Mitch Fifield (Victoria, Liberal Party) Share this | Link to this | Hansard source

My question is to the Minister for Finance and Administration, Senator Minchin. Will the minister inform the Senate of the Australian government’s budget outcome for 2005-06? Will the minister outline to the Senate how this budget result, combined with the further sale of Telstra, will increase the size of the Future Fund and thereby help prepare for Australia’s future? And is the minister aware of any alternative proposals?

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

I thank Senator Fifield for that question. As Senator Fifield would be aware, we recently released the final budget outcome for the last financial year, 2005-06, which showed that the federal government ran a surplus of $15.8 billion in underlying cash, equal to 1.6 per cent of gross domestic product. That was the eighth budget surplus achieved by our government in the last 10 years and the fourth consecutive surplus of at least one per cent of GDP. Of course, the last financial year was also the year in which we finally eliminated the last of the $96 billion in debt we inherited from the previous, Labor, administration. Also, in that financial year just completed we transferred the first $18 billion into our new Future Fund, which as Senator Fifield noted will ultimately help us fully offset the government’s remaining unfunded superannuation liability, which of course has been racked up over the course of the last century and never been provided for up until the creation of the Future Fund.

That fund is now up and running: we have a very good board in place, a broad investment mandate from the government, a new office in Melbourne and the appointment of a Mr Paul Costello as the general manager, someone who brings all the experience of having run the New Zealand equivalent fund to Australia.

The strong surplus we just recorded now allows us to make a further $13.6 billion deposit into the Future Fund, which will be done in January and in April of next year. That will take the fund balance to over $30 billion. Then, assuming the successful sale of T3, the Future Fund will receive in due course about $8 billion in sale proceeds and around $15 billion in Telstra shares, subject to the two-year escrow. Thus, the fund will soon have more than $50 billion available to it, which puts us well on the way to achieving our goal of matching the unfunded superannuation liability, estimated to be around $140 billion, by 2020.

Senator Fifield asked me about alternative policies, and regrettably the alternative government—the Labor Party—is all over the place on the question of the Future Fund. On the one hand it has claimed that the fund and its board are not sufficiently independent from the government, but on the other it has a stated policy of using the fund’s earnings to fund its own election promises. Our decision to place Telstra shares in the fund has further compounded the confusion on the part of the Labor Party. It does say it is opposed to the sale—it is certainly extravagant in its opposition—and it does advocate continued public direct government ownership of those Telstra shares.

Mr Tanner, the shadow finance minister, is now committed to leaving all those Telstra shares in the Future Fund rather than bringing them back under direct government ownership. But a Labor government would put on the condition that they must never be sold. In other words, under a future Labor government the fund would be forced to own around 30 per cent of Telstra in perpetuity. So having lectured us about the independence of the fund, they now want to leave the fund with a mandatory overweight position in our company, a company which Mr Beazley, Senator Conroy and others are running around saying would be a very bad investment. They still claim they would use the remaining Telstra shareholding to influence the company’s activities, which we know of course is code for forcing this company into all sorts of non-commercial decisions. So the Labor Party’s position on the fund and on Telstra is utterly hypocritical and is a consequence of them being all over the place on every policy issue they bring to this chamber.