Ms Anna Burke (Chisholm, Australian Labor Party) Share this | Hansard source

I rise today also to speak on the Future Fund Bill 2005. I welcome a group of young people arriving in the gallery because it is their future we should be thinking about and not the future of a whole lot of public servants. I do not mean in any way to denigrate public servants, having been one myself. I know them to be a great bunch of human beings who work very hard and deserve to retire on decent super. But putting aside the hard-won surpluses that these young people’s taxes are paying for to meet our future liability to public servants is a complete waste of that money; it should be going to the future of those young people in the gallery. It should be going towards education, it should be going to research and development and it should be ensuring that their future is guaranteed, not the future of a bunch of public servants who will retire and be paid out their liabilities without any difficulty. The current requirement on the budget is being easily met for current Public Service liabilities. So to create a fund that will fund Public Service liabilities seems to be very short-sighted. It seems to be a waste of a resource.

We on this side of the House have been championing for some time the ability to put aside the wins of today to grow a fund for the future. Indeed, the shadow minister at the table, the member for Hotham, moved that in an amendment in a budget-in-reply speech some time ago, at which time the Treasurer ridiculed it loudly and clearly and said it was a waste of money. Twelve or 18 months later, he proposed his own Future Fund, but it is a very narrowly defined fund and the boundaries around it are very narrow indeed. This is meant to be a locked box. Indeed, it will not be a locked box and those Nationals over there, who are very good at grasping money, will be able to grasp this very easily.

I ask why we need to establish a fund to secure super future liabilities when those liabilities can be easily met and they are declining because all defined benefit schemes have been shut off. There will no longer be a drain on the public purse for these liabilities over the next few years. We can very easily ascertain that now. You can do the actuarial calculations and say, ‘This is the amount we need,’ and you can project how you will use the budget to bring it down. It reminds me very much of the days when Jeff Kennett came into power in Victoria shouting that it was a terrible state that we had all these unfunded superannuation liabilities. But it was only ever going to be a problem if everybody retired on the very same day and required the entire amount of their fund to be paid out. Funnily enough, that was never going to happen. But it was amazing that the press and everybody seemed to swallow it as a terrible economic disaster that was going to befall us. It is not a disaster.

We on this side of the House are the champions of super. It is the Labor Party who have ensured that everybody has access to super. Super is something that can be funded easily and it should be up to the funds to invest wisely so that they can cover liabilities and so that the government can easily use their surpluses to meet these liabilities. Having said that, I do not deny the need for a Future Fund. We should be pursuing it, but not to pay future super liabilities. There are far more important things to put this money towards.

The cost of a separate board is calculated at $30 million over four years. While the bill quite clearly says that this money will come from the earnings of the fund, why not put those earnings back into paying for services instead of paying for a board and paying fund managers who are providing investment advice, with investors paying fees and charges for that advice? I am sure David Murray is a very good appointment but the shareholders of the Commonwealth Bank can tell you that David Murray does not come cheap. I am sure he will be getting a fair reward for this position, and I do not deny that that should be the case. But why should we be spending money on that when those taxes could be going somewhere far more beneficial?

As I said, existing funds should be far more aggressive in how they use their money. Current government super schemes have not been earning very well over the last few years. In fact, many of the funds have experienced record declines in their investments. So I certainly hope that when we set up this fund it is actually going to make money, not lose money. There is no guarantee that you will make money by investing. It is one of those things. It is like playing the stock market—there is no guarantee that you will earn money. I hope there are checks and balances in place so that the funds from asset sales go towards increasing revenue.

All of us would have a large stack of cash if we sold our house to pay out our mortgage, but where would we all live? At the end of the day, asset sales are fantastic things; they sell down and pay off debt. But we no longer have that asset to earn us an income. So while the Treasurer can say he has delivered this boom economy, it has all been through fire sales. There has been no long-term reform from this government. This government should remember they have been in government for 10 years. They should stop looking to the past. They are the past. They have been here for 10 years. They should be doing something about the future, and this Future Fund will not do it.

As the previous speaker, the member for Kingsford Smith, rightly pointed out, many in industry have slammed this fund. The ACCI has slammed it most comprehensively, and I quote from the Australian Financial Review:

Australia’s largest business group has slammed the federal government’s proposed Future Fund as a “tax increase” and dismissed Treasurer Peter Costello’s claim that the fund would increase Australia’s saving as “paternalistic”.

In its June Review released today, the Australian Chamber of Commerce and Industry has launched business’s first comprehensive attack on the coalition’s election promise to put aside budget surpluses to pay for the retirement of public servants, which is expected to cost $140 billion by 2040.

The report dismisses Mr Costello’s claim that the fund would “increase national savings, offset unfunded superannuation liabilities and maximise the government’s net worth”.

Instead, the chamber argues that the Future Fund will effectively amount to a “tax increase or a foregone tax reduction”.

It will have a “limited effect” on national saving, and the money would be better spent on other reforms, particularly to the tax system, the report says. Superannuation is less of a problem for future budgets, it says, than is the funding of pharmaceutical benefits.

In addition, the report says there is a risk that the fund will be invested in “uneconomic investments”, and it says that international experience shows a limited need for such a fund.

“It is paternalistic of the government to suggest that individuals spend their money poorly and that they need to be forced to save”, the report says. “If there are taxes or regulations that restrict saving, these barriers should be removed, rather than creating another distortion [higher taxes] to increase saving.”

The ACCI says it expects the cost of pharmaceutical benefits to increase by 2.8 per cent of gross domestic product by 2042, compared with an expected 0.3 per cent of GDP fall in the cost of public service super. The national cost of aged-care is expected to increase by 1.1 per cent of GDP and the cost of age pensions is expected to rise by 1.7 per cent of GDP by 2042.

Clearly, the largest business groups are out there saying that this Future Fund is misdirected. The Treasurer commissioned his own Intergenerational report back in 2001. Where is the next chapter to that report? How is the money from the Future Fund going to benefit future generations? This fund will do nothing in that regard. As this article clearly points out, the issues of aged care and pharmaceutical benefits have not been addressed. Where is the money going to come from to fund those into the future? This fund will do nothing to alleviate that problem.

The Treasurer’s mantra at the time was that all people nearing retirement should stay in the workforce for as long as they can: ‘Work till you drop.’ As many people realise, that is a wonderful thing as long as you have a job you can keep working in. My mother is a great example: at 68, she is still teaching. I think she is mad! But she loves going to work every day and she is lucky because she has been in an environment that will maintain her, that will keep her on, that will happily still employ her. There are a lot of people out there who are not as lucky. In my previous life at the Finance Sector Union, I saw literally hundreds of thousands of people between the ages of 45 and 50 thrown out of work—many of them by the very same David Murray who is going to be heading up this Future Fund. They would have loved to have stayed in the workforce, but there was a raft of redundancies and they were all axed. Those people found it virtually impossible to get back into the workforce because their age was an impediment. The Treasurer has done nothing to ensure future generations are secure. He has done nothing to ensure that when we get to 2020, with the scenario of fewer people in the workforce than out of it, there will be a tax base to ensure that basic services can be provided to all, not just in the area of aged care but in education, research and development, and infrastructure.

Labor believe that, instead of creating a fund whose purpose is dubious at best, we should be creating a fund for nation building. If there are surpluses available, they should be put towards infrastructure. This government has let infrastructure slide over the last 10 years and all it can do is blame the state governments. It points the finger at the state governments. It has created slush fund after slush fund that it says is about nation building, but all it is about is holding onto individual seats. The amount of money that went into the federal seat of McEwen at the last election was phenomenal. It was horrendous to see the amount of money that went into that seat through various dubious programs. It was incredible. And it was not even one of The Nationals’ seats, where much more money went over time.

Where is the accountability for securing our future? There is not any. It is alarming that people within the industry have been horrified—their own word is ‘flabbergasted’—by the lack of information about how this money is to be invested, how this money is to be used. Again I want to quote from the Australian Financial Review:

Money managers jostling to become the asset consultant to the first $16 billion invested in the Future Fund have been “flabbergasted” by the brevity of the government’s tender document, saying it failed to outline what the investment objectives are.

Treasury officials will meet prospective tenderers in Sydney this Friday for a “briefing session” on the one-page tender document that has worried some asset consultants with its lack of detail.

…         …         …

The major concern among the tenderers was the government’s lack of investment objectives that they hoped to become clearer by the time the tender closes on June 2005.

…         …         …

At only 340 words, Treasury’s tender brief on the $16 billion project represents $45 million a word ...

So one little tender document has gone out to the investment market and there are no objectives as to how this money is to be invested. The only objective in the bill is that of national interest. But, funnily enough, the bill has not defined what the national interest is. Our experience of what the national interest is for the government is for them to be re-elected and the money spent in any way, shape, size or form to ensure that that outcome is achieved. It will not be spent wisely; it will not be spent well.

The government say that the fund is a locked box, that there are guarantees for how the money will be used and that, instead creating a board of directors, they will create a board of guarantors. You might change the name but you will not change the outcome, because the guarantors will be allowed to solicit advice only from external sources. They will be directed by the minister on where the money can be invested.

So the guarantors will be there in name only, whereas usually people who are trustees on boards of superannuation funds go through rigorous election processes. Some trustees are appointed, but many go through rigorous election processes to demonstrate that they will be the best people to look after the money of individuals. The guarantors will be handpicked, and there are no guidelines. The one glaring admission in this bill about these people is that they will not even have to pass a fit and proper test. These individuals will be in charge of the vast bulk of Australian taxpayers’ dollars and windfalls from asset sales, yet they do not even have to pass a fit and proper test. It is a sham, it is a disgrace and it is a glaring admission in this bill.

The Labor Party believe that such a fund should be established but that it should be used in a much more strategic way. It should be used for nation building. It should be used for putting back infrastructure in our port system. Where is the discussion about our ports that are failing us at the moment? Where is the discussion about roads? Where is the discussion about rail? Where is the discussion about water quality, about air quality and about the long-term viability of our environment through the creation of electricity? How are we going to do that? There is nothing in this bill about ensuring the future of our nation.

The government have called it a future fund, but it is a limited fund. It has many flaws. If Labor win the next election—and I sincerely hope that we do, and I believe that we will—we will get hold of this fund and make it appropriate for the nation so that it can deliver to all and not to a few handpicked individuals who might misdirect where the money will be spent. It is on a very limited basis that this fund is to finance a super liability that can be easily met out of the current Treasury coffers.

We on this side of the House will be supporting the bill and the amendment moved by the member for Melbourne. I hope that our future is protected and not just whitewashed as the government has done in this bill.

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