Michael Johnson (Ryan, Liberal Party) Share this | Hansard source

I am pleased to be back in the people’s House, this great democratic chamber of the Australian House of Representatives, to speak on bills and issues of importance not only to my electorate of Ryan but to the wider nation that I am so proud to be part of as a migrant Australian. At the very outset in this new parliamentary year I want to absolutely reject what the former shadow minister, the member for Rankin, has spoken of. The first thing that Australians have done to invest in their future has been to vote on four successive occasions for a coalition government. That is an investment in their future, not some Labor Party government that would take them into high interest rates, high unemployment and massive debt. The Australian people invested in their future in 1996 when they voted for the Howard government.

The member for Rankin spoke about the Howard government being a high-taxing government. But I recollect that in last year’s budget the federal Labor opposition did not want to support the Howard government’s tax cuts for all Australians. And I recollect that the member for Rankin did not vote for $21.7 billion worth of tax cuts. So this claptrap that the Labor Party, particularly the member for Rankin, talks about—that the Howard government is a high-taxing government—is absolutely rejected by this side of the parliament. To use an analogy from the Treasurer in today’s question time, like a reliable motorcar the Australian economy remains strong, robust and dynamic because of the management, the stewardship and the leadership of the economy in coalition hands. The driver of this economy is wearing a coalition badge. Thankfully, it is not the member for Rankin, it is not the member for Werriwa and it is not the current member for Brand.

The Howard government is committed to strong and sensible economic policy and the Future Fund Bill 2005, which I am pleased to speak on, is very much part of this package of good policies, of vision, of measures that will put this country in a very strong position for the future. The Howard government is committed to policies that keep this budget in surplus, that keep unemployment low and that keep interest rates low. All this is the envy of the world. We are the envy of developing nations and we are the envy of developed nations. This government is pro jobs and pro families. All this adds to a prosperous economy, a society and a community that Australians are all proud of. We are for the future. We are for the Future Fund. This is a commitment of the Liberal and National parties in coalition.

As I said, it is a pleasure to be back in the House in this new year, 2006, and to start off the year’s debates and presentations by speaking on a very important bill, a very fundamental bill for the future of this country, in particular for the future of young Australians, who will have a more secure future financially and economically.

This government, as has been alluded to in speeches so far, is approaching its 10 years in office. In that 10 years it has done some remarkable things in the interests of this nation. Of the $96 billion worth of debt created by the Keating government, some $90 billion has been repaid—incredible stuff, which is going to secure the future of this country, particularly, as I mentioned, of younger Australians.

The Future Fund Bill 2005, which I am pleased to speak on, is an example of what this government is doing. This government is all about addressing major issues, major policy challenges. One of the biggest policy challenges that we have is how to address this matter of unfunded public sector superannuation. The Future Fund will do that. The Future Fund is a mechanism, a vehicle, with which we can address this very critical issue.

For 13 years employers in Australia have been legally obliged to put aside a percentage of their staff salaries into a superannuation fund to ensure that employees are secure in their economic futures. Yet, somewhat remarkably, public employees have received no such guarantee. The government is currently relying on an ad hoc pay-as-you-go superannuation system. While this system works when the budget is in surplus and the economy is strong, there is no doubt that it becomes somewhat of a challenge when the economy faces weaknesses. We want to prevent any future weaknesses that might confront the economy from damaging the economic livelihood of Australians.

I think that most public servants have seen how quickly an irresponsible and incompetent Labor government can send this country into debt, indeed into near bankruptcy, as the years have proved when Labor has been in office. They are rightly concerned about how a Labor government—any Labor government, led by any member of the opposition—that gets back in power would be in a position to completely destroy their prospects. The collective sum of these entitlements is a massive amount of money: $140 billion of accumulated entitlements by 2020. This country, this government, must do something about that, and we are doing something about it. This is a further reassurance to the Australian people and why we have the confidence of the people—because we are seen to be acting, and we are acting in a very appropriate manner.

In such a scenario the government of the day would be forced to increase taxes, cut spending in other vital areas or go into deficit. Quite clearly, from this side of the parliament, they are all untenable policy options. This fear is especially justified when figures show us that, while at the moment there are some nine people paying taxes for every one person in retirement, with an increasingly ageing population this ratio will drop to just four working Australians for every one person in retirement by 2040. The Future Fund will cover this $140 billion liability, creating a fully funded public superannuation scheme without having to raise taxes or drive the budget into deficit. It allows the government to put money away in case of a rainy day so that Australians can be reassured that their economic futures are better secured.

We all know that the Labor opposition are on the record as attacking the idea—none more so than the member for Melbourne, the shadow opposition finance spokesman. In only December last year he questioned the need for the Future Fund, saying, ‘It is difficult to see why it is necessary to specifically fund future public sector superannuation liabilities,’ and calling this fund a ‘honey pot’. That is remarkable when in a few years time there will be $140 billion of entitlements due. All that the shadow minister in the responsible area can say is: ‘Why do we need to have it?’ It is just remarkable. Quite simply, the federal Labor opposition cannot be trusted with the future prosperity of this country and with the management of this economy. This was never more reflected than by the Australian people’s commanding result and commanding voice at the last election in 2004 when they spoke emphatically and decided not to trust the former member for Werriwa and the Labor Party in government; it was just too much of a risk.

Today the sun is shining on the Australian nation and the Australian people. We have a very strong economy, we have low unemployment rates and we have strong budget surpluses, but we do have this lurking issue of the ageing population, which all my colleagues on this side have referred to and some of the speakers on the Labor side have also acknowledged. This is an issue of immense importance. I was pleased in my first speech in this chamber when I was elected in 2001 to refer to it. I drew the attention of the House and the electorate of Ryan, which I have the great privilege of representing, to the significance of this issue of the ageing population. How this government and future governments manage and lead on this issue of the ageing population will shape the future prosperity of our country.

Quite frankly, I am not yet sure that the Australian public fully appreciate the gravity of this issue and the implications of an ageing population. I encourage all my colleagues on this side of the chamber, as well as those opposite, to continue the good and important work of drawing the public’s attention to this issue of the ageing population and what it means in particular for younger Australians. We do not want working Australians in the future to be saddled with enormously high taxes to sustain the current high quality of services that we deliver to the wider community at the moment. One thing I will say and predict in this parliament today is that Australians of my generation will be in for a very big shock if we think that nothing needs to be done to address this important issue. The government and all those in this place, as I will reiterate, have an abiding responsibility to educate and emphasise the importance of this issue for future Australians.

The Future Fund Bill establishes an initial deposit of $18 billion from the 2005-06 surplus. It will allow for deposits in the future both from surpluses and from the sale of any government assets. This includes the possibility of placing government shares in Telstra into the fund. Importantly, though, it does not set out any obligation on the government to deposit funds—which is quite unlike the equivalent New Zealand Superannuation Fund. Therefore, in times when such an allocation of funds would be inappropriate, such as if the budget was in deficit, the government is not obliged to contribute to the fund.

The fund is a financial asset fund, meaning it will invest in financial assets such as shares and bonds but not directly in property, art or infrastructure—although it may invest indirectly in infrastructure projects through listed infrastructure vehicles. Although it is expected that the fund will invest in appropriate Australian companies, it must be said that no legal mandate exists for it to do that; it is not compelled to do that. In accordance with international best practice, it is expected the fund will also invest heavily in overseas markets to spread its risk and also to avoid possible distortion of the Australian market.

I now want to refer to the Board of Guardians. The bill establishes important controls over the management of the fund. One very important control lies in the quality of the Board of Guardians. I have heard in presentations by Labor speakers preceding me that this fund is going to be accessible almost at whim by the government. That is just absolute nonsense; it is claptrap. Why speak in such language when it is just not true? There are controls in place. The purpose of this piece of legislation is to ensure that there is a significant amount of money in place for a very specific purpose—to meet unfunded superannuation liabilities of $140 billion plus. It is absolutely absurd to suggest that the government, in coming up with this initiative, is in fact keeping its money aside for ulterior purposes. Why create the fund in the first place if we are going to use it as a honey pot? That is absolutely not the case. This has a very specific purpose, and to protect the integrity and legitimacy of the Future Fund controls have importantly been put in place.

The first is the Board of Guardians. A seven-member panel of eminent Australians, including a chairman, the Board of Guardians will be independent of the government and will be responsible for the fund’s investment decisions. The bill sets out an investment target of around 4½ per cent to 5½ per cent per annum for the guardians and also allows for the government to present the board with a broad investment mandate. The guardians themselves will be responsible for the particulars of all investment decisions. By protecting the guardians’ power in law and recognising their control over investment decisions, the Howard government is ensuring the Future Fund cannot be raided or used as a ‘honey pot’—to quote the shadow finance minister, the member for Melbourne. We are not in the business of fiscally irresponsible practice, as the Labor Party has been when it has been in office.

The CEO of the Investment and Financial Services Association, Mr Richard Gilbert, has recognised the government’s efforts in maintaining a separation between the government and the administrators of the fund. He stated:

It is critical that the Future Fund operate at arms length from government and it appears that the legislative foundation will achieve this.

The guardians will be assisted by a new statutory agency, the Future Fund Management Agency, which will provide operational support for the guardians. The Future Fund Management Agency will be self-funded, drawing directly from its capital for its day-to-day running costs so as not to put a strain on future budgets. It will be based in Melbourne and is expected to employ some 20 people.

The bill provides provisions to ensure the Future Fund is secure and legitimate and that its integrity remains in place. The Future Fund cannot be accessed until it is sufficient to cover the public superannuation liability or until 2020. This allows the guardians to plan an investment strategy across a longer term without the fear of future governmental interference.

The fund will be absolutely transparent and accountable. This is completely consistent with the entire purpose and motivation for the creation of this fund. I want to take this opportunity to quote from the Treasurer’s budget speech last year for the benefit of those opposite, because quite clearly they were asleep when he was giving his presentation or they have not taken the liberty of reading it and listening to its very wise words. For their benefit—and this might assist future opposition speakers in not making geese of themselves when they come into this chamber to give their presentations—this is what the Treasurer said on this issue of transparency and accountability and the entire purpose of the bill:

It will begin to fund the liabilities we have already incurred but not yet made provision to pay for. Earnings will accumulate in this fund and it will be safeguarded by legislation. Whilst the fund will invest the money allocated to it, no government will be able to draw money out of it until it is sufficient to meet all the unfunded liabilities to which it is dedicated. A statutory independent board will be created to manage the fund.

This is quite simple, even for some of those sitting opposite. I am sure—I would like to think very much—that they understand the very simple language of the Treasurer in explaining the essence of the Future Fund. I draw attention to this for the benefit of those Labor speakers following me.

As I have alluded, we all know that Labor stands on the opposite side to the government on this bill. I am at a loss to understand why. In my electorate I have had the opportunity to discuss this bill with businesspeople and everyday Ryan residents, and they see complete sense in it. They see absolute logic in this bill and they see the importance of it. They see it as a protection for future Australians—for their children and grandchildren. I cannot see any reason whatsoever why the federal Labor Party would oppose such an important initiative.

Again, I draw the House’s attention to the comments of the shadow minister for finance, whose responsibility is to comment prudently and wisely on this sort of topic and yet he comments that it is difficult to see why it is necessary to specifically fund future public sector superannuation liabilities. Once again, I say that this legislation funds $140 billion worth of unfunded superannuation liabilities. It is as simple as that. The member for Melbourne has once again revealed his complete misunderstanding of the purpose of this bill. I only hope that those around him might be able to bring him to an appreciation of this piece of legislation.

The track record of those opposite tells us that they have no integrity whatsoever in the stewardship of the Australian economy. Australian taxpayers continue to pay off a debt that totalled $96 billion when we came into office in 1996. Fortuitously, a very impressive government was elected to address that important issue; otherwise, Australians today and in the future would be saddled in an untenable way. Australian taxpayers continue to pay off this enormous debt, and the multibillion dollar surpluses and the ability to save for the future are luxuries afforded only by a coalition government.

The five Labor budgets preceding 1996 were each in deficit to the tune of an average of nearly $14 billion. In contrast, in 2005 the coalition government brought down its eighth budget surplus in nine years. It is a remarkable achievement by a very good government—a government that has a right to be proud of 10 years in office come March this year. If we continue to work together, to appreciate that it is a privilege to be in government and to realise that we are here in the interests of the Australian people, then we will continue to have the confidence of the Australian people. I commend this bill to the parliament very strongly. In this new year of 2006 I wish all my colleagues a very good year.

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