Is superannuation Australia’s sharpest untapped foreign policy tool?

Nikko Riazi | Australian Foreign Policy Fellow

Image sourced from Shivansh Singh via Unsplash

On 9 July 2026, AustralianSuper, the country’s largest superannuation fund, committed a further AUD$500 million to India's National Investment and Infrastructure Fund, lifting its total investment in India to around AUD$3.3 billion. Although a commercial decision, the announcement, which coincided with Prime Minister Narendra Modi’s Australian visit, reflects a broader strategic reality in which Indo-Pacific influence is increasingly shaped by the infrastructure, connectivity, and investment that underpin economic resilience, alongside traditional security partnerships. Yet despite the scale of this announcement, Australia’s AUD$4.4 trillion superannuation system, one of the country’s greatest strategic advantages, has yet to find its place in the foreign policy architecture.  

Investing beyond defence and diplomacy

Security cooperation remains fundamental to Australia's Indo-Pacific strategy, but the depth of regional ties is also shaped by trade, investment, and commercial links built over decades. Australia is recognised as a trusted security partner and reliable supplier of critical resources, but deploying its superannuation savings more strategically would deepen that role through financial integration.

Trade agreements set the conditions for commerce, while investment often determines the depth and durability of economic relationships. Australia has built an extensive network of free trade agreements and continues to shape regional economic architecture, including through the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Its export profile, however, remains concentrated in commodities such as iron ore, coal and liquefied natural gas. Deploying institutional capital more deliberately would complement these foundations, forging commercial links and advancing regional development priorities.

Australia’s institutional edge

Australia’s superannuation assets are now equivalent to more than 150 per cent of GDP, making it the fourth largest pension pool in the world. While the system’s primary purpose should remain to deliver strong retirement outcomes for Australians, this same pool can also support development and build enduring partnerships that security cooperation alone cannot replicate.

Demand for institutional capital is clear, with transport infrastructure needs of developing economies across Asia and the Pacific estimated to rise to around $USD2.6 trillion a year by 2035 to sustain growth. Public finance and development assistance remain essential but are contracting sharply, with official development assistance falling by 23.1 per cent in 2025, the largest annual drop on record. Mobilising institutional investors is now the most realistic way to close the infrastructure financing gap.

Expanding investment across developing markets carries real constraints, beginning with the fiduciary obligations that (appropriately) limit how trustees can deploy the capital. Regulatory frameworks, governance arrangements, and investor protections also vary across Southeast Asia, South Asia and the Pacific, and many projects require risk-sharing arrangements before they become commercially viable. However, some of these risks may be more manageable than commonly assumed, with aggregated credit data showing that development bank lending to private borrowers in emerging markets carries an average average annual default rate of around 3.5 per cent, similar to that of private firms in advanced economies.

The capital contest

Deploying investment as a tool of influence is neither new nor unique to any one country. China's Belt and Road Initiative (BRI) has directed an estimated USD$1 trillion towards infrastructure projects beyond its borders, turning roads, ports, and power grids into instruments of strategic leverage.

As the financing landscape has matured, partner governments have grown more attentive to the terms attached to different sources of capital. Japan’s Partnership for Quality Infrastructure channels public and private money into sustainable development across Asia, while the G7’s Partnership for Global Infrastructure and Investment seeks to mobilise around USD$600 billion by pairing public finance with institutional investors. What distinguishes these approaches from the terms attached to BRI lending is not only scale but method, through transparent procurement, sustainable financing, strong governance, and social and environmental safeguards.

Australia can compete on those terms with its comparative advantage less in the volume of its capital than in the credibility of the institutions deploying it, a model that aligns with ASEAN’s emphasis on high-quality, sustainable development finance. Yet Australia has barely entered the contest, and ceding one of the defining instruments of regional influence is not a choice it needs to make.

From asset to influence

Realising this potential does not require changing the purpose of Australia's retirement system, but it does necessitate closer coordination between the Department of Foreign Affairs and Trade, Export Finance Australia, multilateral development banks, and the superannuation sector. This coordination should identify viable opportunities, communicate actual rather than perceived risks, and share risk where that brings sound projects within fiduciary reach. Some of this is already underway, with the Australian Government committing AUD$175 million of superannuation capital to a regional debt fund through its AUD$2 billion Southeast Asia Investment Financing Facility.

Even one per cent, or approximately AUD$44 billion, of Australia’s superannuation pool would be a significant contribution to Indo-Pacific infrastructure. Given that around half of superannuation assets are already invested overseas, this would largely mean redirecting existing allocations rather than finding new money.

Australia's most consequential strategic asset over the coming decade may not be a new defence capability but the financial depth it has already accumulated. AustralianSuper's commitment showed what that can look like: a commercial investment that also deepens a bilateral relationship. The question is whether Australia will continue to leave these strategic dividends to chance or begin to pursue them by design.

Nikko Riazi is a government relations and public policy professional whose work experience spans banking, healthcare, international trade and investment, infrastructure and the public service. 

Her writing has appeared in The Mandarin, the Lowy Institute’s The Interpreter and ASPI’s The Strategist, focusing on Asia-Pacific housing, superannuation and the links between finance and national security. 

A former OECD Australian Youth Delegate, she also chairs the Education CHANCES Foundation - a youth education not-for-profit. She holds a Master of Public Policy and Management, Bachelor of Commerce (Economics/Finance) and a Diploma of Languages (French Studies) from the University of Melbourne.

Disclaimer: The views and opinions expressed in this article are those of the author, and do not necessarily reflect the views and opinions of Young Australians in International Affairs. All content is original, and no plagiarism has been used in the preparation of this article. No AI tools were used by this author in the preparation of the article.