Mathias Cormann (WA, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

I move:

That the Senate take note of the answers given by the Minister for Finance and Dregulation (Senator Wong) to questions without notice asked by Senator Cormann, the Leader of the Nationals in the Senate (Senator Joyce) and Senator Fifield today relating to Future Fund assets.

Whatever way you look at it, the government has been caught out using the proceeds from the expected sale of Future Fund assets to help it create the illusion of an early surplus. The assets from the Future Fund are of course supposed to be quarantined from the government. The government is not supposed to touch those assets, but what is very clear from information provided by the Secretary of the Department of Finance and Deregulation, David Tune, is that the government expects to raise revenue from the expected sale of Future Fund assets and that those proceeds will hit the budget bottom line. Those proceeds will become part of the government's underlying cash balance in 2012-13, which the government wants us to believe will be about $3.5 billion.

Today we had a lot of political rhetoric from the minister. We did not have a lot of facts, we did not have a lot of actual information and we did not have a lot of answers to the questions asked, so let me recap where things are at. A spokeswoman for the Minister for Finance Penny Wong was quoted in the Australian today as saying:

… more than $250 million worth of assets were due to be withdrawn from the Future Fund in the 2012-13 financial year, despite the fund having been created, by Peter Costello, under the condition it was not to be touched before 2020.

These are not the opposition's words; these are the words of the minister's own spokeswoman, as reported by the Australian. A spokesman for the Future Fund is also quoted in the story, confirming:

… the anticipated withdrawal was known to the fund and that this was the first time a withdrawal had been included in the budget bottom line.

This of course is a government that is always desperate for more cash. It is a government that has deserted for successive deficit budgets. It is a government that inherited a position of no government net debt. It is a government that is very quickly running up to $107 billion worth of government net debt and is likely to exceed that, given the fiscal impact of recent decisions, including the $4.2 billion hit on the budget bottom line from the carbon tax and various hits from decisions in Western Australia and New South Wales to increase royalties.

Today, the minister refused to confirm the figure that was given by her own spokes­woman. Her spokeswoman said that the government planned to withdraw—the spokeswoman's words—$250 million worth of assets from the Future Fund. I ask the minister: how much of the $4.937 billion in estimated proceeds from the sale of non-financial assets in 2012-13 is expected to come from the sale of assets of the Future Fund. Given that the government has put the overall figure into the budget, the minister, if she were prepared to be open and transparent, should have provided the Senate with that figure. It is a very straightforward question. The Secretary of the Department of Finance and Deregulation let the cat out of the bag. He said that that figure of $4.937 billion includes revenue from the expected sale of Future Fund assets. The Senate deserves to know how much the government expects to collect from that. The minister also confirmed that, yes, the proceeds from that sale of Future Fund assets will hit the budget bottom line. It is part of the government's claim of an early surplus; it does form part of the government's underlying cash balance of $3.5 billion. The minister was not prepared to say when that money would leave the government's budget bottom line and when it would exclusively be held as an asset in the Future Fund.

The Future Fund has sold assets before. The Future Fund sold down its shareholding in Telstra, for example. None of those proceeds and none of those sales have ever made it into the budget bottom line. Sales of assets and purchases of assets inside the Future Fund should not hit the budget bottom line, but of course this is just, at best, another accounting trick by a government that is so desperate to claim an early surplus that it is prepared— (Time expired)

Catryna Bilyk (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

The government is not withdrawing anything from the Future Fund. That is fundamentally incorrect. It is another false assertion by those on the other side, another part of the scare campaign that they have run constantly since they have been in opposition. They are trying to scare the people of Australia so that they will vote for them at the next election. People are not conned by that at all. As the minister said in question time, she has put out a press release asserting the fact, but those on the other side once again just do not want to know that, just do not want to hear it. As we heard earlier, it appears that the only people that are not happy with the economy in Australia are those on the other side. They do not want to know any of the good news; they just want to talk down the economy all the time. When you come from a party where you have got a $70 billion black hole, it just amazes me that you continue to talk down the economy.

The government has a very sound fiscal strategy, unlike those on the other side. They cannot even work out how to fix up their big black hole. Instead of making false claims about the budget they would do better to focus—especially Mr Robb and Mr Hockey, who cannot even get their facts aligned—on how they are going to deal with their big black hole. Ever since they have been in opposition they have been talking down the economy and doing nothing—all they have done is oppose, oppose, oppose. They have to realise that there are 140,000 more Australians in jobs than there were a year ago. That is a very important issue. The people of Australia understand that that is an important issue. I also think Mr Hockey should stop trying to avoid scrutiny by undermining the role of the Parliamentary Budget Office. If the coalition were serious about budget accountability and transparency they would support the recommended model for the Parliamentary Budget Office and the government's legislation. But, no, they cannot do that. They have to come out with a brand-new scare campaign. Every week there is a new scare campaign. The latest is that the government is going to sell off Future Fund money. As I have said, that is untrue. It is just another scare campaign from those on the other side.

The Gillard government has a sound fiscal strategy. We understand the importance of having that sound fiscal strategy and making sure that the government and the country are able to move forward. We understood that when we went into deficit to put stimulus into the economy, which kept over 200,000 Australian jobs and kept people off the dole queues. We made it clear at that time that we would return the budget to surplus, and that is what we continue to do. We laid down a budget earlier this year that has us coming back to surplus in 2012-13, and as a government we are determined to deliver on that.

As I said, those opposite can run their scare campaigns. Today it is one thing, tomorrow it is another thing and last week it was something else. I do not think a week has gone by where they have not come up with some new scare campaign to try to make themselves look more impressive. The $70 billion black hole is the thing that people out there in voter land will remember. Those opposite cannot come up with a way to deal with it. They would rather cut pensions to Australian pensioners for two years or cut Medicare than deal with the reality of their $70 billion black hole. At the time of the previous election, if my memory serves me correctly, they had an $11 billion black hole that I do not think they dealt with appropriately either.

Our economy is in a very strong position. It is almost stronger than that of any other advanced economy. We are weathering the global financial uncertainty, as we did the previous financial crisis. We are building productivity, we are investing in skills and education, we are investing in trade training centres and we are investing in the National Broadband Network. Those opposite did nothing for 12 years. They claim that they had this great surplus when they lost government, but they did nothing. They did not spend on infrastructure. They did not spend any money for the future of the people of Australia. They do not care what happens in future to the children of today. They just do not care. (Time expired)

Barnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | Link to this | Hansard source

Thank you very much, Mr Deputy President—you are not acting anymore; you are the real thing! It is an interesting day. They have got the big guns out today defending Senator Wong. I would have to say that Minister Wong had a very bad day in the office today. Today was a shocker for Minister Wong. Let's start with her actual statement, which was:

Any funds raised from the sale of nonfinancial assets will be kept by the Future Fund—not by the government.

She said:

The government is not making withdrawals from the Future Fund. The Future Fund is simply making a small change to the types of assets it holds.

See, $250 million—a quarter of a billion dollars—is just small change. Hell, if you dropped it at the pub on a Friday night you would not bother picking it up!

Let us go through statement No. 9 of the budget financial statements. This is helping the finance minister out with finance. It has been ticked off; it is part of her portfolio. There we see it: net cash flows from investments in nonfinancial assets are $3.77 billion. The trouble is that that actually becomes part of the bottom line, where they end up with a $3.498 billion surplus—the magical $3.5 billion surplus. In two pages, quod erat demonstrandum—QED—it is all worked out for you. It does actually affect the bottom line. If the minister had read two pages she would have made a more concise, articulate and correct statement than the one she actually made. But the fun did not stop there. It just kept going. In answer to a question from Senator Cormann, my good friend and colleague, Mr Tune said, 'The estimates for the sale of nonfinancial assets'—we have just been through that—'include the expected sale of assets from the Future Fund.' Boom, boom! Surely not. Senator Wong said it was not so. She came into the parliament today and said it. Then we had to quiz her. Maybe she just missed it. We should quiz her on a few of the fundamental facts that any decent financial officer should know—fundamental facts that should be at your fingertips, like, for instance, how much you have got in the Future Fund. The answer to this one was a clanger. She said, 'I think we have got more than $70 billion.' She could have said, 'I think we've got more than a dollar,' or 'I think we've got more than $38.56.' But, no, she thinks we have more than $70 billion. It is just a little bit more, actually—it is $75.15 billion, if my memory serves me correctly. But who cares? What is $5 billion between friends these days? These are the most fundamental things that she cannot handle.

It gets worse. We asked how much they have contributed—not the capitalisation of interest but how much of a contribution to the Future Fund this economic luminary and her forebears have presided over. Her answer? She will take that one on notice. She did not know how much she had contributed to her own Future Fund. We were having a bit of a laugh before because they were saying two was the number. What is so interesting about the answer to this is that it is not a number. It is not a number because it is nought—it is zero. It is ex nihilo—it is nothing. They have contributed nothing to the Future Fund. But she could not remember that she had not contributed anything, so she took it on notice. No doubt we will get an answer back later on telling us it is nothing.

Where does this leave our nation? It leaves our nation in the hands of people who are completely and utterly out of their depth. If it was any sadder you would cry. This is the person who is responsible for financial affairs—she is the finance minister. But they do not have a clue. So they run out of the chamber and put Senator Bilyk out there to defend them after questions on notice. I would have stayed in the chamber myself.

To help out Minister Wong with a few of the figures: the government has $133 billion of liabilities to public servants. If they all retired and they all wanted their money the government would have to pay out $133 billion. But it does not have $133 billion. It has the Future Fund with $75 billion in it but if you start using that money to pay off your surplus then you are using their savings to fix up your stuff-up.

Matt Thistlethwaite (NSW, Australian Labor Party) Share this | Link to this | Hansard source

The claims by Senators Cormann and Joyce and those opposite relating to the Future Fund are completely misleading and incorrect. They also demonstrate a complete lack of understanding of the operation of the Future Fund and indeed the architecture for the management of the fund that was put in place by those opposite when they were in government. Claims of accounting tricks and withdrawals from the fund are completely misleading. Those opposite fail to under­stand risk in a difficult economic environ­ment. They fail to understand a change in investment mix to reduce risk in a difficult economic environment. They fail to understand that the timing of the sale of assets related to the Future Fund is an issue for the Future Fund—a Future Fund with an independent board of guardians, amongst whom is none other than the former Treasurer, Peter Costello. They fail to understand just how this fund works.

This also demonstrates a complete lack of credibility when it comes to economic management. This is from those opposite, who went to the last election with a suite of policies that, when costed, came up $11 billion short. Even their own auditors would not give an unqualified appraisal of their accounting for their election promises. Those opposite criticised the stimulus package that this government put in place to deal with the financial crisis and to support communities and jobs. What has happened in the wake of that? We have one of the strongest economies in the OECD and a job rate that is the envy of the United States and the United Kingdom, with an unemployment rate half the rate in those countries. We did an excellent job of managing the economy during the global financial crisis.

More recently, a leak from the opposition party room has indicated that they are planning $70 billion worth of cuts to services in the lead-up to the next election. They plan to go to the election with a policy of restoring a surplus but they have failed to come clean with the Australian people about how they are going to achieve this surplus. How are they going to achieve this surplus without the revenue from the minerals resource rent tax? How are they going to achieve this surplus without the revenue from carbon pricing? There is one way they are going to achieve this perceived surplus, and that is through cuts to services—$70 billion worth.

They will not come clean with people in their individual electorates. I have asked the member for Calare, John Cobb, to come clean with the people of Calare about what services are going to be cut in that electorate. Is Medicare on the line? Is the childcare rebate on the line? Are increases to pensions on the line? Is a reduction in the company tax rate on the line? What services are those opposite going to cut from the budget to achieve their so-called surplus?

When it comes to carbon pricing, the advice of all the experts throughout the world on what is one of the most pressing environmental and economic issues facing our nation is that an emissions trading scheme is the most cost-effective way of tackling climate change.

Mathias Cormann (WA, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

Mr Deputy President, I rise on a point of order. I draw your attention to the motion before the chair, which is that the Senate take note of the answers by Senator Wong to questions asked by Senators Cormann, Fifield and Joyce. Senator Thistlethwaite is not speaking to the motion before the chair and I ask that he return to it.

Stephen Parry (Tasmania, Liberal Party) Share this | Link to this | Hansard source

Senator Thistlethwaite has been directly relevant for the majority of his contribution. We have always allowed a little latitude in take notes.

Matt Thistlethwaite (NSW, Australian Labor Party) Share this | Link to this | Hansard source

My points go to the issue of economic management. Economic management is at the core of the claims made by those opposite. When it comes to the issue of pricing carbon, we have seen from David Cameron, the Conservative leader in the United Kingdom, that we have got it right. We have got it right on this important economic issue. When it comes to the claims made by the opposition in respect of the Future Fund, this morning and in the parliament, they are simply wrong. They fail to understand the architecture of the fund, the independence of those who manage that fund and the need for the fund to make decisions to reduce risk on behalf of the people of Australia, whose funds are invested in the scheme. (Time expired)

Mitch Fifield (Victoria, Liberal Party, Manager of Opposition Business in the Senate) Share this | Link to this | Hansard source

You might indulge us a little if we are a bit suspicious of this government when we receive advice, as we did, from answers to questions on notice—forensic questioning by Senator Cormann—that the estimates for the sale of non-financial assets include expected sale of assets from the Future Fund. The reason for our suspicion is this. You might recall there used to be something called the Higher Education Endowment Fund—gone. There used to be a thing called the Health and Medical Infrastructure Fund—gone. There used to be a thing called the telecommunications fund—gone. That is billions of dollars set aside for investment in community assets and infrastructure gone, squandered by this government. They basically did a smash-and-grab raid on those three funds.

Those of us on this side of the chamber actually take the squandering of those assets a little bit to heart, because when we came to office we inherited a $96 billion debt. People forget this, but it actually took us 10 years to pay down every cent of that debt. It was not until the middle of 2006 that all of that debt was gone. We balanced the budget, we repaid all the debt and we cut taxes. But in that situation, when you find you have a surplus, it is important to lock away Aust­ralia's good economic fortune into a fund. We set up the Future Fund. It is a sovereign wealth fund. I hear all this talk about how we should set up a sovereign wealth fund in Australia. We have one! It is called the Future Fund and you can only put money in it if you are running budget surpluses.

We have heard, we have seen and we have read that this government, with their sticky fingers, want to take $250 million away from the Future Fund. That is galling in itself, but, when you think that this government have not put a single dollar into the Future Fund, it is even more galling. We have heard the excuse from Senator Wong—in fact she could not even bring herself to admit that they had not put a dollar into the Future Fund—and it was, 'Well, you know, the global financial crisis; it is really tough.' But we have been hearing from this government how Australia is the envy of the world, how our economy is booming and how great we are doing. You cannot have it both ways. You cannot say the economy is booming but that we cannot run a budget surplus and we cannot find money to put into the Future Fund. You cannot have it both ways.

All I can think is that this government are just really unlucky. They were unlucky in 2008-09—unlucky budget deficit. They were unlucky in 2009-10—budget deficit. They were unlucky in 2010-11—budget deficit. They are going to be unlucky in 2011-12 as well—budget deficit. They are the unluckiest mob that you will ever come across. If you are in a lightning storm, do not stand next to any of these guys—you are not going to see the day out.

There was a salutary warning from a very insightful gentleman, the Hon. Peter Costello, in his 2007-08 budget speech. He made this observation:

If you rob capital or earnings from the Future Fund, taxpayers will have to make up the difference.

I think he foresaw a day when we might have a government like this in place. It is also worth recounting the very reason for setting up this fund in the first place. Mr Costello said at the time:

The Fund is established and is well on its way. It will help pay entitlements to our soldiers, navy and air force personnel which must be honoured after they have retired and finished their service to the nation. The Fund operates as an accumulation fund and reinvests its earnings. It aims to meet its target by 2020.

We want to see that target met by 2020. We expect this government to honour that commitment. We expect this government to defend the fund as much as we did.

There is an important additional thing that the government must do in defending the fund—the term of the current chair of the Future Fund Board of Guardians, Mr David Murray, expires in six months and the government needs to outline the process of consultation the government will undertake when appointing a successor to Mr Murray to ensure the ongoing independence and integrity of that fund. It needs to recommit to protect this fund and it needs to make sure that the next chairman is someone who will stand up for it. (Time expired)

Question agreed to.