Bernie Ripoll (Oxley, Australian Labor Party, Shadow Parliamentary Secretary for Industry, Infrastructure and Industrial Relations) Share this | Hansard source

Before I discuss the main points around this very important bill, the Future Fund Bill 2005, I would like to touch on some of the technical aspects of it. What is clear is that the Future Fund is anything but what its name suggests. This Future Fund is not about securing the nation’s future; it is more about securing the Treasurer’s future and the government’s future. In principle, though, Labor does support without reservation the concept and principle of a future fund but to build the nation rather than the aspirations of a few individuals within government.

Rather than answering questions, this bill leaves many questions unanswered. What is clear is that the open-ended mandate setting and the board appointment processes leave the Treasurer and the Minister for Finance and Administration ample opportunity to favour their own people and get approval for their pet projects. Ministers will set and change the investment mandate and direct the board as they choose. This is not an arms-length arrangement; it opens up avenues for political interference and rorting—and, as many speakers on this debate have said, including the member for Hotham, we have seen it time and time again, not just at election time but at any time that the government decides.

If you are looking for models where this can be done properly without rorts or interference, you do not have to look much further than New Zealand. The New Zealand model is much tighter and provides for much better governance. In New Zealand, the board of the future fund must invest on a prudent commercial basis. For example, the New Zealand finance minister may give directions to the guardians regarding the government’s expectations as to the fund’s performance but must not give any direction that is inconsistent with the duty to invest the fund on a prudent commercial basis. Later I will discuss why I raise these issues. The performance of the board in New Zealand is also subject to five-yearly reviews. An important point about this relates to Telstra: it is obvious that the government intends to dump the proceeds of Telstra into the Future Fund. The midyear review has set an unrealistic share price of $4.13 and assumes that all sale proceeds—that is, $26.6 billion—would be booked in 2006-07.

Anybody examining this would find it extremely hard to believe. The government needs to set out the process for transferring Telstra proceeds to the fund, if that is its intention—when it is going to do it, how it is going to do it and how many shares will be affected. This is another level of government interference not only in the way Telstra operates but also in the way a Future Fund would operate. In particular, the bill reveals that the government is anxious to control the transfer of financial assets. In respect of ministerial directions on the transfer of financial assets, the explanatory memorandum to the bill states:

Such directions allow the Government to appropriately manage any interaction between such transfers and policy priorities.

The fund will not be able to meet its objective of paying Public Service superannuation for some time. If the principal course of this fund were to do that, it would not be able to achieve that for some time—until the fund equals the superannuation liability. With current settings, even when fund earnings pass superannuation payouts in 2007-08, the budget will get no relief from the Future Fund at that point. Superannuation payments will still have to be met from the budget over the forward estimates—that is, $2.4 billion in 2005-06, rising to $2.6 billion in 2008-09. As we heard from the member for Melbourne on this very issue, it just does not make sense. Why would the government set up a fund to pay for a future liability? As the member for Melbourne explained, it is equivalent to a household investing a massive capital sum in a bank account and using the interest to pay their rates on a yearly basis. Why would it have all that equity sitting in a fund doing nothing and only use the interest for recurring payments such as council rates? It just does not make sense. This fund is poorly designed and too narrowly focused.

Labor believes investment returns would be better applied to critical infrastructure. The point is that if the government were serious about a Future Fund they would start to direct it to the nation’s future and not their own futures. Labor’s Building Australia Fund and Infrastructure Australia Fund can provide for such investment and enhance the fund’s viability in the process. While I today give my support to the second reading amendment moved by the member for Melbourne, I also give in-principle support to the bill and the government’s intention to at least create a savings fund for future generations of Australians. After all, what we are talking about is a Labor Party policy that was proposed some years back. But, as several speakers before me have indicated, we have many reservations about the process on which the government has embarked, the way the fund will be structured and, in particular, the way it will be administered in this vitally important public policy area. And it is these reservations that I want to draw people’s attention to in the time available to me.

Labor supports the broad concept of a Future Fund, but we question the need to create a Future Fund to cover the increasing government liability that is accruing in respect of public sector superannuation. It will continue to increase gradually over the next 20 to 30 years and then start to decline. And that is the important part. If you look at the liability and how it is structured, you could make a comparison to a mortgage. When you have a mortgage you run-up a huge debt, but in return you have a massive asset which can carry you well into the future. I think ordinary people can understand that having a mortgage is a good thing, not a bad thing, because it gives you a home. In a sense, the liability we are talking about is similar to that. There is no need for the government to set up a fund to deal exclusively with this liability over the next 20 years.

There are much more pressing needs which the government needs to address. In this regard, the government’s motives surrounding the Future Fund are very questionable indeed. We have been told that the Future Fund is a locked box. We heard that from the Treasurer himself. But I think we all know that the locked box has two sets of keys, one of which will be held by the National Party—although, given current events, maybe the Liberal Party will try to get those keys back. However, the locked-box theory is ridiculous; it is ludicrous. Why would any government want to lock up tens of billions of dollars in a fund and not properly set about using those funds to build Australia’s future?

We have a crisis in our serious shortage of skills and training. We have a crisis in our infrastructure—our roads and port facilities. We have heard a litany of charges against this government, on most of which they are very culpable, on infrastructure. We do need a Future Fund, but we do not need a locked box. We need a Future Fund that is open for investment, open to growing the economy and open to ensuring that future generations of Australians enjoy the same opportunities that this generation has enjoyed through the investments of past generations and through the foresight, the vision and the investments of past Labor governments which saw the need for massive reforms of the financial sector, the banking industry and taxation—the sorts of reforms that are desperately needed today. This is where the government’s energies and a Future Fund should be directed.

There is a discretion within this legislation that would allow the Treasurer and the Minister for Finance and Administration to issue directives for investment on matters of national interest and national importance. Of course, the question everybody would ask is: how do you define ‘national interest’ and ‘national importance’, and who specifically decides that? Simply stated, this is not a locked box. In much harsher language, it is a slush fund—and it will be raided unequivocally and unashamedly by the National Party, who will wear it as a badge of honour. They will walk into this place and tell you they will do it. They will go to their electorates and tell everybody that there is nothing wrong with this because it is going to be money coming directly back to their electorates. This is a slush fund for a handful of elites while ordinary Australians will miss out. Ordinary Australians need a Future Fund for infrastructure and training and to make sure that we invest in the future. This is about National Party interests. It is not about nation building. It should be about nation building; that should be the focus of government. There is a lot of concern about how tensions within the coalition at the moment might spill over into the structure of a Future Fund and the way it will be used. I have grave reservations about that.

I have said many times in this place that Australia needs to invest in the future of our country, not just in our physical assets but in our people. We need to invest in people, and Labor knows that all too well. In fact we are the only political party in this country that is prepared to highlight the problems that presently exist and to outline our intentions to address them in both the short and the long term. Labor believes in investing in the national interest, not in the political interest. Labor will invest in priorities set by the experts and not by party machine men, not by a few elites on the front benches of government.

Labor knows that infrastructure is at the core of this debate. It is a national asset, a national priority, and it must be treated not as a cost but as an investment that will provide returns to this country in spades. Labor believes that dividends from a Future Fund should be invested in infrastructure first and that superannuation liabilities for Commonwealth bureaucrats can be funded in many other ways, and it will do so regardless of this proposed fund. Labor believes that, to grow our economy, this nation must invest in Australia. We must not do that by cutting wages. We will never win the global race with bottom of the barrel wages. We are innovators. Australia has always had to compete on a global platform. Australia invented free and fair trade before they became buzz words, because we have always had to compete and we have always had to punch well above our weight. We will continue to do that but not on lower wages. We will continue to do that with our skills, training, innovation and expertise. That is where our strengths lie.

If we do not have a strategy to invest in skills and infrastructure, then we do not have a strategy at all. We do not have a strategy for the economy and we do not have a strategy for the national interest. In short, Labor will invest in Australia and will do so in a number of ways: through greater skills and education for our workforce and through greater investment and attention given to our crumbling, creaking infrastructure across the nation. We will provide real national leadership on the issues when the country needs it most.

I want to touch quickly on skills. A Beazley Labor government will introduce a skills account, which will remove TAFE fees for apprentices in traditional trades. This is the right investment. This is the way to go. Let us make it easier for young people to train themselves; let us give them the opportunities. Right now our policy is to make an initial contribution of $800 per year for up to four years to an apprentice’s skills account. This would get rid of the up-front TAFE fees for up to 60,000 traditional apprentices who commence their training each year. Labor’s new system of skills accounts will invest in young people and will help them complete their traditional apprenticeships. Under Labor’s plan, an additional 13,000 qualified tradespeople would enter our workforce every year. That is doing something positive today, right now, about the skills crisis. It is not just coming up with an alternative, pseudo, mirror structure called the Australian technical colleges, which is just a different name for another TAFE system and a doubling up of the bureaucracy, from which you will not turn out your first graduate until 2011. That is the wrong way to go.

Labor is determined to build Australia into the future and to build a better future for all our kids. Labor is the only political force in Australia developing new policies to tackle the massive skills shortage in this country. Over 10 long years the Howard government has neglected the training of skilled tradesworkers, and, as a result, the economy and the community are starting to suffer. You do not need to look too far to see the impact this is having. Businesses and industry that are growing at incredible rates cannot get the skilled labour they need. They cannot get the workers, because we simply do not have them. While the government may gloat about low unemployment rates and about how strong the economy is, the reality is that this has happened despite this government. It is the global trends and the economic levers and patterns around the globe that affect what happens in Australia. The old cliche that if the US sneezes Australia catches a cold has never been more true.

Our economy is reliant on our trading partners, on the United States, Japan and China, and we compete with those countries in our ability to provide resources, expertise and skills. These are our strengths. I am very concerned that, once we go down the path that not only the proposed Future Fund will take us down but this government is taking us down—that of a low-skilled, low-wage country—we will have to compete on wages, which is a competition we can never win. It is a race we can never win because we will never be able to do what those other countries do. We will never be able to survive on the wages that people in China survive on. So we need to focus on our strengths and on where we can best invest.

There is no doubt in my mind that a Future Fund is essential. It is essential for the prosperity of this country and for our young people. It is essential that we do it and that we get it right the first time. Forget about what this government says when it talks about locked boxes. All you have to do is turn your mind to the AusLink proposals and the funding for AusLink, which has huge discretionary funds available for the minister to personally intervene in so-called national interest infrastructure. But when we examine where that national interest infrastructure is, why does it invariably happen to be in National Party or Liberal Party seats, or in very marginal Labor seats where maybe the government is starting to focus its attentions?

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