Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Hansard source

I would just like to make a few remarks on this very significant piece of legislation, the Future Fund Bill 2005. Firstly, I would like to thank all senators who have contributed to a constructive and good discussion of what is a vital piece of legislation. On behalf of the government, I do appreciate the general support for the policy direction the government is setting in relation to this matter and to the policy intent behind it. I also want to make special reference to the Economics Legislation Committee, especially the chair, Senator Brandis, and the deputy chair, Senator Stephens, for what I think is a good report on this legislation. I thank them for the work they and the committee have done in thoroughly examining it.

From the government’s point of view, this is one of our most significant initiatives in this term of government. It was something we took to the Australian people at the last federal election. It was our undertaking and commitment to the Australian people to establish this very important fund as part of our concern about future financing of obligations entered into by previous Australian governments. I think the fund itself in general terms does have wide community support. I think the only criticism, if any, has come from some groups who suggest that the establishment of this fund may come at the expense of future tax cuts and/or infrastructure spending. I think that is a misreading of the government’s approach to this fund.

We have made it abundantly clear on numerous occasions that decisions as to the direction of funds into the Future Fund will come after all appropriate budgetary decisions are made. It would be for the government of the day to properly and appropriately make its budgetary decisions on the level of taxation and the nature of the taxation required to meet its expenditure obligations and to make decisions on expenditure, including any it wants to make on infrastructure. Then, as a residual of those decisions, surplus funds that may exist in relation to the budget would be deposited into the Future Fund. Therefore, we reject out of hand any suggestion that government decision making in relation to appropriate levels of taxation or infrastructure spending would be compromised by the Future Fund. That is simply not the case and misunderstands the way this fund will operate.

I should also say that, while I welcome the opposition’s general support for the direction that we are taking and the opposition’s acceptance that it is appropriate for the government to seek to provide for its legal obligations to former public servants through the establishment of this fund, we are not in a position to support the second reading amendment that the Labor Party has proposed. I particularly want to say that I am disturbed by the Labor Party’s continued support for the proposition that earnings of the fund be taken away from the fund and used for other purposes. If I can be as generous as possible and accept that the ALP is genuinely interested in infrastructure spending, nevertheless, as I said, I think governments should appropriately make those decisions as part of the normal budget process.

When it comes to funds deposited in the fund, it is critical that the fund is able to retain its earnings if it is to have any hope at all of meeting what we believe will be a $140 billion obligation with respect to public sector superannuation. So to strip the fund of its capacity to retain and reinvest its earnings would be extraordinarily detrimental to the whole purpose of this fund. As I say, albeit that one day there should be a future Labor government, it is for that government, in my view and in our government’s view, to make decisions about infrastructure spending as part of its budget process and not pervert or damage the Future Fund’s capacity to meet these obligations. I therefore give notice that we would not be in a position to support the second reading amendment. There are amendments being moved to the bill by the Democrats, and I am happy to deal with them in the committee stage.