September 12, 2011
LABOR is planning to withdraw hundreds of millions of dollars from the Future Fund in an unprecedented move that will help the government meet its promise of returning the budget to surplus in 2012-13.
A spokeswoman for Finance Minister Penny Wong confirmed to The Australian that more than $250 million worth of assets were due to be withdrawn from the Future Fund in the 2012-13 financial year, despite the fund having been created, by Peter Costello, under the condition it was not to be touched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.
The government, which has forecast a surplus of $3.5 billion in 2012-13 after several years of heavy deficits, claims that the assets will be returned to the fund at a future date.
But the opposition has slammed the move as "reckless and fiscally irresponsible".
"The fact is that the government is planning to raid the Future Fund, including the revenue from the expected sale of Future Fund assets in its revenue forecasts, yet they haven't been able to point us to where in the budget that money is supposed to be going back into the Future Fund," opposition assistant Treasury spokesman Mathias Cormann said yesterday.
Mr Costello, the then treasurer, established the Future Fund in 2005 to cover the costs of future public servant superannuation liabilities. At the time, he told parliament: "The fund will only be drawn upon at the earliest in 2020 or a time when an independent actuary determines that the fund's assets are sufficient to offset the unfunded part of the government's accrued superannuation liabilities."
The Future Fund's own website sets out that "withdrawals from the Future Fund may only occur once the superannuation liability is fully offset or from 1 July 2020".
Consistent with the Costello legislation, the government actuary independently determined that the target asset level to fully offset those superannuation liabilities would be about $110bn in 2012-13. With current Future Fund assets of about $75bn, that target will not be met by then.
David Tune, secretary of the Department of Finance and Deregulation, took a question from Senator Cormann during Senate estimates hearings earlier this year about what asset sales were included in the budget forecasts under the heading "sales of non-financial assets".
His answer said that the figure included "the expected sale of assets from the Future Fund".
A spokesman for the Future Fund confirmed 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.
Senator Cormann said the "real concern is that, if they get away with their plans to raid the Future Fund now they will do it again and again, every time they need more cash to fund their wasteful spending".
"The Future Fund was set up by the Coalition after we paid off the Hawke-Keating debt and it shouldn't be touched until the public service superannuation liability is under control," he said.
Also helping the government to reach the 2012-13 surplus is the timing of the sale of digital spectrum.
Senator Wong refused to spell out in Senate estimates hearing the expected price tag on the sale of the spectrum "We cannot comment on the quantum," she said. "I would ask you to be aware of the evidence Mr Tune gave in relation to commercial-in-confidence."
The Australian can confirm that the planned sale of digital spectrum and the asset sales slated to come out of the Future Fund have been listed in the budget under the heading "sale of non-financial assets".
In most years the figure contained under that headline, which can include such asset sales as defence land, is between $100m and $400m. In the 2011-12 financial year it rises to $1.4bn, rising further to $4.9bn in the 2012-13 financial year.
The expected surplus for 2012-13 was forecast in this year's budget to be $3.5bn. However, planned increases in state mining royalties and costs associated with carbon tax compensation are likely to reduce that figure.
Questioned by The Australian about the use of the Future Fund asset sales for the surplus target, Wayne Swan's office directed questions to the Finance Minister.
Article by Peter van Onselen From:The Australian