John Watson (Tasmania, Liberal Party) Share this | Link to this | Hansard source

My question is also directed to the Leader of the Government in the Senate, the Minister for Finance and Administration. Will the minister explain how the government is preparing Australia to deal with an ageing population? As part of that preparation, how important is the role of the Future Fund in assessing demographic changes, and is the minister aware of any alternative policies?

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

I thank Senator Watson for that question and acknowledge his long interest in these issues. We as a government have been all about making the hard decisions that are in the long-term national interests of this country. They include substantial personal tax reform, the GST, industrial relations, our Welfare to Work reforms and superannuation reforms, which I know Senator Watson is particularly interested in, like abolishing all exit taxes on super to give people more incentive to save for their retirement, and that builds on our other initiatives like the co-contribution scheme.

So we have continued to develop plans to deal with the long-term demographic challenges facing this country. To help us continue to address those issues, the second five-year Intergenerational report will be released by the Treasurer next Monday. It will show that the plans we are putting in place are already helping Australia to meet the very significant demographic challenge it has, but we will  need to continue to make significant and difficult decisions for this country and that is why the Future Fund, to which Senator Watson refers, is so vitally important.

By the year 2020, only 13 years away, the taxpayers of the day are going to want their taxes to go to the important government services they need, such as health care, aged care and age pensions. Without the Future Fund they would have a bill of $7 billion every single year for the superannuation of former public servants. After the success of T3, we already have $50 billion in the Future Fund, but there is a $140 billion liability which that fund must meet. That is the size of the gap that has to be bridged. The best way to turn that $50 billion into $140 billion is to let the fund reinvest its earnings every year so that, with compound interest, the $50 billion will grow by billions of dollars every year, but under Labor’s alternative policy on this matter not only are they taking $2.7 billion out of the capital of the fund for their national broadband scheme but also they have admitted they are going to take out the earnings of the fund every single year. So under Labor the fund will not be able to grow at all.

Labor like to pretend that under their policy they can have their cake and eat it too—that they can keep the smash and grab raid on the fund for their projects but the super liability is going to be met as well. That is fundamentally impossible. Without being able to reinvest its earnings, the fund simply can never move from the $50 billion it has now to $140 billion. Of course, Labor are refusing to rule out further raids on the fund, despite trying to lecture us about treating the fund like a locked box. Just yesterday the Australian newspaper reported Shadow Minister Tanner as saying that the Future Fund needed to be more independent of government as the governance arrangements currently allowed for too much government interference. So Mr Tanner has the hide to lecture us about the Future Fund after they on the other side have just announced they are going to raid the fund.

The Treasurer raised this matter in the other place yesterday and Mr Tanner interjected that he made those comments last week. So last week Mr Tanner was telling the Australian that the Future Fund needed to be more independent and two days later Mr Tanner stands there with Mr Rudd, without Senator Conroy, announcing that Labor will force the Future Fund to invest in broadband. The Australian people simply cannot believe anything these people say. You cannot trust the Labor Party with a $50 billion savings fund, let alone a $1 trillion economy.