global momentum, we encourage the Government to focus on catalytic action. We look forward to working constructively with the Australian Government to drive a proactive agenda for scaling impact, building on the foundations already laid and the course charted with practitioners and stakeholders for achieving a vibrant, dynamic impact investment market at scale that is uniquely Australian and makes a rich contribution globally”, concluded Mrs Addis.
Impact investments, which intentionally target societal outcomes alongside financial returns, unlock private resources to achieve positive social and environmental impacts. Impact investing is already making a difference across a broad range of areas, including: housing, employment, disability, aged care, health, education, arts and culture, agriculture and the environment.
[recent_comments count=”5″]In last year’s Budget the Australian Government committed to working in partnership with IIA, the implementing arm of the AAB to examine opportunities to leverage private sector capital and community sector engagement to build the impact investment market to scale in Australia and tackle issues that affect Australian families and communities. We welcome this next step and look forward to strengthening this partnership further.
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